A bill that would allow local governments to temporarily reduce property taxes without having to ask their voters' permission won unanimous approval from a Senate committee on Thursday.
The measure also picked up a major sponsor, increasing its chances of getting to Gov. Jared Polis' desk.
As introduced, Senate Bill 108, lets a local government provide temporary property tax relief through tax credits or mill levy reductions and later eliminate the tax credits or restore the original mill levy — without the need to ask the voters' permission.
State law requires voter approval for tax increases. The temporary relief, once lifted, could be viewed as raising taxes.
During Thursday's hearing, Sen. Faith Winter, D-Westminster, said she intends to sign on as a prime co-sponsor when the bill reaches the Senate floor, thereby joining Republican Sen. Mark Baisley of Woodland Park and Republican Reps. Rose Pugliese of Monument and Lisa Frizell of Castle Rock as authors.
The bill won a 5-0 vote from the Senate State, Veterans and Military Affairs Committee on Feb. 9. The Senate Finance Committee, after giving it a unanimous vote Thursday, sent it on to the consent calendar.
SB 108 was amended Thursday to make clear just what "temporary" means — an annual review by local government officials to ensure the tax cut is still needed.
Property valuations in Colorado are expected to skyrocket by 26% this year, and lawmakers on both sides of the political aisle are seeking both short-term and long-term fixes.
"This is a tiny but important part of property tax reform for the state," said Scott Wasserman of the Bell Policy Center.
He told the Senate Finance Committee that local districts should have the option to reduce their property taxes and to avoid a "one size fits all" policy reaction at the state level.
Wasserman earlier raised the question about how temporary the fix would be when the bill was heard in the State Affairs committee.
"The last thing we would want to see is a permanent ratcheting down" of property taxes, which would affect school funding, he said.
Teller County Commissioner Eric Stone told the committee it's clear what counties can do if they exceed TABOR limits, whether that county is de-Bruced or not. A county that has de-Bruced has asked its voters for permission to spend all the revenue it collects, rather than sending it back to taxpayers through a refund. According to the Bell, 51 out of 64 counties have taken that step.
But the law is silent on whether local governments, including special districts, can enact a temporary tax reduction and then restore it back to the level approved by voters, he said.
Teller County can provide the level of service it currently offers without those property tax hikes, Stone said.
Despite that lack of clarity in the law, Douglas County commissioners have five times approved temporary mil levy tax credits, saving property owners more than $30 million, according to Douglas County Commissioner Lora Thomas.
"When we can budget and save property owners these taxes, they are appreciative," she said, adding they can then invest in their businesses and families.
Frizell and Sen. Byron Pelton, R-Sterling, are working on another property tax bill that would put a hold on property tax increases due in 2023.
House Bill 1054 would hold off on the 2023 revaluation until 2025, in effect freezing property taxes for the next two years. Under the bill, assessments would be done only every four years going forward. The bill has been assigned to the House Finance Committee but has not yet been scheduled for a hearing.
