During this year’s November election, Coloradans clearly rejected Proposition HH, the ballot measure Democrats in the state legislature referred to the voters in the waning days of the 2023 regular session to address severe spikes in property tax rates. Following the proposal’s defeat by a double-digit margin, Gov. Jared Polis (D) called lawmakers back under the Gold Dome for a special legislative session that began this past Friday, Nov. 17.
In his press conference announcing the special session, Gov. Polis charged the legislature with: (1) creating a property tax relief package to offset property value increases for the 2023 tax year, while balancing the interest and financial reliance of schools and local governments that depend on property taxes, and; (2) establishing the apparatus to draw down federal funds and administer the state component of the Summer Electronic Benefits Transfer program, a federal program to provide “nutrition benefits” and resources to qualifying families to curb food insecurity among children over the summer months. Notably, the governor repeatedly expressed his hope that legislators could find bipartisan solutions to offer Coloradans residential property tax relief, particularly for seniors and other at-risk populations, but not for commercial and other nonresidential property owners.
Yet, when the session began, it became clear that the bipartisanship the governor sought would be in short supply. Of the 14 bills considered during the extraordinary lawmaking period, only one bill featured bipartisan co-sponsorship at introduction. Meanwhile, eight of the remaining bills were carried exclusively by Democrats with the final five sponsored solely by Republicans. While both parties introduced competing legislation designed to provide property tax relief, only the Democrats’ proposals—led by their headlining measure, Senate Bill 1—ultimately crossed the finish line.
Meanwhile, none of the Republicans’ proposals advanced out of their first committee hearing.
Given the supermajority Democrats hold in the House and the 23-12 advantage they enjoy in the Senate, the passage or defeat of certain bills was never in any real doubt. However, for what was intended to be an open-and-shut three-day special session, the lawmaking period was marred by a series of technical issues, unforced procedural errors, and unprecedented protests related to the conflict in the Middle East involving members of the public and, in some cases, lawmakers themselves.
For example, on Friday, committees had to halt their consideration of bills because the language had yet to be posted online. Then, later that day, Democrat and Republican senators sparred over adopting a rule set that would allow for expedited consideration of bills on the floor, which ultimately scuttled plans to end the special session on Sunday. Finally, after the Senate adjourned sine die on Monday, House floor work dragged on when state Rep. Elisabeth Epps (D–HD-6) joined another group of demonstrators in the gallery after she unsuccessfully tried to run an amendment related to the Israel-Hamas conflict on SB23B-002, which would stand-up Colorado’s summer EBT program.
In spite of these distractions, seven bills will advance to Gov. Polis’ desk for consideration. Please find a summary of the legislation (as well as links to the full bill language) that passed below.
- SB23B-001 – 2023 Property Tax Relief – One of the most hotly contested bills of this special session. Property Tax Relief bill further reduces the valuation for residential properties for the 2023 property tax year by reducing the valuation for these properties to 6.7% of the amount equal to the actual value minus the lesser of either $55,000 or the amount that causes the valuation to be $1,000. The bill specifies that the backfill mechanism that reimburses local governments will be calculated using the local government’s mill levy for the 2022 property tax year, excluding bond or contractual mills and also requires the state treasurer to reduce a local government’s reimbursement as necessary to prevent the local government from exceeding its TABOR revenue limit. The bill also creates a new local government property tax reimbursement mechanism through increasing backfill expenditures and requires county assessors to calculate the total property tax revenue reduction for each local government entity, excluding school districts, as a result of the property tax changes in this bill. For counties with a population of more than 300,000, the state treasurer will reimburse local governments 100% for each library, sanitation, water district or municipality that had assessed value growth of less than 10% from 2022 to 2023 and for all ambulance districts, health districts and fire districts in proportion to the amount they spend to provide fire protection services. The state treasurer will also reimburse local governments 90% of the property tax revenue reduction for each select special district or municipality that had assessed value growth of between 10% and 15% from 2022 and 2023, and 65% for all other local governments that had assessed value growth of less than 15%. In counties with populations under 300,000, the reimbursement mechanism is calculated as: 100% to local governments in counties where assessed values grow by less than 10% between 2022 and 2023; and 90% to local governments in counties where assessed values grow by more than 10% between 2022 and 2023. The bill also stipulates that if the total of all reimbursements exceeds $54 million, fire districts are fully reimbursed first, followed by any local governments for which assessed values decreased or did not change between the 2022 and 2023 property tax years. On Sunday, Nov. 19, Senate Democrats introduced amendment L.066, which removes a prior Senate amendment that would have allowed the state to claw back backfill from local governments in the event the funding mechanism was found to be unlawful upon legal review.
- SB23B-002 – Summer Electronic Benefits Transfer Program – This bill creates the Summer Electronic Benefits Transfer for children program (summer EBT) in the Department of Human Services. The program will provide eligible students a federally funded benefit of $40 per summer month through an electronics benefit card that can be used to purchase food from approved SNAP retail stores. The bill also requires the Colorado state department to provide resources for local community-based organizations to conduct outreach and assist families seeking access to program benefits. By participating in this federal program, Colorado would receive 50% reimbursement for the state’s administrative costs.
- SB23B-003 – Identical TABOR Refund – This bill creates a new temporary refund mechanism—for FY 2023-24 only—to direct TABOR refunds that would have been paid via the current six-tier sales tax refund mechanism to instead be paid in equal amounts to all taxpayers who qualify. The traditional tiered refund mechanism is based on six adjusted gross income tiers and distributes TABOR refunds to full-year Colorado resident individual income taxpayers who file a state income tax return. The new flattened refund structure will result in an ~$847 TABOR refund for all taxpayers.
- HB23B-1001 – Emergency Rental Assistance Grant Program – This bill creates the emergency rental assistance grant program in the Division of Housing within the Department of Local Affairs to provide grants to residential tenants who have an annual household income of 80% or less than the area median income and are at risk of eviction or displacement. The division would administer the grant program as well as contract with nonprofit organizations to award grants to qualifying tenants. The Housing Development Grant Fund would subsidize the tenant grants.
- HB23B-1002 – Increased Earned Income Tax Credit 2023 – This bill would increase the earned income tax credit (EITC) that an individual resident may claim on the resident individual’s state income tax return from 25% to 50% (down from 75%, following an amendment in the House Finance Committee) of the federal EITC. The bill also classifies this expansion of the EITC as a TABOR refund mechanism for the FY 2022-23 TABOR surplus, refunded in FY 2023-24, after the property tax exemption refund mechanisms.
- HB23B-1003 – Property Tax Task Force – This bill would create the Property Tax Task Force with the purpose of considering legislative options for permanent and sustainable property tax reform in the state. The task force consists of 18 members and, following Republican criticism around a lack of representation from rural Colorado, there was an amendment added in the Senate to shift some of the task force appointments in the minority party’s favor. Specifically, the amendment reduces the number of majority party appointments made by the Senate president, House speaker and governor and, in their place, allows more minority party appointments to be made by caucus leadership as well as appointments made by the Colorado Municipal League, Special Districts Association and the fire chiefs. The bill requires that appointments be made by Dec. 4, 2023, and for the task force to meet twice a month beginning the week of Dec. 18, 2023, through the week of March 15, 2024. Then, with the help of a facilitator with “experience in tax policy,” the task force must make recommendations to both the Colorado General Assembly and the governor on recommendations for both short- and long-term property tax reform and potentially for commercial and other types of nonresidential properties along with residential properties. Interestingly, the bill explicitly prohibits an individual who is “materially connected” to the submission of a statewide property tax ballot initiative from being appointed to the task force.
While the legislature’s special session work addressed property tax relief for the 2023 tax year, we expect discussions around further reform in this area to continue into the 2024 regular session, particularly given the anticipated work of the property tax task force in coming up with a more permanent structural solution. Perhaps more importantly, some of the tensions that arose during the extraordinary lawmaking period may very well carry into the upcoming session, which may further raise the stakes in an unpredictable election year.
In any case, please contact a member of Brownstein’s Colorado Government Relations team to answer any of your questions related to the 2023 special session and to help navigate the many new opportunities and challenges that will present themselves during the 2024 regular legislative session in Colorado.
THIS DOCUMENT IS INTENDED TO PROVIDE YOU WITH GENERAL INFORMATION REGARDING PROPERTY TAX. THE CONTENTS OF THIS DOCUMENT ARE NOT INTENDED TO PROVIDE SPECIFIC LEGAL ADVICE. IF YOU HAVE ANY QUESTIONS ABOUT THE CONTENTS OF THIS DOCUMENT OR IF YOU NEED LEGAL ADVICE AS TO AN ISSUE, PLEASE CONTACT THE ATTORNEYS LISTED OR YOUR REGULAR BROWNSTEIN HYATT FARBER SCHRECK, LLP ATTORNEY. THIS COMMUNICATION MAY BE CONSIDERED ADVERTISING IN SOME JURISDICTIONS. THE INFORMATION IN THIS ARTICLE IS ACCURATE AS OF THE PUBLICATION DATE. BECAUSE THE LAW IN THIS AREA IS CHANGING RAPIDLY, AND INSIGHTS ARE NOT AUTOMATICALLY UPDATED, CONTINUED ACCURACY CANNOT BE GUARANTEED.