The Joint Budget Committee ended a long Tuesday session with one last big budget cut: suspending the state's popular homestead exemption, which saves seniors on property taxes, for the next three years.
The Tuesday evening vote was not unanimous; the JBC's Republicans, Rep. Kim Ransom of Littleton and Sen. Bob Rankin of Carbondale, both voted against.
It works like this: seniors 65 and older and who have been in a primary residence for 10 years can have property taxes waived for 50% of the first $200,000 of actual property value. The program also applies to disabled veterans.
The cost in the 2020-21 budget is estimated at $163.6 million, all but $4.7 million from seniors.
The homestead exemption has been suspended during a recession before, in 2010, and that was also for three years.
Also not yet decided, whether it will be suspended for disabled veterans as well as seniors. Rep. Julie McCluskie, a Dillon Democrat, asked that the committee allow the exemption for veterans to go forward.
The exemption is set in the state Constitution, but it also grants the General Assembly the power to raise or lower the maximum amount of residence value that is exempt from taxation. That could be as low as zero, in effect suspending the exemption.
Given that the JBC did not vote unanimously, the bill that will suspend the exemption will not be a committee bill and will be carried by committee Democrats.
The committee discussed the exemption on May 4 but postponed the decision until the updated revenue forecast came out.
JBC staff analyst Alfredo Kemm recommended suspending only the senior portion.
"This will be a very controversial" suspension, Rankin said on May 4. "There's a good bit wrong with this exemption" as has been discussed by the committee in the past. Rankin would prefer to see a means-tested approach or even a full rewrite, and said it was unfortunate that the time for dealing with the program could come during budget cuts. He supports completely replacing the program or means testing.
"The problem with this thing is that it applies to everybody," including him. "I've been getting $500 per year for years" from the program, until he and his wife sold the home.
A lot of people who aren't in danger of losing their homes, have high-priced homes and are well-off get this exemption, Rankin explained, and that's why the cost has grown so much over the years. "If there's a way to protect those folks who are threatened, we need to find a way to do that."
Sen. Rachel Zenzinger, an Arvada Democrat, supports means testing for the most vulnerable, but said they could not manufacture a new program this year.
Tuesday night's action to suspend the program came with no discussion.
The JBC also voted to take $43 million out of the unclaimed property tax fund, after lengthy discussion. The fund comes from abandoned financial assets such as stocks and dividends, mutual funds, checking and savings accounts, unpaid wages, securities, life insurance payouts, uncashed checks that are without activity for a certain period of time, as well as the contents of safe deposit boxes for which the rent has been expired for at least five years. It does not include real estate or vehicles.
The state treasurer, through the Great Colorado Payback program, administers the fund, which has a $404 million balance.
The committee's vote Tuesday evening was unanimous but not without some back and forth between Ransom, who initially opposed the transfer, and the other committee members. Ransom said her concerns were based on taking funds that should be paid back to the rightful owners.
She later, and very reluctantly, voted to support the transfer after learning the transfer would in no way stop someone from collecting their property. The obligation remains, even were the fund insolvent, committee members said.
The JBC on Wednesday is on its last day of budget cutting, to give their staff time to draft the Long Appropriations Bill for next week's session.