Denver, Colorado 2021-10-18 08:45:47 –
Denver — Colorado voters will be asked in November whether to reduce the tax valuation rate for residential and commercial real estate. However, the newly passed state law significantly complicates ballot issues.
However, if Proposal 120 is passed, the creator of the question has promised to sue the state, further complicating the action.
How the abolition of Gallagher Amendment set the stage
Last year, Colorado voters said Gallagher Amendment will be abolished.
Forty years ago, the law intended to keep property tax rates lower than those paid by non-residential real estate owners such as businesses.
The state’s overall property tax is split, with residential real estate paying 45% of the share and non-residential real estate paying 55% of the share.
When the Gallagher Amendment was enacted, the home valuation rate was 21%. As real estate prices rose and new homes were built, valuations were lowered to maintain the same 45/55 ratio mandated by Gallagher.
Over the years, these ratings have declined to 7.15%.
However, with the abolition of the amendment, as house prices rose, current interest rates remained unchanged, rather than falling again this year. However, home valuation rates have risen significantly over the past year, for owners to pay more taxes.
Proposal 120 asks voters whether to permanently reduce the valuation of residential real estate to 6.5% and the valuation of commercial real estate to 26.4%.
It also allows lawmakers to hold $ 25 million annually beyond state constitutional spending limits until 2027, but only if that money is used to exempt homes.
These exemptions allow veterans and seniors with service-related disabilities to exempt 50% of the first $ 200,000 of residential real estate from tax. In 2020, they saved $ 584 on average in these groups.
Colorado lawmakers introduced workarounds on the final day of the 2021 legislative session, while supporters of Proposal 120 gathered signatures and went through the titleboard process to ask questions about the November ballot. , Discussed and passed.
Senate Bill 21-293 We will temporarily reduce the housing evaluation rate to 6.8% for single-family homes and 6.95% for single-family homes. It will also temporarily reduce the valuation rate of commercial real estate for agricultural or renewable energy production to 26.4%.
This decline will continue for the next two tax years to provide financial relief to families and some businesses attempting to recover from the COVID pandemic.
“What we were trying to do on a bipartisan basis in Senate Bill 293 was to provide Colorado with immediate and targeted property tax relief,” said one of the bill’s main sponsors. Senator D-Denver Chris Hansen said. “We are in a highly regarded situation right now.”
The new state law also further divides the real estate appraisal rate category. Instead of everything being grouped into residential or commercial valuation categories, the new law creates six subcategories.
- Apartment houses (apartments, town homes, condominiums, etc.)
- Detached house
- Commercial non-residential
- Renewable energy production
as a result, Independent Blue Book Analysis We have decided that Proposal 120 applies to accommodations and apartments only if they pass, regardless of how they read the ballot questions.
The ballot language has to go through a very long and complex process and cannot be changed to accommodate changes.
“At that point, it was the title and the proposal in front of the title board. We are working in the state legislature to carefully manage property taxes,” Hansen said.
However, supporters of Proposal 120 have promised to fight back and will sue the state to apply as intended if the ballot questions are successful.
“This is completely unprecedented in Colorado,” said Michael Fields, executive director of Colorado Rising Action. “They are trying to undermine the vote before it takes place. They don’t trust voters enough to fully weight something in front of them. “
Fields believed that the new law would undermine the process of civil initiative and called the parliamentary move an attempt to kneel the Ballot initiative.
If Proposal 120 is applied as intended, there will be a $ 1 billion tax cut across the state.
Proponents claim that there are precedents in the states to which the recently passed law applies, so Fields believes he has a good shot of winning the court battle.
“It definitely gets complicated because I don’t know what will happen wherever I try to get support,” Fields said. “If you pass this, it’s definitely for accommodation and apartments. The question is whether you’ll get a tax cut of over $ 1 billion.”
Discussion of Proposal 120
If the ballot questions pass and the legal objection is successful, the tax cut will be deeper and the tax rate change will be permanent, rather than the temporary relief provided by SB21-293.
“Overall, we knew this was coming because you’re talking about double-digit increases in your property tax as well as your property value, so we’re adjusting these for growth. I think it really should be slowed down, “Fields said.
He disagrees with SB21-293’s intentions, but Fields proves that the new law allows property tax rates to be too high, confirming that people deserve some relief. Is called.
He admits ballot questions about starting a conversation about helping real estate owners.
Even if the proceedings are unsuccessful, accommodation and housing complex will be even more reassuring if Proposal 120 is passed.
“Many people are unaware that they are paying property taxes because they are built into their rent payments. But when property taxes go up, rent payments go up and when they go down. “It’s going down,” said Drew Hamrick, an advisory lawyer for the Colorado Apartment Association. “Reducing housing tax is a good thing.”
Hamrick believes the proceedings are likely to succeed, but says that even if they don’t, many renters in the state can help save some money.
Discussion on Proposal 120
Opponents of Proposal 120, such as Hansen, say that the original form of the ballot would have a major impact on special districts and schools.
“For me, it’s a fundamental flaw in what the 120 people in the proposal have raised, and at worst it undermined all these services,” Hansen said.
He describes the ballot question as a blunt instrument that has a long-term negative impact on the state.
Others, such as Senator Bob Rankin and R-Carbondale, have said the measure would have a disproportionate impact on rural areas that depend on these property taxes for almost their entire budget. increase.
Property tax cuts could work in the front range, which is experiencing spikes in real estate prices, but Rankin says rural areas will suffer the most.
“It doesn’t make any sense for front-range people to vote for a voting initiative that cuts property taxes and cuts the budget of small fire departments by 20%,” Rankin said.
Instead, Rankin argues that the county ministers throughout the state have the ability to reduce factory taxes as needed, and a universal strategy is useless to the state. He believes that it is up to the individual region to control their taxes.
Fear and uncertainty
Hansen is confident that SB21-293 will survive legal issues, but others are worried.
The head of the small fire department is worried that the proceedings could be successful, so he is calling on people to vote against Proposal 120.
The Canyon-to-Canyon Fire Protection Area covers 52 square miles in Jefferson County and operates with an annual budget of $ 1.5 million.
The budget is responsible for providing all the needs of 5 fire departments, 15 emergency vehicles, and a small number of paid staff.
However, in the last 30 years, the volume of calls in the area has doubled and the equipment is rapidly aging.
“Most of our budget, more than 90%, comes from our housing tax space. There is little commercial development in our area,” said Captain Dan Hatrestad. ..
If Proposal 120 is passed and the proceedings are successful, the fire department will significantly reduce its annual budget. Hatlestad states that it will discontinue some services.
A nearby fire department is addressing similar restrictions. Indian Hills Fire and Rescue says it operates with an annual budget of $ 425,000 and is doing everything possible, such as rebuilding the vehicle’s engine, rather than buying new equipment.
However, the fire chief says there are so many places to cut before the response time is slow.
“When it comes to emergency services, people really need to ask themselves. Especially in these rural communities that were exempt from the factory tax on their tax basis, are they willing to skip it? “?” Said Damian Diffeo of Golden Gate Fire, which covers 50 square miles. “When you’re hanging upside down in a car on the side of the road in a snowstorm, that’s not what you think.”
So they are asking people to vote against Proposal 120.
The Colorado Education Society is also opposed to this measure because it is concerned about what this means for schools.
CEA President Amie Baca-Oehlert said the school is already in serious funding shortage and the ballot questions only make things worse.
“We can’t have another thing that has a negative impact on public school funding,” says Baca-Oehlert.
The state is supposed to make up for the loss of local school funding, but Baca-Oehlert is confident that the state has the money to do it because of the negative factors currently present in schools. not.
She is worried that the ballot questions may have a disproportionate impact, especially on low-income areas.
“Our students are of better value, and when we vote in the ballot box, we need to vote for our students as voters,” she said.
Fields opposes this, saying that local and state governments have more money than ever with federal pandemic support, so it’s time to cut property taxes.
“Even if this reduction happens, I’m pretty sure that the state-wide government has more money,” he said.
Proposal 120 looks relatively easy on the November ballot, but new state laws and potential proceedings have greatly complicated the process.
But in the end, it’s up to voters to decide if they are willing to take the risk by passing it on, before finding out who it really applies to.
Prop. 120 aims to cut property taxes, but it’s complicated Source link Prop. 120 aims to cut property taxes, but it’s complicated