Denver Judge Denied An Effort To Block A Property Tax Plan

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Judge David H. Goldberg of the Denver District Court rejected concerns that Proposition HH breaches state constitutional requirements that ballot measures deal with a particular issue and have unambiguous titles.

Townhomes and single-family residences near Montaine community in Castle Rock.(Report for America)

Judge Rejects Bid To Prevent Property Tax Proposal From Voters

A Denver judge rebuffed a bid by conservative fiscal activists and Republican-led counties to prevent Gov. Jared Polis and Democrats in the legislature from putting a 10-year property tax proposal before voters in November.

Denver District Court Judge David H. Goldberg determined that he lacked the authority to hear the matter. However, the judge rejected concerns that Proposition HH breaches state constitutional requirements that ballot measures deal with a single issue and have clear titles.

The plaintiffs in the May complaint included Advance Colorado, a conservative political organization, and more than a dozen Republican-controlled Colorado counties. Several Republican county commissioners, as well as Republican current and former officials, signed on to the lawsuit.

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Proposition HH Violates The Constitution’s Single-subject And Clear-title Provisions

“Prop. “HH unquestionably violates our constitution’s single-subject and clear-title provisions,” Advance Colorado’s Michael Fields said in a written statement Friday. “We plan to appeal this decision.” The case will be heard by the Colorado Supreme Court. The governor’s office stated that he “appreciates the court’s ruling to allow the voters the opportunity to enact Proposition HH as passed by the legislature.” Senate President Steve Fenberg, D-Boulder, applauded the decision.

“I am pleased that the court today agrees that voters should have their say,” Fenberg said in a written statement. Denver Democrat and proposal architect Sen. Chris Hansen called the judgment “clear and decisive.”

A law enacted by the Assembly in May placed Proposition HH on the November ballot. It is intended to respond to significant increases in property tax payments beginning next year as a result of a dramatic increase in property values. The typical increase in home values across the state in May, when county assessors calculated property values, was 40% from June 2020, when assessors determined property values for the prior time.

For residential property, this is how it would work:

For taxes owing in 2024, the residential assessment rate would be cut to 6.7% from 6.765% in 2023, and to 6.7% from 6.976% in 2025. For taxes owing in 2033, the 6.7% rate would remain stable until the 2032 tax year.

In addition to the assessment rate reductions, residential property owners would be exempt from taxation on the first $50,000 of their home’s value for the 2023 tax year, a $10,000 increase made possible by a Monday change. Residential property owners would then be able to exempt $40,000 of the value of their dwellings from taxation in the 2024 tax year. The cut would last until the 2032 tax year, with the exception of people’s second or subsequent single-family residences, such as rental or vacation properties, which would lose the advantage in the 2025 tax year.

Here’s how it works for commercial real estate:

The assessment rate for commercial properties would be cut from 29% to 27.85% until 2026. The state would be forced to assess economic conditions in order to determine whether the rate cuts should continue. If the rate cuts continue, the commercial assessment rate will be 27.65% in 2027, 26.9% in 2029, and 25.9% beginning in 2031.

Through the 2032 tax year, the assessment rate for agricultural and renewable energy properties would be cut from 29% to 26.4%. The tariff would be reduced to 21.9% for properties that fall under both classifications, such as those utilized for agrivoltaics.

Property taxes in Colorado are computed by multiplying the statewide assessment rate by the value of a property as determined by a county assessor. The result is multiplied by the local mill levy rate.

(A mill is a $1 payment on every $1,000 of assessed value, thus to calculate your tax bill, multiply your mill levy rate by 0.001 and then multiply that number by the product of calculating your property’s value by the statewide assessment rate.)

So, someone with a $600,000 house and a 6.765% statewide residential assessment rate in a town with a mill levy rate of 75 would owe $3,044.25 in taxes each year. The formula for calculating the figure is as follows: $600,000 x 0.06765 x (75 x 0.001) = $3,044.25.

The proposal would also prohibit many local taxing districts from raising property taxes beyond the rate of inflation, with the exception of education districts, with local governments having the authority to exceed the cap after providing notice to property owners.

To make up for the cuts, the legislature intends to spend $200 million to reimburse local governments, including schools, for the extra revenue they would have received. The plan also calls for using approximately $250 million of the $2.7 billion Colorado is expected to earn in the current fiscal year, which ends June 30, above the Taxpayer’s Bill of Rights cap on government growth and expenditure, to adjust for local district income reductions.

Furthermore, voters would be asked in November to increase the TABOR cap, which is calculated based on annual population growth and inflation, by an additional 1%. (Any money collected in excess of the cap must be repaid.)

In years when the cap is surpassed, the amount of money available for refunds would be reduced or eliminated. The change could mean that voters would not receive billions of dollars in refunds over the next decade.

Finally, Proposition HH would put aside around $20 million per year for a state renter aid program, a late addition to the bill intended to acknowledge that the policy primarily favors property owners.

If voters adopt Proposition HH, the state’s distribution of more than $2 billion in TABOR refunds will be altered.

Instead of a system in which refund amounts are tied to which of six income tiers taxpayers fall into, with higher earners receiving larger refunds and lower earners receiving less, the money would be refunded through flat-rate checks of roughly $650 or $1,300, depending on whether someone is a single or joint tax filer.

Advance Colorado, a dark money group, has already initiated an ad campaign opposing Proposition HH. The Sun defines dark money groups as political nonprofits that do not reveal their contributors.

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