Gov. Jared Polis and Democrats unveil property tax relief bill

As Colorado homeowners face record property tax increases, Colorado Gov. Jared Polis is unveiling a plan to provide relief.

County assessors announced last week that property values in the nine major counties in the Denver Metro area rose between 33% and 47%. They are up as much as 60% in some mountain communities.

With a week left in the legislative session, the governor and Democratic lawmakers rolled out a bill that they say will reduce projected property tax increases by sixty percent for the average homeowner, but it's not a done deal. It needs to pass the legislature and then get voter approval.

Under the bill -- aimed at stabilizing property tax fluctuations for the next 10 years -- the governor says the tax on a home valued at $600,000 would drop from just over $1,000 to $400 next year.

"I think homeowners want a 10-year horizon," Polis said. "They don't want every year to say, 'Oh my gosh, are they going way up or going way down?' People get their notices now and they're freaking out. We don't want to do that year to year."

Property taxes are calculated by multiplying a property's value by the state assessment rate by the local mill levy. The bill lowers the taxable value of residential properties by $40,000 a year, lowers the state assessment from 6.976% to 6.7% and caps the increase in property taxes for local governments at the rate of inflation, with the exception of school districts. If a local government wants to keep more money, it would have to notify voters or, in some cases, ask permission.

While the changes will save property owners hundreds of millions of dollars, the savings come at the expense of local governments. To make up that lost revenue, the bill uses money Coloradans would have received as refunds under the Taxpayer Bill of Rights.

"It is a calibrated approach. We will have a backfill mechanism so that school funding is held totally harmless so that local governments like fire districts, like counties if they're slower growing, will have backfill," says Democratic State Rep. Mike Weissman.

Weissman is one of the bill sponsors, along with State Rep. Chris Kennedy, State Sen. Chris Hansen and State Sen. Steve Fenberg, all Democrats.

Republican State Sen. Paul Lundeen, the senate minority leader, says the bill simply opens up the Taxpayer Bill of Rights to runaway government: "It's not a tax cut when you give people their own money. It's not a tax cut when the taxes keep going up and the bills that people are paying on their property taxes keep going up dramatically."

The bill also reduces the assessment rates on commercial and agricultural properties but not all residential properties are treated the same. Rental homes get less of a tax break.

Republican State Rep. Lisa Frizell says that combined with several pro-renters' rights bills this session will result in fewer people investing in rental properties.

A former county assessor, Frizell says counties will, for the first time, have to determine who's living in a residential property to determine the tax rate, which may be a violation of the Taxpayer Bill of Rights.

The Colorado Association of REALTORS released the following statement:

"The creation of new property ownership classifications, specifically owner-occupied vs. non-owner occupied, in determining tax rates is incredibly problematic to our 29,000-plus members and property owners statewide. We simply cannot jeopardize the foundation of opportunity for our state's working middle-class families to build that intergenerational wealth through the opportunities investment properties can provide. Our association leadership and members have been active participants in a coalition looking at the property tax issues since last year, but this proposed solution is not an outcome of that coalition's work."

While Republicans can't stop the bill's passage, they can -- and likely will -- employ delay tactics to force some concessions. Complicating matters further, the referred measure from the legislature may be one of several property tax proposals on the November ballot.