Gov. Jared Polis signs property tax relief measure as opposition mounts

Gov. Jared Polis on Wednesday signed into law two measures tied to property tax relief for homeowners and commercial property owners, with a backdrop of a home in Commerce City that could soon be on the market. 

Joe Medina has lived in that ranch-style home for 43 years, but taking care of it has gotten to be too much, he said. He's ready to downsize, but fears losing his senior homestead exemption, which saves him $600 to $700 per year. 

A ballot measure, Proposition HH, which is tied to one of the measures Polis signed, would allow him to take his senior exemption to his next residence without having to wait 10 years, as is currently required for a new property. 

Senate Bill 303 would take a portion of the TABOR surplus, which pays for TABOR refunds, and divert it for at least 10 years to homeowners and commercial property owners for property tax relief.

The measure attempts to address skyrocketing property taxes, the result of substantial increases in property values, as well as the 2020-voter approved repeal of the Gallagher Amendment, which kept property taxes low.

But opponents of the measure, including the conservative nonprofit Advance Colorado Institute, announced Wednesday they added more than a dozen plaintiffs in a lawsuit challenging the bill adopted by legislative Democrats on the last day of the 2023 session.

Polis told reporters on Wednesday that SB 303 — and the ballot measure that goes with it — will help people save money on property taxes, using the state's record TABOR surplus, the result of a strong economy. 

The measure also has a "truth in taxation" policy, Polis said, one that caps property tax increases at the rate of inflation, although local jurisdictions could decide to ask voters to raise taxes above that limit. 

If Proposition HH passes, it would reduce property taxes by 11% over the next decade, Polis said. That will save homeowners on average about $1,078 over two years and $3,417 over five years. 

The measure also makes the senior homestead exemption portable for seniors who want to downsize to smaller homes or condos. That, in turn, will open up housing for growing families, the governor added.

Businesses, meanwhile, will save on average about $12,000 in property taxes over five years, Polis said.

Finally, under the measure, the surplus would help backfill lost property tax revenues for schools, hospital and fire districts and library districts. 

Without Proposition HH, Medina said, his property taxes would be $298 higher, and if he moved, he'd lose his senior homestead exemption, another $625.

This is "real relief for families all over the state," said Senate President Steve Fenberg, D-Boulder, one of the sponsors of SB 303. Homeowners would see immediate savings, business and commercial property owners' property taxes drop over the next decade, and critical services would be protected, he said.

This creates lasting change to property tax law, added Rep. Mike Weissman, D-Aurora, one of the bill's House sponsors. 

Weissman claimed that landlords who get property tax relief would pass those savings on to renters, but, when asked to provide evidence to back up this claim, he could not.

According to the left-leaning Bell Policy Center, 40% of Coloradans are renters, and they would have to give up a part of their TABOR refunds to provide that property tax relief to homeowners and businesses.

It would be mitigated in the first year only through a separate measure that Polis also signed on Wednesday. That separate measure, House Bill 1311, creates a one-time equalized TABOR refund, predicated on the passage of Proposition HH in November. 

But after 2024, renters would give up about 23% of their TABOR refunds for that property tax relief, beginning in 2025 and continuing for at least 10 years.

Bill sponsors and the governor insisted that renters would get a benefit through financial support of services provided by the entities that get the backfill to replace lost property tax revenues.

"If you rent, you are impacted by property taxes," Weissman said. "Obviously, the landlord's likely to pass it on to you."

The relief from SB 303 is just a bit more indirect, he said, adding, "This is a responsible alternative ... we've tried very hard to achieve balance."

As to the effect on renters, Polis said, "Everyone should look at their own financial situation." 

While Polis was signing the measures, Advance Colorado Institute announced a slate of new plaintiffs in their lawsuit challenging SB 303.

The lawsuit, filed in Denver District Court on May 15, challenges SB 303 on the constitution's single subject rule, which requires measures to cover only one topic. The lawsuit claims SB 303 has four subjects, and, hence, is unconstitutional.

During the legislative session, the bill drew opposition from organizations representing realtors, the state association of fire chiefs, the Special District Association, the Colorado Municipal League, the county assessors' association and numerous counties.

Representatives of some of those groups have now joined the lawsuit challenging the law.

Along with Advance Colorado, the plaintiffs included Englewood City Councilman Steven Ward, and the counties of Cheyenne, Douglas , El Paso, Elbert, Fremont, and Kit Carson. Logan, Mesa, Phillips, Prowers, Rio Blanco County and Washington, as well as the Highlands Ranch Metropolitan District, are now also a part of the lawsuit. Another 14 county commissioners and other elected officials, all in Republican-leaning counties, have also joined in as plaintiffs.

“Politicians need to play by the same rules as everyone else. Thankfully, these local governments — from every part of the state — have stepped up to defend our State Constitution. This ballot measure clearly has multiple subjects — and the ballot language is misleading and unclear,” said Advance Colorado Institute President Michael Fields.