Legislators and Local Leaders Clash Over Controversial Measure
When it comes to the ballot issues facing voters this November, the controversial Proposition HH (titled Reduce Property Taxes and Retain State Revenue) has commanded the main debate stage.
Many state leaders have favored this Democratic-sponsored legislative plan, while local entities have come out in force in opposition. In the last two weeks, leaders from a slew of local entities, and even the local WP Chamber of Commerce, have publicly opposed the measure.
The main issue of contention deals with addressing the impacts of potential, unprecedented property tax hikes.
During the 2023 legislative session, state lawmakers on both sides of the political aisle tried to come up with ways to lessen the blow rising values will have on state property owners. One bill to address the unprecedented rise in property valuations was signed into law last summer, while Proposition HH will be decided by the voters on Nov. 7.
Republican lawmakers across the state have applauded Senate Bill 23-108 that allows local governments and taxing authorities to temporarily lower property tax rates during times when valuations are high. Democratic lawmakers then passed Senate Bill 23-303 that officially put another way to alleviate rising property taxes on the ballot in the form of Proposition HH.
While the passage of Proposition HH would not lower property tax rates from what people are currently paying, it would limit the property tax increase caused by rising valuations for at least the next 10 years. However, to make up for the money not received by local governments when property valuations rise, the bill would decrease TABOR (Taxpayer Bill of Rights) refunds for the next several years.
The money withheld from the residents’ TABOR refunds would then go back to entities that would have received more property tax money if Proposition HH didn’t pass. The funds withheld from TABOR refunds would go back to local governments, up to $20 million for a rental assistance fund, and school districts.
Last week, news sources out of Denver held a special debate that explored both sides of the debate. Colorado Governor Jared Polis and economist Arthur Laffer spoke on the benefits of voting “yes,” and Republican State Representative Rose Pugliese and Michael Fields urged residents to vote “no.”
Arguments Supporting Proposition HH
Overall, Governor Polis focused on the fact that the ballot measure offers a substantial tax cut to state residents. He said that without its passage, property tax rates can increase as high as 40 percent in the future.
He pointed out that the amount people will save if Prop. HH passes will be between $9 billion and $13 billion over the next 10 years and the TABOR refund reductions will only equal $2 billion to $3 billion. He said that TABOR refunds are only given out in years where there is a surplus of state tax funds which has been only five of the last 10 years.
“The good thing about a tax cut is that it occurs every year even in a recession when there is no TABOR surplus they get that tax cut,” Polis explained. “That is the beauty and importance of this. People need the money even more when times are tough and those are the years that don’t have surpluses. When there is no refund to go out, you still get that tax cut.”
Economist Arthur Laffer said that Prop. HH gives residents property tax relief whereas TABOR does not. “HH would cut property tax rates, so if the valuation is higher, you will still get a lower percentage on that,” Laffer explained. “With lower property tax rates, those benefits will automatically be passed on to renters. Renters will have lower rent because of the property tax rate reduction.”
Local Leaders Urge Residents to Vote “No” on Prop HH
These favorable pro-HH sentiments are certainly not shared by local leaders.
With the Nov. election looming, the Teller County commissioners and other local governments and organizations spoke out against the ballot measure. The county commissioners have said that the passage of SB 23-108 allows local leaders to temporarily lower tax rates which will end up being more tax relief than what is proposed in Proposition HH.
The commissioners emphasized in a resolution that property taxes are collected and spent on a local level, so relief will best come at the local level and not from the state. Other local organizations and municipalities have also reiterated the negative aspects of the ballot measure.
Green Mountain Falls Mayor Todd Dixon has spoken out against the measure arguing that the passage of Prop. HH will make the town of Green Mountain Falls’ 2024 budget “extremely lean.” “It sounds like the ‘reduced property taxes…’ statement is really just a reduction in future increases,” Dixon said in a letter sent out to residents. “That’s not really a reduction in your current property taxes.”
Dixon mentioned a Common Sense Institute Study that states that renters in the state are the biggest losers if Prop. HH passes. The study also claims households could lose over $5,000 in TABOR refunds over the next 10 years if the measure passes.
He also said that Prop. HH removes local control. “Keep in mind that the voters in our town have already ‘de-Bruced’ (waived the TABOR caps) and waived the property tax revenue limit of 5.5%,” Dixon continued. “In subsection (4), it allows a local government to now increase mill levies without a vote of the people. As of the last legislative session, a local government already has the authority to lower the mill levy if needed.”
The Greater Woodland Park Chamber of Commerce Board also sent out a letter stating their opposition to the ballot measure. The letter stated that SB 23-108 eliminates the need for Prop. HH as local governments can now provide temporarily tax relief.
“The language of Prop HH is misleading,” the chamber board stated in the letter. “The measure offers very small relief on the front end while paying heavily for a property owner down the road, i.e. If HH is actually a tax reduction as billed, how does a tax reduction make more money for schools?”
The board reiterated concerns that the passage of Prop. HH will be equivalent to a multi-billion dollar tax increase as it slowly takes away TABOR refunds over the next decade. “Almost every local government in Colorado is against this bill – it further erodes local control,” the board’s letter stated. The city of Cripple Creek also recently joined the fight against Proposition HH.