Last-minute tax bill passed by the Colorado General Assembly earlier this year would likely reduce the impact of a billion dollar tax cut on the 2021 ballot by more than 90%, according to a Newsline analysis of state property valuation data.
Initiative 27, backed by conservative group Colorado Rising State Action, was officially certified for voting in 2021 last week after supporters submitted more than the required 124,632 valid signatures to the State Department. If the voters approve, the measure aims to lower property tax rates for residential property from 7.15% to 6.5% and for non-residential property from 29% to 26.4%.
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But laws passed by Democrats and some Republicans in the state legislature undermined voting by changing what types of property their tariff cuts would apply to. Senate Act 21-293, signed by Governor Jared Polis in June, amends Colorado’s tax law so that the permanent cuts made by Initiative 27 only apply to apartment buildings and commercial real estate, while only temporarily lowering prices on other real estate classes.
As a result, a tax cut originally estimated by state analysts would reduce local government and school district revenues by more than $ 1.2 billion across the country, if approved, would cause only a fraction of that revenue impact.
Impartial analysts on the State Legislative Council have not yet released an updated financial statement for Initiative 27 following the adoption of SB-293. However, based on 2020 valuation data released by the state’s Property Taxes Department, the annual impact of the measure’s cuts on apartment building and housing valuation rates would be around $ 70 million across the country. That number could increase somewhat depending on future growth in property values.
Despite yelling about the passing of SB-293, Initiative 27 supporters have made little reference in recent weeks to the impact of the legislation on their electoral work. On the campaign website and in media appearances, supporters continued to present the measure in such a way that it would bring large parts of “families and small businesses” a “9% lower property tax”.
My concern about this move is that it will fuel further inequalities.
– Carol Hedges, executive director of the Colorado Fiscal Institute
Colorado Rising State Action did not respond to requests for comment. As a 501 (c) (4), “dark money” nonprofit, the group, which has supported a number of tax-cutting and anti-government voting measures in recent years, is under no obligation to disclose its donors.
Michael Fields, the group’s executive director, previously said Colorado Rising State Action would attempt to “challenge” SB-293, but state court records show that no lawsuit has been filed under the law.
Carol Hedges, executive director of the left-wing Colorado Fiscal Institute, said in an interview that if Initiative 27 is approved by voters, a conservative-backed legal challenge is possible.
“I think the law is not on their side – I think the legislature retains authority to do what it did on (SB-) 293,” Hedges said. “But whether the usual suspects decide whether to sue or not, they can be good. They tend to be quite contentious. “
Critics say action will worsen inequality
In its current form, Initiative 27 would hit some Colorado communities harder than others, especially communities with high concentrations of homes and hotels. Almost a third of the potential loss of revenue would be in the city and county of Denver, while mountain resort communities in Pitkin, Routt, and Eagle counties would also experience relatively large revenue losses.
Property taxes are levied by local governments, school districts, and special jurisdictions such as fire protection districts to fund public services and are calculated based on a biennial appraisal by district officials.
Although the revenue impact of Initiative 27 will be much less than its originally proposed backers, critics of the measure say such blanket tax cuts exacerbate inequality by making most of its benefits available to the wealthiest property owners.
“My concern with this move is that it will fuel more inequalities,” said Hedges.
“It has been recognized that property taxes are currently a challenge for some people,” she added. “But the greatest benefit from these cuts will go to the people who need them least right now. And then you multiply that by the dramatic loss of services to some people in the community and the heightening of regional inequalities – it just doesn’t seem to make much sense to me. “