Denver judge rejects effort to block 10-year property tax relief plan from going before Colorado voters in November

An effort by conservative fiscal activists and GOP-led counties to block a 10-year property tax plan formed by Gov. Jared Polis and Democrats in the legislature from going before voters in November was denied Friday by a Denver judge. 

Denver District Court Judge David H. Goldberg rejected arguments that Proposition HH violates requirements in the state constitution that ballot measures deal with a single subject and have clear titles.

The plaintiffs in the lawsuit, filed in May, included Advance Colorado, a conservative political nonprofit, and more than a dozen Colorado counties controlled by Republicans. Several GOP county commissioners and Republican current and former politicians also signed onto the legal action. 

“Prop. HH undoubtedly violates the single-subject and clear-title provisions in our constitution,” Michael Fields, who leads Advance Colorado, said in a written statement Friday. “We plan to appeal this decision.”

Polis’ office didn’t immediately return a message seeking comment.

Proposition HH was placed on the November ballot through a bill passed by the legislature in May. It’s meant to respond to massive increases in Coloradans’ property tax bills starting next year caused by a sharp spike in property values. The median increase in home values across the state in May when county assessors determined property values was 40% since June 2020, the last time assessors determined property values. 

Here’s how it would work for residential property:

The residential assessment rate would be reduced to 6.7% from 6.765% in 2023, for taxes owed in 2024, and to 6.7% from 6.976% for taxes owed in 2025. The 6.7% rate would remain unchanged through the 2032 tax year, for taxes owed in 2033. In addition to the assessment rate cuts, residential property owners would get to exempt the first $50,000 of their home’s value from taxation for the 2023 tax year, a $10,000 increase made through an amendment adopted Monday. Residential property owners would then get to exempt $40,000 of their homes’ values from taxation for the 2024 tax year. The break would persist until the 2032 tax year, except for people’s second or subsequent single-family homes, like rental or vacation properties, which would stop being subject to that benefit in the 2025 tax year. 

Here’s how it work for commercial property:

For commercial properties, the assessment rate would be reduced to 27.85% through 2026, down from 29%. The state would be required to evaluate economic conditions to determine if the rate reduction should continue. If the rate reductions persist, the commercial assessment rate would be reduced to 27.65% in 2027, 26.9% in 2029 and 25.9% starting in 2031.  For agricultural properties and properties used for renewable energy, the assessment rate would be reduced to 26.4% from 29% through the 2032 tax year. For properties that fall under both classifications, such as those used for agrivoltaics, the rate would be cut to 21.9%.

Property taxes in Colorado are calculated by multiplying the statewide assessment rate by the value of a property — sometimes referred to as a market value — as determined by a county assessor. That number is then multiplied by the local mill levy rate. 

(A mill is a $1 payment on every $1,000 of assessed value. So in order to figure out what your tax bill is you should multiply your mill levy rate by 0.001 and then multiply that number by the product of multiplying your property’s value by the statewide assessment rate. That’s how much you owe.)

So someone who owns a home valued at $600,000 and assessed at a 6.765% statewide residential assessment rate in a place where the mill levy rate is 75 would owe $3,044.25 in taxes each year. The formula to get to that number looks like this: $600,000 x 0.06765 x (75 x 0.001) = $3,044.25.

MORE: Use our calculator to determine what your new property tax bill would be under the Colorado legislature’s relief plan

The proposal would also prevent many local taxing districts from increasing property taxes above the rate of inflation, though school districts would be exempt and local governments could override the cap after giving notice to property owners. 

To account for the cuts, the legislature is planning to spend $200 million to repay local governments, including schools, for the additional revenue they would have collected. The plan also calls for using about $250 million of the $2.7 billion Colorado is projected to collect in the current fiscal year, which ends June 30, above the Taxpayer’s Bill of Rights cap on government growth and spending, to further account for local districts’ revenue reduction.

Additionally, voters would be asked in November to increase the TABOR cap, which is calculated based on annual growth in population and inflation, by an extra 1%. (Any money collected over the cap has to be refunded.)

The change would reduce or eliminate the amount of money available for refunds in years in which the cap is exceeded.

Finally, Proposition HH would set aside about $20 million each year for a state renter relief program — a late addition to the measure aimed at acknowledging the proposal mostly benefits property owners. 

If voters approve Proposition HH, that would trigger a change to how the state will distribute more than $2 billion in TABOR refunds next year. 

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, as opposed to a system where the refund amounts are tied to which of six income tiers taxpayers fall into, with higher earners getting larger refunds and lower earners receiving less. 

This is a developing story that will be updated.