Colorado governor will call special session on property taxes following failure of Proposition HH

Gov. Jared Polis on Thursday called state lawmakers into a special legislative session to cut property tax rates and blunt the impact of large increases in home values on tax bills awaiting homeowners next year.

Polis announced the special session in a post on X, the social media site formerly known as Twitter, and is expected to offer details about when the session will begin at a 10:15 a.m. news conference on Thursday.

It’s likely the session will start next week. The timing — less than a week ahead of Thanksgiving — will put pressure on lawmakers to reach a deal quickly or risk interrupting their holiday plans.

The governor’s announcement comes just two days after voters overwhelmingly rejected his preferred solution, the sprawling property tax relief and school funding measure known as Proposition HH. The initiative, authored by Polis’ office and placed on the ballot by the Democratic majority in the legislature, was aimed at combating a 40% median increase in home values across Colorado that would cause a corresponding jump in property tax bills next year.

The General Assembly will be working under a tight timeline if it hopes to curb the state’s rising cost of living.

If no tax cut is approved before early December, a sharp increase in Colorado property taxes due in April will be locked in.

The governor’s call for a special session comes despite the lack of a clear proposal that a majority of lawmakers can agree upon. Progressives are now pushing for more targeted relief to low- and middle-income Coloradans, while Republicans are seeking “clean” tax cuts that avoid a long-term reduction in taxpayer refunds under the Taxpayer’s Bill of Rights, or TABOR.

Caught in the middle of the debate are school districts and local governments, which stand to lose out on hundreds of millions in revenue each year if the state cuts property taxes without increasing financial support for local services.

Barring cuts to other parts of the state budget, the obvious source of state dollars is TABOR surplus, which funds state taxpayer refunds in years when the economy grows faster than the state spending cap. Notably, that was also the funding source for Proposition HH, which voters just rejected by a 60-40 margin.

Local government advocates, who opposed Proposition HH because it offered relatively little compensation for their lost revenue, told The Colorado Sun they have been working to come up with proposals of their own.

One solution being discussed at the Capitol is a pared-down version of Proposition HH that would temporarily cut statewide property assessment rates and tap surplus revenue under the Taxpayer’s Bill of Rights to reimburse schools and local governments for their reduced revenue.

But looming over the discussions is a measure conservatives placed on the 2024 statewide ballot that would cap annual property tax increases statewide at 4%. The measure has no funding mechanism to offset the financial hit to local services, such as schools, fire districts and libraries that would ensue.

The hastily called session comes as local government officials are scrambling to meet December deadlines to set their budgets for next year. Tax bills go out in January and are due in April.

This is a developing story that will be updated.