Aurora aerial photo

 An aerial view of homes in Aurora

The journey of Senate Bill 293, whether you view it as an attempt for reductions on property taxes for multi-family units or an end run around a November ballot measure, got kind of strange on its first full day in the General Assembly.

Its first hearing with the Senate Finance Committee drew a small contingent of those normally viewed as  Democratic allies in opposition to the bill.

Senate Bill 293 was introduced late Wednesday and as of Thursday night is the 623rd and likely last bill introduced in the 2021 session.

What it does: according to sponsors Sens. Chris Hansen, a Denver Democrat and Bob Rankin, a Carbondale Republican, the bill divides  the current classifications of real property — commercial and residential — into six subsections. For residential, that would be single family homes as one group, multi-family units (apartments, condos, townhouses and duplexes, for example) into another.

As introduced, the bill subdivides commercial property classification into commercial non-residential, agricultural, renewable energy production and lodging.

The bill then reduces assessment rates that property taxes are based on by about 5% for multi-family units, which the sponsors say could result in savings for landlords and in turn rental savings for low-income tenants. It also would reduce assessment rates for agricultural, renewable energy and lodging property.

Hansen told the Finance Committee that the two-year temporary reduction in assessment rates gives the state a breather while the housing market recalibrates. In two years, Hansen said, there will be data that will help the legislature understand where the housing market is and reassess.

Rankin added that the bill provides stability for taxpayers for the next two years as well as for the entities that are funded by property taxes. That stability also extends, he explained, to seniors and veterans who participate in the homestead exemption program that allows them to claim a credit against a portion of their property taxes.

At the same time, a ballot measure, known as Initiative 27, seeks to reduce property taxes as well, except as a permanent tax cut. It also reduces the assessment rate on residential property by 10%.

But the fiscal note for SB 293 states that it would amend the underlying statutes that the initiative proposes to change, so that the assessment rate reductions in the initiative would apply only to lodging, rather than all nonresidential property, and only to multifamily residential property, rather than all residential property.

The competing measures caused some confusion for the Senate committee. Sen. Ray Scott, R-Grand Junction, referred to SB 293 as a “poison pill” against the ballot measure.

If SB 293 passes, Hansen explained, that’s a guaranteed rate reduction to homeowners. If, however, both SB 293 and the ballot measure fails, there’s no guarantee of any rate reduction.

Sen. Paul Lundeen, R-Monument, noted that Initiative 27 would cut property taxes by more than $1 billion over five years, while SB 293 would cut taxes by only a couple of hundred million dollars over two years.

To that, Hansen said there are rising assessed values in homes in most of the state, and that SB 293 would provide immediate reductions in those assessment rates, but voters could choose to make additional reductions through the ballot measure.

One of the big questions, as verbalized by Lundeen, is why people would chose not to vote for a ballot measure that would give them bigger tax breaks.

It’s because “people are about their schools, their fire districts, their libraries, their water districts...they clearly made that choice last fall with the Gallagher Amendment repeal,” said Hansen. It was a powerful signal that they want to fund those services in a stable way, he added.

As to why the different subclasses were created, Hansen said that was done to support the economic rebound, such as for the tourism economy. Ag and renewables, such as solar energy, are being treated the same as they work in concert in many parts of the state, he explained.

Witnesses testifying against the bill included former Democratic state representative and senator and now Boulder County Treasurer Paul Weissmann* and Carol Hedges of the Colorado Fiscal Institute.

It was the section on deferrals, also known as the homestead exemption, that gave Weissmann pause. He noted that in some years Boulder County has 98% of the deferrals statewide.

He has one person whose only job for three months of the year is working on senior exemptions. He would have to add people to his office should SB 293 pass, and while he could do it, he raised the specter that small rural counties might struggle with that.

“I understand the pressure you are under to help taxpayers,” Weissmann said. “But I ask you to pause on this one,” stating that he thought the bill wasn’t doable and that it could have ramifications beyond the concerns he raised.

Hedges came with a laundry list of objections. She conceded the legislature had the authority to do what it’s doing, but the bill, coming at the same time as the ballot measure, will confuse voters, which she called a lack of transparency.

She also indicated that the permanent reduction in the assessment rate for lodging wasn’t needed, which would be the result if both SB 293 and the ballot measure passed.

“They are not the folks in need of tax breaks,” Hedges said. And third, the permanent tax cut will mean real hardship for Colorado communities.

The property tax system needs an overhaul, Hedges said, but this bill, which impacts permanent tax cuts and creates voter confusion, is not the answer moving forward.

The bill also drew opposition from EMS providers. Chris Howes, representing the EMS Association of Colorado, pleaded with lawmakers to amend the legislation to take EMS, health service and fire districts out of the bill.

“We fear this bill will send us backward,” he said. “We can’t afford just a few years of lower rates.”

And Scott Wasserman, president of the Bell Policy Center, called his position “angst-ridden neutrality ... we see this as the better of two very bad options.”

A temporary change is better than a permanent one that will hurt communities, Wasserman said, and then launched into complaints about the citizen initiative process.

Voters will need an education campaign to understand what’s going on and they will be confused, Wasserman added. He said breaking the classifications into subclasses is a good beginning but much more needs to be done.

In support of SB 293, Dan Gibbs, executive director of the Department of Natural Resources, wore his wildland firefighter hat. He said the bill balances the interests of taxpayers by providing homeowners with tax relief while at the same time providing stability for service districts and local governments.

Brett Miles of the Colorado Association of School Executives also is in favor. He told the committee that SB 293 would provide more protection to school district budgets.

Initiative 27 could result in long-term devastating cuts, and “we certainly don’t want to take a couple of steps forward this year just to take a step backwards,” he said.

The bill passed on a party-line 4-3 vote and an hour later was reviewed by the Senate Appropriations Committee, where it passed on a 5-2 vote (with Rankin in support). It now awaits action from the full Senate.

Correction: Rep. Mike Weissman pointed out that Paul Weissmann's name is spelled with two "Ns". As Weissman, the current rep says, "he has two, I have one. He's twice the Weissman I am." (yuk yuk yuk)

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