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Colorado lawmakers pass bipartisan property tax relief bill as 2024 legislative session comes to a close

The General Assembly hopes its legislation will persuade voters not to back property tax measures on the November ballot that would ravage state and local government budgets
Townhomes and single-family residences are seen near the Montaine community in October 2022, in Castle Rock. (Olivia Sun/The Colorado Sun via Report for America file)

Colorado lawmakers Wednesday evening sent Gov. Jared Polis a last-minute, bipartisan property tax relief bill as the state’s 2024 legislative session came to a close.

Senate Bill 233, introduced Monday after months of negotiations, was one of the final bills passed before the General Assembly gaveled out for the year. The Legislature hopes the bill will persuade voters not to back property tax measures on the November ballot that would ravage state and local government budgets.

The measure, which would likely save the average homeowner several hundred dollars annually, calls for holding residential and commercial property tax rates steady this year, for taxes owed in 2025. The residential property assessment rate would be 6.7%, with a $55,000 value reduction and the commercial rate would be 27.9%, with a $30,000 value reduction.

Because the rates are supposed to rise under current law, however, that would cost schools about $350 million, money that would be reimbursed out of the state’s education fund, which is filled with income tax revenue.

About $10 million in reimbursements would be made to local governments that would lose money under the plan compared with their 2022 revenues. The vast majority of the hit to local governments won’t be reimbursed, however the revenues in most communities are still growing because of the effect of rising property values on tax bills.

The legislation was amended slightly as it made its way through the Capitol. The changes after introduction would affect tax years 2025 and beyond, when the real shift in the state’s property tax code would begin.

Property taxes fund schools and other local governments, and the state property assessment rate that determines how much people and businesses owe doesn’t differ depending on who is collecting the revenue. That would change under Senate Bill 233, with one rate for schools and another for all local governments.

The school rate for residential properties would be higher to prevent K-12 losses that the state would have to pay for out of its budget. (Schools make up the largest share of Colorado property tax bills.)

In 2025, the residential property assessment rate for local governments would drop to 6.4%. It would go up to 7.15% for schools. The commercial property tax assessment rate would drop to 27%. Additionally, a 5.5% cap on local government property tax revenue growth would be enacted – and remain in perpetuity – that could only be overridden by a local referendum. (The cap wouldn’t apply to schools.)

For the 2026 tax year, the residential assessment rate for local governments would be set at 6.95%. Homeowners would also receive a 10% exemption from taxation on their properties’ value, up to $70,000. The commercial rate would decrease to 25% and stay there in perpetuity.

The residential assessment rate would remain at 7.15% in perpetuity unless local property tax revenue statewide makes up 60% of K-12 funding.

Coloradans’ property taxes will still be higher than they were in 2022, before rising property values led to increased tax bills, but if Senate Bill 233 is signed into law they won’t be as high as they would have been.

The other major change made to Senate Bill 233 during the legislative process is that it would be repealed if voters in November pass Initiative 50, which would cap the annual statewide increase in property tax revenue at 4%, or Initiative 108, which would take a chain saw to the state’s property tax assessment rates. The measures are backed by the conservative political nonprofit Advance Colorado and Colorado Concern, a nonprofit that represents the state’s CEOs.

Only Initiative 50 has qualified for the ballot. The proponents of Initiative 108 would have to collect about 125,000 voter signatures by early August to get that question on the ballot, too.

Rep. Lisa Frizell, a Castle Rock Republican and one of the main sponsors of Senate Bill 233, said if both the legislation and one or both of the initiatives were to be enacted it would be a financial disaster for the state.

In fact, Frizell said that would be “catastrophic.”

Initiative 108 would have an estimated $3 billion effect in its first year and require the Legislature to reimburse schools and local governments for that revenue reduction. That’s roughly 8% of the entire state budget.

Senate Bill 233 passed the Senate by a 33-2 vote. It passed the House 57-6. The measure cleared the Legislature in three days, the minimum amount of time it takes to pass a bill.

The Legislature adjourned for the year at about 10 p.m. The 2025 legislative session begins Jan. 8.

The Colorado Sun is a reader-supported, nonpartisan news organization dedicated to covering Colorado issues. To learn more, go to coloradosun.com.