As part of their mad, stagflation-fueled scramble to buy taxpayer votes with their own money, Colorado Democrats (and the occasional Republican) have added property taxes into the mix.
Democrats have realized, belatedly, that when incomes consistently fail to keep up with rising property values, then incomes will fail to keep up with rising property taxes, as well.
And make no mistake, those valuations have risen far in excess of incomes. According to the latest ATTOM Home Affordability Report, the average income rose 6.0% in the 11 counties they surveyed over the last year. The median home price averaged a 17.7% increase. From the second quarter of 2020 through second quarter 2021, those numbers were 6.6% and 18.7%. At some point, not only does buying a home become unrealistically expensive, so does hanging onto the one you have.
This was less of an issue for the average taxpayers before the Gallagher Amendment was repealed. The amendment tended to keep personal property taxes in check, leaving businesses to bear the brunt of increasing valuations.
But liberals last year pushed through a repeal of that measure, so that personal property taxes statewide no longer needed to produce the same amount of revenue in proportion to business property taxes. Once that happened, as valuations rose, personal property mill levies no longer need to be adjusted downward, which means that homeowners have begun to see the real costs of skyrocketing valuations.
Now, in an election year, our ‘affordability’ governor and his allies in the legislature have decided some short-term fixes are in order. Currently, their three-part plan (which is subject to amendment in the waning days of the legislative session) includes one part that merely robs from future refunds, and two parts that are at least a partial reve
rsal of policies enacted over the last two years. (Too bad nobody warned them.)
First, they want to move about $50 per person of next year’s Taxpayer’s Bill of Rights (TABOR) refund forward to late this summer. This doesn’t actually reduce the amount of money homeowners are turning over to the state, it merely returns a small portion of it to them sooner.
Second, they want to write a $200 million check to homeowners from the general fund. While this wouldn’t directly come out of TABOR refunds, it may as well, since it simply acts to reduce the overall surplus.
Finally, they will allow large, Front Range counties, to keep 60% of their revenue increases, while smaller counties will get between 90%-100% of their revenue increases.
Ironically, Dennis Gallagher himself said that if he were writing his Amendment today, he would have considered a three-tier system, distinguishing among large, medium, and small counties. But instead of adopt or even consider a change like that, Democrats (and again, some Republicans) pushed for a wholesale repeal.
Two other pieces of the proposed bill would let homeowners defer, but not avoid, 4% of their property tax bill and would temporarily cut $15,000 of assessed value from residential property values. I supposed it’s nice not to have to pay this year’s taxes this year, but none of this provides either permanent relief, or the sort of reliable and predictable tax structure that both businesses and individuals want before investing.
In addition, as part of separate legislation, Governor Polis and his party are proposing a temporary $100 million refundable tax credit aimed at senior citizens. If only they hadn’t dialed back the Senior Homestead exemption to $0 back in 2020.
Nobody has any idea what the economy, interest rates, inflation, or real estate prices are going to do over the next few years. There may be some better guesses than others, and no doubt some people will get it right while others get it wrong. But nobody has a crystal ball.
At best, legislative Democrats and Governor Polis will guess right, and their temporary relief will help exactly the people now being hurt by their policies of restricting building, driving up property values, and creating an increasingly two-tier economy.
But it’s far more likely that, two years from now, when this temporary help expires, they’ll be revisiting this whole issues, and scrambling again to figure out how to help the very same taxpayers they’re pretending to help now.
Joshua Sharf is a senior fellow in fiscal policy at the Independence Institute, a free market think tank in Denver.
