A Democrat-backed proposal will provide billions of dollars in property tax relief over a decade in a way that helps schools, according to a new analysis. 

The analysis from the Bell Policy Center said all Colorado property owners will receive property tax relief under Proposition HH, but it would be particularly helpful to low- and middle-income households.  

“Low- and middle-income households will benefit the most,” the analysis said.

Under Proposition HH, property tax bills would be lowered first by reducing the rate at which a home’s assessed values are taxed and it would also decrease the amount of taxable property value through value reductions, “a progressive mechanism that benefits lower-value homes more than higher-value homes,” the analysis said.

The analysis noted each household’s property tax bill will still increase, but those increases would be smaller if voters approved Proposition HH. 

The analysis, however, ignored the funding mechanism for reducing property taxes under the proposal: the TABOR surplus, which provides refunds to Colorado taxpayers.

While a companion measure to Proposition HH would provide a one-time only equalized TABOR refund to all taxpayers – whether property owners or renters – the analysis did not point out that TABOR refunds would be reduced over the next decade, beginning in 2025.

Critics of Proposition HH have argued the measure would eventually eliminate TABOR refunds entirely. In addition, critics noted that renters, who make up 40% of the housing market, will have to forego TABOR refunds after 2024 and for the foreseeable future, and be hit with higher rent costs as a result of still increasing property taxes landlords will face.

Under Proposition HH, homeowners will realize about $600 in property tax savings and smaller TABOR refunds. 

Democratic lawmakers touted the measure, sent to the ballot through Senate Bill 23-303, as a way of saving people money on property taxes.

Bell’s analysis pointed out that a major effect from the measure is to put more money into public education.

The analysis estimated Proposition HH could pump as much as $2.3 billion into the State Education Fund by fiscal year 2031-2032.

“This amount reflects the massive needs of our schools, which are still grappling with nearly $10 billion of cumulative underfunding over the past decade, though it’s important to recall that first, Colorado needs to dig itself out of a $10 billion hole,” the analysis said. “This additional funding would ensure that schools don’t incur additional financial setbacks.”

Under Proposition HH, an additional 1% of state income tax revenue would be retained and spent above the existing Referendum C cap, in part to backfill local governments for reductions in property tax revenue. Once that’s paid for, up to $20 million would be appropriated for rental assistance. In the third year, property tax backfill needs would subside and funding will be directed to the State Education Fund, the analysis said.

The Referendum C cap is a voter-approved change to TABOR revenue limits, which allows those limits to increase by population and inflation.

The Bell’s analysis came just days after a Common Sense Institute study that said taxpayers would lose, on average, more than $5,000 in TABOR refunds over the next decade due to Proposition HH and the lost of TABOR refunds is, in fact, a tax increase.

Bell President Scott Wasserman told Colorado Politics that the long-term reduction of TABOR surplus funds should not be characterized as a tax cut.

TABOR delegates the return of surplus dollars back to the legislature, he said, and lawmakers have returned surplus dollars in the past through a variety of ways, such as targeted tax credits or reimbursing local districts.

“It is irresponsible to assume that taxpayers will see surpluses continue to translate into temporary income or sales tax reductions – or that will be experienced equally by everyone,” Wasserman wrote in an email.

The claim by Common Sense Institute and the measure’s critics that Proposition HH is a tax increase “is false,” Wasserman said.

Using an “average” across renters and property owners to calculate what they might gain or lose omits the fact that outside of tax year 2023, when TABOR rebates would be equalized if Prop HH passes, taxpayers will see varying TABOR rebates based on their income, under which those with higher incomes will get more money and those who earn less will get less, Wasserman said.

“Considering that renters are disproportionately represented in lower income quintiles, claiming that they will lose $5,119 is an extreme overstatement of what will likely happen,” he said.

“Furthermore, many homeowners are likely in those lower income quintiles and will likely see more property tax relief than loss of TABOR rebate dollars. By averaging TABOR rebate dollars, this report attempts to shrink the wide variety of savings and TABOR rebates that will affect Coloradans if Prop HH passes,” he said.

Chris Brown, one of the authors of the CSI analysis, stood by the report’s findings and said Proposition HH is one of the “most complex measures to ever appear on the ballot.”

“Voters are being asked to give up future TABOR refunds to pay for slowing the growth in their property taxes,” Brown said. “As others have pointed out, and our report now quantifies, the typical household could give up $5,119 in TABOR refunds over the next decade, surpassing what they might save on their property taxes.”

He added: “And renters, who represent 1/3 of all households, are the biggest losers. Renters would simply face TABOR refund reductions without any direct property tax relief. “

Six issue committees have been formed to oppose Proposition HH, including the latest, backed by TABOR author and convicted tax felon Douglas Bruce of Colorado Springs. One issue committee that favors Proposition HH, backed by Democratic-aligned organizations and donors, has raised more than $360,000, the most raised so far on the issue.