After the failure of Proposition HH in 2023, the State Legislature convened a “special session” to devise temporary tax relief measures. The session also created a Property Tax Commission composed of legislators, county commissioners, advocates, assessors, and school representatives to work on longer term solutions. NDC’s Executive Director, Jonathan Cappelli, was appointed to the Commission by House Speaker McCluskie to represent the interests of senior and low-income renters and homeowners.
The commission voted on a slate of 11 recommendations, found in their Preliminary Report on Property Tax Relief.
Among the listed recommendations, which NDC supports, we have been working with other commissioners on the following tax relief ideas:
- A Homestead Property Tax Exemption/Devaluation. This idea builds on the existing senior homestead exemption and reforms the existing temporary $55,000 devaluation. Under the proposal, properties would be devalued by a proportion of the county’s median home value to accommodate Colorado’s wide home value ranges between the plains and mountain communities. Devaluations would be capped at 70% of the median income value per county, with a maximum devaluation of $55,000. Property tax devaluations have a precedent in Colorado, making them politically viable. However, they are not equitable, as they do not take income-poor and asset-rich homeowners into account.
- A multi-threshold marginal property tax circuit breaker. It caps property tax liabilities at a certain percentage of household income, regardless of property value. Considered the gold standard of equitable property tax relief policies, circuit breakers are highly targetable, providing direct relief to asset-rich, income-poor households. If tied to percentages of household median income, circuit breakers can remain effective in shifting economic conditions. Property tax circuit breakers can further be extended to renters, as landlords pass their property tax liabilities onto their tenants. Renters would receive a refundable tax credit that offsets their housing cost that exceeds 30% of their household income up to a maximum. While arguably the more equitable policy, its relative complexity compared to the property tax devaluation and perception as a “progressive” policy reduces its political viability. Further, its implications are challenging to evaluate, creating uncertainty around its state and local budgets.
The Property Tax Commission legislative members, led by Senator Hansen, are working creating and introducing legislation this session to reflect the priorities voted on by members. Stay tuned for more information in the coming weeks!