Colorado residents to vote on one-of-a-kind homeowner tax relief plan
Fox News
Colorado residents are deciding whether to siphon off a state tax refund that’s unique in the U.S. to help homeowners offset hikes in property taxes after years of rising home prices.
If passed in the election Tuesday, the proposition would lessen property tax increases for homeowners over the next decade in return for decreasing a state tax refund called the Taxpayer Bill of Rights or TABOR.
TABOR caps Colorado’s tax revenue and requires the surplus to be redistributed to residents. Last year, TABOR provided $750 to each taxpayer.
Under the measure, property taxes won’t drop below previous levels, but the expected future increases in bills would be dampened.
The owner of a $500,000 home would pay anywhere from $186 to $276 less in property taxes this year than they would if the ballot measure didn’t pass, depending on local tax rates, according to estimates by legislative analysts.
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In exchange, after an initial increase in the taxpayer refund for everyone this year, the refund checks will start to decrease and possibly disappear for people of all income levels over the next decade, depending on how much revenue the state takes in, according to legislative analysts.
And renters will get those smaller taxpayer refunds without getting any of the direct relief that homeowners do.
The measure will allow the state to keep 1% more money each year than is allowed under TABOR. The money will be used to reimburse local governments for some of the money they are losing due property tax bills that won’t increase as much as they normally would and fund schools. Up to $20 million of the extra money would also be set aside for rental assistance.
Proponents of Proposition HH say it’s the best way to prevent devastating property tax bill increases and is targeted at helping older residents and working families. Opponents, including Republican state lawmakers and conservative groups, argue the measure could ultimately cost taxpayers more than they save on property tax bills.
The owners of primary residences will see greater reductions than the owners of second homes and rental properties. The complicated measure would also allow residents 65 and older to take an existing property tax break with them if they decide to downsize to another home. Currently, they only get that break if they have lived in a home for 10 years.
This year taxpayers will each get an estimated $898 — $148 more than last year — in a flat taxpayer refund. But then starting in 2024 the refund will revert to the traditional method of being determined by income and start to decline below even what the old rules would dictate.
People with an adjusted gross income of $52,000 or less are projected to get a $326 refund next year, $31 less than under current law. Those with an income of $289,001 or more are expected to get checks for $1,028, $100 less.
Put on the ballot by the Democratic-led Legislature, the property tax measure slows the increase of property tax bills over the next decade in two ways. Proposition HH lowers the statewide assessment rate that is used to calculate how much people have to pay to their local governments based on the value of their homes. It also exempts a portion of a home’s value from being taxed.
The measure lowers the statewide assessment rate slightly from 6.765% to 6.7. The rate is set to increase to 7.15% in 2025 but would stay at 6.7% under the measure. It also exempts $50,000 of the value of the home from being taxed in 2023 and $40,000 in 2024. It would also limit the growth in property tax revenue for local governments.
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Backers of the measure say the owner of a $723,000 home, the median sale price for the last assessment period, would save an average of $685 a year in property taxes over the next decade the measure is in effect. That’s based on how they believe local governments will respond to the limit.
In the latest tax assessments this year, residential property values increased by between 35% and 45% in the Denver area and up to 60% in parts of the mountains. So homeowners will still get bigger property tax bills for this year compared to last year, but they will be lower than they would have been without the measure.
Voters are also deciding a second tax measure that would permit millions more dollars from a tobacco tax to be spent on the state’s new universal preschool program.
It deals with taxes on cigarettes and tobacco products approved by voters in 2020. Analysts underestimated how much it would take in so, under the Taxpayer’s Bill of Rights, voters must be asked if the state can keep the extra $23.65 million the taxes brought in in the first year, including interest, or whether it should be refunded.
https://www.foxnews.com/politics/colorado-residents-considers-one-kind-homeowner-tax-relief-plan