Dear members of the Commission on Property Tax:
The commission was tasked with providing property tax relief options before the temporary tax adjustments expire at the end of 2024.
The obvious answer is to restore inflation and growth adjustable property tax revenue caps where they’ve been forfeited in prior elections. Good news – that’s already in the Taxpayer’s Bill of Rights (TABOR) but it needs to be reinforced!
If that doesn’t happen, there will be a hard property tax cap on the 2024 ballot. That’s been clearly stated by two of the proponents of property tax caps if there was insufficient actions from the commission.
Taxpayers want tax caps whether they are hard or inflation adjustable. Taxpayers like me understand that government growth should be relative to the size of the local economy. That is rightly answered in the existing property tax limit contained in TABOR, paragraph 7c, which allows for such growth.
Having sat through all the commission meetings, there’s a few moments I want to highlight.
Bring back the tax caps
In this three minute video, the county assessor from Santa Clara, California described where that state sits now under the Proposition 13 property tax caps. His points illustrate why our Colorado TABOR is ideal. The assessor points out that local California governments didn’t appropriately reduce property taxes in 1978, even referring to property taxes as “money machines.” So, California voters used their right to petition to place a hard tax cap on the ballot, which became Proposition 13.
The criticism about California’s property tax cap has some merit because it doesn’t include an inflationary factor. The good news for Colorado is that our TABOR addresses that concern by allowing an inflationary clause. When the Consumer Price Index (CPI) jumps to high inflation, like 5 or 8%, TABOR allows governments to increase revenue relative to the CPI and even adds local growth (construction) to that. That’s called sustainable government.
We know that local Colorado governments have acted similarly to California with the recent property valuation explosion. While the Colorado Special Districts Association (SDA) may try to reassure taxpayers that automatic protections exist, that’s largely not available anymore because voters unwittingly waived property tax limits, both the TABOR paragraph 7c limit and the 5.5% Annual Property Tax Revenue Cap.
When Commissioner Chris Richardson asked the SDA counsel in testimony how many local voters have waived the tax caps, her off the cuff answer was 70%. When Richardson asked how many local governments lowered their mill levy rate in response to the valuation spike, the answer was “not many.”
Leaving government tax revenue caps up to local elected officials without an automatic taxpayer guard dog on duty doesn’t work. A typical property owner isn’t likely to show up at a budget cycle hearing which happens to also set the mill levy. The average person doesn’t show up at the 9 am weekday public hearing about a property tax increase because they’re at work.
Here’s how such a situation works out in a real life.
Lakewood City Councilor Mary Janssen, in a minority position, forcibly submitted a motion to lower Lakewood’s mill levy in October 2023. The city was estimating a 25% revenue increase. Janssen’s motion would have lowered the mill levy to result in a single-digit revenue increase. Approving a double-digit increase shouldn’t have even been a question since our Lakewood city charter section 12.12 prescribes no more than a 7% increase in property tax revenue.
Yet, somehow the city’s finance department and legal counsel interpret that as a limit on increasing the mill levy rate. How can that be misread? The council majority pushed aside Janssen’s motion for meaningful tax relief and replaced it with roughly a 12% increase on the back of struggling taxpayers. Quite ironic as “affordable housing” is supposed to be a city priority.
Should a taxpayer have to fight for tax caps with each of the several different governments every assessment period? No, we shouldn’t. We need a 24/7 taxpayer watchdog – that’s TABOR.
Taxpayers should be the focus
While there have been some pro-taxpayer suggestions from other commission members, I want to commend Commissioner Chris Richardson. He laid out reasonable taxpayer protection options for discussion at the February 9th meeting, as follows: Apply the revenue restrictions already in the Taxpayer’s Bill of Rights (TABOR) to taxing entities to specifically limit property tax collection increases to inflation plus population growth. The impact of this would take two forms depending on previous voter actions:
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- If voters in a taxing district had previously voted to waive the TABOR revenue cap, only the local property tax mill levy collections would be limited by the inflation plus growth formula found in TABOR, but other revenues are unaffected.
- If voters have not waivered the TABOR revenue cap, then the local property tax mill levy would be reduced in order to remain under the cap.
- Eliminate current waivers to the 5.5% annual increase restriction provided by the “Annual Levy Law”) to dampen spikes during periods of high inflation or rapidly rising property values.
- Allow local votes to raise these caps so long as the ballot language specifies the authority for the increase will expire (sunset) within a period that doesn’t exceed ten years. (Does not apply votes for Bonded Indebtedness – which may not exceed 30 year pay-off. This would allow the most beneficial loan rates for larger projects).
- Lock the current Residential assessment rate (6.7%) – while requiring downward mill adjustment to satisfy the caps in 1 &2 above.
- Reduce the Assessment rates for Non-residential properties (other than Oil & Gas/Mineral Extraction) (now 24-27%) by 1% annually until parity with Residential is reached (No more than 2:1 Non-Residential:Residential).
- Continue Non-Residential reduction to parity until all non-res classes are equal, then eliminate all other classes other than Agriculture, and O&G/Mineral.
Richardson’s collection of proposals incorporate meaningful tax relief. Shouldn’t that be the commission’s goal? Please give his proposal serious inspection before you make your decisions.
The commission seems to be top lining measures that would shift the property tax payments from one or two payments to twelve payments, or smoothing of payments, which doesn’t lower the bill but rather averages it out. At best these would be considered ornamental and that might be a stretch with little benefit but definitely have administrative challenges. The commission needs to shift this conversation to local caps.
The commission has the option to restore property tax caps. They could eliminate the waivers from the 5.5% Annual Levy Law and amend that section to be adjusted by CPI and local growth, plus – add home rule jurisdictions which aren’t included now.
November is going to be here fast. Hard caps or inflation adjustable caps – which will it be?
Natalie Menten has been an activist in Jefferson County for over 20 years focusing on state and local public policy. She is a former elected RTD boardmember and sits on the board of directors for the Taxpayer’s Bill of Rights Foundation. Contact Natalie at Coloradoengaged@gmail.com.
