Gov. Jared Polis confirmed that a deal has been reached and he will convene the Colorado General Assembly in a special session in a few days to tackle the compromise aimed at pulling two initiatives from the November ballot and providing more property tax relief to residents and businesses.
The groups behind the two initiatives said the compromise means nearly $1.6 billion in annual tax savings to Coloradans.
The special session will start on Aug. 26, the governor told Colorado Politics.
"The goal is to provide additional property tax relief," he said, adding the compromise builds on the work that the legislature has already done.
Just as importantly, the governor said the deal eliminates the risk of huge ballot fights this November by withdrawing Propositions 108 and 50.
Advance Colorado and Colorado Concern confirmed that a compromise has been reached with the governor and legislative leaders, and that this deal ends the current and future efforts to further reduce property taxes.
"If the agreed-upon bill is signed into law, the groups will withdraw their two-initiative package from the November ballot," the two groups said in a news release. "Because the agreement offers a permanent solution to Colorado’s property tax crisis, Advance Colorado and Colorado Concern will not bring similar ballot measures in the future — provided that the legislative, executive or judicial branches do not go back on the provisions of the agreement in the years ahead."
The two groups said the agreement:
Cuts the effective residential property tax rate to 6.3% or 6.4%, depending on assessment growth
Reduces the commercial property tax rate to 25%
Caps growth to 5.25% for local governments and 6% or inflation growth, whichever is greater, for school districts
Ensures a "clear and non-biased ballot language" in the required vote of the people to opt out of the local cap
Combined with legislation already enacted earlier this year, the deal yields nearly $1.6 billion in annual tax savings, according to Advance Colorado and Colorado Concern.
The governor said the compromise offers stability and predictability.
"(This makes) sure we have a path forward to provide the stability that we need so that homeowners know their property taxes won't go up too much too fast and that schools and counties and fire districts know that they don't risk a huge cuts to their funding in any particular election," he said.
The governor added that the parties are "excited" to move forward with the deal and he's optimistic it will garner support to pass.
It would be the second time in less than a year that Polis would have convened a special session to tackle property taxes. After voters rejected Democrats' proposed solution to soaring property valuations — some have seen 40% to 50% increases — last November, also called lawmakers to a meeting outside of the regular session, in which they approved legislation that reduced home's assessment rate and increased the amount that would be exempted from tax liability purposes.
In the last several days, lawmakers and political advocates have hinted that negotiations are underway to stop Proposition 108 and its companion measure, Proposition 50, in exchange for a bigger tax cut than what the legislature approved earlier this year.
Proposition 50 has already qualified for the ballot, while election officials have yet to conclude whether Proposition 108 also turned in enough signatures to appear on the November ballot, though its proponents are confident of its chances.
When asked what has been insufficient in previous efforts to offer solutions to soaring valuations, Polis noted that the state doesn't get revenue from property taxes, but local governments rely on them to fund their operations. A close interplay between state and local government funding exists, making the issue complicated.
"I took this very seriously when the schools and the counties all wrote me a letter, saying, 'Please, if we could avoid these ballot initiatives and reach agreement, do it,'" the governor said.
"And that's exactly what we're doing is pulling people together to find a way to provide additional property tax relief and avoid devastating budget cuts to our schools and hospitals," he added.
During a special meeting of the state Commission on Property Tax on Monday, lawmakers began to digest the framework for such a compromise, notably that it would cut both residential and commercial property tax rates, decrease the commercial assessment rate over three years and cap revenue growth.
The threat of significantly more tax cuts than what lawmakers enacted earlier in the year — and the corresponding loss in government revenue — has compelled the parties to try to negotiate and head off Propositions 50 and 108. Proponents have argued that the legislature has failed to provide meaningful and lasting relief to both residents and businesses.
The parties must act quickly, as the deadline to remove measures from the ballot is Sept. 6.
On Monday, analysts briefed members of the Commission on Property Tax on what the current tax regime looks like under Senate Bill 24-233, which Republicans and Democrats earlier passed, the fiscal effects if voters approved Propositions 108 and 50, and the parameters of the potential compromise that, assuming a deal is reached, lawmakers would then approve in the special session.
Most of the 19-member committee seemed agreeable to the compromise framework’s core elements, which include changes to residential assessment rates, non-residential assessment rates, and a revenue cap for both schools and local government rates.
Just before the special meeting, more than 40 bipartisan organizations and the mayors of Aurora, Denver, and Colorado Springs — Mike Coffman, Mike Johnston, and Yemi Mobolade, respectively — submitted letters to the commission, expressing concerns about the potential impact of Propositions 108 and 50 on local governments' revenue and urging policymakers to head them off via a compromise.
Proposition 108 seeks to reduce assessment rates to 5.7% for residential properties and 24% for commercial properties. Proposition 50, a constitutional amendment, would cap tax revenue growth to 4% and require voter approval for local government to retain dollars above the limit. Proposition 50 already qualified for the ballot, while election officials have yet to conclude whether Proposition 108 also turned in enough signatures, though proponents are confident it will get on the ballot.
A compromise would provide certainty to both sides: Proponents wouldn't have to spend money in what's likely to be an expensive fight to persuade people to vote for or against the two measures. To critics, a compromise opens the possibility of tax cuts that wouldn't be as deep as what Propositions 108 and 50 seek.
"We saw in May that the commission supported SB24-233," Sen. Barbara Kirkmeyer, R-Brighton, said of the legislation approved earlier this year. "And I believe they will support the negotiated framework. This is a common sense approach that makes minor changes to the historic bipartisan legislation that I co-prime sponsored and it will lead to Initiatives 50 and 108 coming off the ballot."
