Yesterday voters rejected Proposition HH not because they do not want property tax reform, but because they want a better deal. Now, Gov. Jared Polis will have to call a special session so the legislature can deliver it.

At the May 1 press conference in which lawmakers unveiled Proposition HH, Senate President Steve Fenberg said, “Last November, voters put their trust in many of us to… seek transformative sustainable solutions that will propel Colorado forward. This November, we are putting our trust back in the voters.”

Trust means listening even when voters say, “no.”

Of course Coloradans want and need property tax relief. Without a fix, property owners face tax increases of 30% to 60% or more across the state. But voters said, “Prop HH isn’t the fix.” That’s because it did not provide the “transformative sustainable solutions” its architects promised.

Prop HH guaranteed a large increase in property taxes on top of an even larger increase in state taxes. Over the long term, the measure would have caused a net tax increase to the tune of billions. That’s not “transformative” tax relief.

It also would have allowed property tax bills to increase 40% or 50% again the next time property values rose the same. That’s not a “sustainable solution.”

A clear mandate

By rejecting Proposition HH, voters have given lawmakers a clear mandate: deliver clean property tax relief now without picking our pockets and give us real reform for the long-term that controls the future growth in property taxes.

First, to prevent the impending surge in property taxes, the governor must call the General Assembly into a special session and sign legislation before the end of the year. That legislation should set the state assessment rate to keep this year’s property tax growth around 6% – in line with the historic trend – or a little more to account for unusually high inflation.

Keep in mind, the legislature could do property tax relief as a TABOR refund mechanism without voter approval, as they have done in the past. But replicating the very scheme voters rejected at the ballot box would constitute a direct violation of the people’s trust. To respect the will of voters, the legislature must pass clean property tax relief that leaves TABOR refunds intact.

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?Remember, property taxes are set to soar because the legislature, with voter approval, repealed the Gallagher Amendment to the state Constitution, which before its repeal controlled the growth in property taxes. As with Proposition HH, legislators used deceptive ballot language in the referred measure that caused the impending tax increase. For more than two years, they failed to come up with a permanent replacement.

At the press conference announcing Proposition HH, Gov. Polis said, “Three years ago we came together to repeal the Gallagher Amendment. This commonsense proposal will help replace that.”

When lawmakers asked voters to consent to Gallagher’s repeal in 2020, they promised to replace it with something better. Yesterday’s election results sent the unmistakable message that voters did not see Proposition HH as the right replacement.

Next steps for tax relief

After providing stop-gap relief during a special session, lawmakers – or citizens through a citizen initiative – need to come up with long-term property tax reform to replace the Gallagher Amendment. That reform should focus on controlling the future growth in property taxes. Tax bills should never grow by 40% just because property values rose 40%.

Earlier this year, a small group of special interests and Democratic lawmakers devised SB23-303, the bill that referred Prop HH to the ballot, without input from local governments, stakeholders, Republicans or even most elected Democrats. They rushed it through the legislature in just a few days, cutting off debate to protect it from public scrutiny. They put it on the ballot under a misleading and deceptive title, written by the same lawmakers behind the now defunct measure.

Voters’ rejection of Proposition HH is not just a rejection of the policy; it’s a rejection of the process by which it was created. Its failure demands not only a different approach to future legislation but other reforms to protect taxpayers from similar legislative scams in the future.

In a press conference in late October, Republican legislators showed the way forward. They announced a three-bill package that would deliver real savings for taxpayers with bipartisan policy solutions backed by the governor and at least one Democratic state senator. The first bill would expand the senior and veteran homestead exemption and make it portable. The second offers clean property tax relief for all property owners.

The third bill seems unrelated at first glance, but HH uncovered its necessity. Proposition HH attempted to raise taxes by letting the state keep and spend surplus tax revenue – also known as the TABOR surplus – which the state must otherwise return to taxpayers as a refund. The final bill in the package would lower the income tax rate to 4%, preventing perpetual over-collection of taxes. If the state does not collect surplus revenue, they cannot take the money away from taxpayers through schemes like Proposition HH.

Ironically, Polis fervently insisted on this policy change during the 9News debate on HH, saying, “We should cut the income tax more,” and, “I think it’s better not to tax money from people in the first place, rather than over collect and refund it via TABOR.” The Republican package checks this off his wish list.

Property tax bills will be finalized in December. Legislators have gift-wrapped the relief taxpayers need, but the package will only get delivered by Christmas if Polis calls a special session right away. During the 9News debate, however, the governor hesitated to commit to a special session, expressing doubt that Democratic legislators would work with him and Republicans to provide tax relief.

After the legislature addresses the immediate need for tax relief, we should consider additional reforms to safeguard Coloradans from future legislative ballot schemes like Proposition HH.

Ballot title accountability

Critics across the political spectrum have pointed out the ballot language for Proposition HH misled voters, making a tax increase measure sound like a tax cut. Thanks to a strong coalition dedicated to educating voters – grassroots activists like Natalie Menten, citizen organizations like the TABOR Foundation and Colorado Union of Taxpayers, and nonprofits like Americans for Prosperity, Common Sense Institute and Advance Colorado – the truth about the measure prevailed over the misleading ballot language this time. But HH revealed the pressing need for more accountability over ballot language drafting.

Under current law, either citizens or the legislature can refer measures to the ballot. When citizens do, a state board writes the ballot title according to strict rules that ensure fairness and unbiased language. When the legislature refers a measure to the ballot, as with Proposition HH, the legislature gets to write the language. That needs to change. Legislators should have to play by the same rules as the people they represent.

Independence Institute President Jon Caldara brought a citizen initiative to the Title Board this spring to require legislatively referred measures to receive additional oversight, but the board shot it down. The ruling, however, left the door open to try again next year.

For money-grabbing politicians, HH was the ultimate gambit, and they lost. They tried to take taxpayer money with a con artist’s shell game. Now, to regain the trust of voters, they will have to call a special session and deliver clean property tax relief without getting a dime from taxpayers.

But more than that, in their effort to gut TABOR and take our refunds they showed Coloradans how their shell game works. Now we know exactly what reforms are necessary to prevent the legislature from attempting their con again.

Ben Murrey serves as director of the Fiscal Policy Center at the Independence Institute in Denver.