General Assembly convenes for special session called by Polis

Just days after voters delivered a stinging defeat of Proposition HH, a Democratic-backed proposal from the General Assembly and Governor Jared Polis, the governor called lawmakers back to the State Capitol to come up with property tax relief that wouldn’t touch TABOR refunds.

That didn’t mean that TABOR refunds weren’t there for the grabbing for other things.

The General Assembly convened for four days, beginning last Friday, to review 14 bills on property tax relief and a laundry list of other issues the governor included in his special session call.

That included:

Approval for the state to participate in a federal summer lunch program, which had a deadline of Jan. 1 for State authorization;

Rental assistance;

Expansion of the Earned Income Tax Credit for low- and moderate-income families;

Creating a property tax task force that would look at long-term solutions on skyrocketing property taxes;

Equalized TABOR refunds;

Expanding a loan program for property taxes administered by the Treasury Department.

With the exception of the summer lunch program and the task force, all of the rest of the measures approved in the special session apply to the 2023 tax year only.

The main property tax relief bill was authored by three of the Democratic lawmakers who came up with Proposition HH: Senate President Steve Fenberg, Senator Chris Hansen of Denver, and Representative Chris deGruy Kennedy of Lakewood. Joining them in sponsoring the bill: House Speaker Julie McCluskie of Dillon.

But Senate Bill 1 got no less argument from Republicans in the special session than the bill that produced Proposition HH in the 2023 legislative session.

Senate Bill 1 raises the value exemption for residential single- and multi-family properties from its current level of $15,000 to $55,000. It also reduces the assessment rate that will be charged for 2023 property taxes from 6.765 percent to 6.7 percent.

To pay for those property tax cuts, the bill allows the state to use $200 million in general fund dollars set aside in 2022 legislation.

Of the $200 million, $146 million go to schools, fire and ambulance districts and rural hospitals, to cover any loss of revenue resulting from the property tax cuts.

What’s left, about $54 million, will go to counties that did not see tax revenue growth of more than 15 percent over the last two years, depending on county size. Smaller counties, those with less than 300,000 in population, would be eligible for more of the revenue.

Left out of the bill: property tax relief for commercial and agriculture properties. That means even if a home on a farm goes up in value (and results in higher property taxes), the farm won’t get a property tax break, according to Sen. Byron Pelton, R-Sterling.

Senate Bill 1 did not include portability of senior or veteran homestead property tax exemptions, as was included in Proposition HH.

Out of the 14 bills introduced in the special session, six came from Republicans; a seventh, on the senior/veterans property tax exemption, was bipartisan. Democrats killed all seven within the first few hours of the special session on Friday.

Among the bills that failed: A Pelton-backed measure, along with House Minority Leader Mike Lynch of Wellington, that would both reduce property taxes through changes in valuation and assessment rates and set up a task force on long-term property tax solutions. House Bill 23B-1005 would have tapped part of the State’s $2.3 billion reserve to pay for those property tax cuts.

The biggest fight during the special session was over Senate Bill 1.

Both parties drew hard lines in the sand, with Democrats insisting on smaller property tax relief, given the amount of money available to pay for it. Republicans pointed out the state’s statutory reserve had more than enough to cover more property tax relief that would have included commercial and agricultural businesses.

Democrats in both the House and Senate held off attempts to change the measure, although they had a few fixes of their own. Rural hospitals and ambulance/EMS services were initially left out of the entities eligible for revenue, and that drew complaints from the Colorado Hospital Association that it could doom those hospitals to failure. 

Republicans claimed the equalized TABOR refund is a form of wealth distribution, in that everyone, regardless of income, would get the same 2023 refund, payable in the 2024 tax filings. Under Senate Bill 3, the refund is projected to be $847 for individual tax filers and $1,694 for joint filers. 

House Bill 1001, on rental assistance, adds $30 million to an existing program within the Department of Local Affairs. Renters can receive money for current or back rent, or up to two months of future rent; money for late fees or other costs related to an eviction.

The bill on the earned income tax credit, which relies on the TABOR surplus to pay for it, doubles the amount of the credit for 2023 from 25 percent to 50 percent.

While Pelton’s bill on the task force didn’t make it out of a Senate committee, he was part of major negotiations on the task force bill that did make it. After House amendments, House Bill 1003 was an 18-member task force with 14 of the 18 members appointed by the Governor, Senate president or House speaker, virtually ensuring little to no Republican or rural representation, according to Republicans. 

That did not fly in the Senate, where Sen. Kyle Mullica, D-Thornton, wanted to see better rural representation. He worked with lawmakers, including Pelton, throughout much of Sunday, trying to find a compromise that would result in bipartisan sponsorship.

That didn’t happen, but Mullica did win approval to substantially modify the membership. The 19-member group would have just four members from the legislature, with equal appointments from the majority and minority party. The governor would have one appointment, for a county assessor. The rest of the group would be made up of the state property tax administrator, representatives of municipal and county governments (including a commissioner from the Eastern Plains, to be appointed by Republicans), school finance experts, a special district association representative, a fire chief member, and others representing business and low-income advocates.

Republicans said the bill still had aspects they couldn’t support, such as requiring the group to study impacts on housing affordability and disproportionate impacts on low-income individuals. The group’s report is due by March 15, 2024.

The special session was not without the usual drama that has come to characterize the state legislature. House Democrats imposed rule 14, which limits debate to one hour, during their Sunday review of Senate Bill 2, the bill that would allow the state to participate in a federal summer food and nutrition program for kids. 

However, the time allotted for the debate was handed over primarily to Democrats and Republicans were denied an opportunity to speak.

All seven Democrat-sponsored bills from the special session are headed for the governor’s desk and he is expected to sign them all.

The 2024 legislative session is scheduled to start on Wednesday, Jan. 10, 2024.