Proposition HH - Reduce Property Taxes and Voter-approved Revenue Change

Summary

Beginning with the 2023 property tax year, the act establishes a limit on specified property tax revenue for local governments, excluding those that are home rule and school districts, that is equal to inflation above the property tax revenue from the prior property tax year (limit). A local government may establish a temporary property tax credit up to the number of mills necessary to prevent the local government's property tax revenue from exceeding the limit. Alternatively, the governing board may approve a mill levy that would cause the local government to exceed the limit if the governing board approves the mill levy at a public meeting that meets certain criteria. The act temporarily reduces the valuation for assessment (valuation) for certain subclasses of nonresidential and residential property for the property tax years 2023 through 2032 and creates the new subclass of renewable energy agricultural land, which is a subclass of nonresidential property. The act also establishes the residential real property subclasses of primary residence real property and qualified-senior primary residence real property and establishes administrative procedures related to the classification that are based on the procedures for the homestead exemption, with those procedures expanded to treat civil union partners like spouses. Several property tax deadlines for the 2023 property tax year are delayed because of the possible valuation reductions that are contingent on the 2023 ballot. County assessors are required to provide information to taxpayers about the new valuations for assessment and the application process for primary residence real property and qualified-senior primary residence real property. The act modifies an existing mechanism designed to reimburse local governmental entities for property tax revenue reductions by extending the backfill through 2032, incorporating the lost revenue due to the act, clarifying how the reimbursement is determined, excluding local governmental entities that have a certain amount of growth in assessed value, capping the total amount of state backfill, and eliminating the cap on the amount of excess state revenues that may be used for the reimbursements for the 2023 property tax year. If the voters approve the referred ballot issue, which the act requires to be called "proposition HH", then the state will be authorized to retain and spend revenues up to the proposition HH cap, the amount of which is determined under the act. The ability of the general assembly to continue retaining and spending this money after the fiscal year 2031-32 is contingent on the general assembly enacting future valuation reductions. The amount retained under this authority is first used in the following fiscal year to backfill certain local governments for the reduced property tax revenue as a result of the property tax changes in the act and Senate Bill 22-238 "Concerning reductions in real property taxation for only the 2023 and 2024 property tax years" and then up to $20 million for the amount of property taxes that are paid as a portion of a tenant's rent. Any remaining amounts are transferred to the state education fund to offset the revenue that school districts lose as a result of the property tax changes.

A "YES" vote supports reducing property taxes, setting a limit on local property tax revenue, and allowing the state to keep excess revenues and spend them on water districts, fire districts, ambulance and hospital districts, and other local governments.

A "NO" vote opposes making changes to property taxes and supports maintaining current state revenue limits.

Arguments

"Our families are impacted when we have an increase in property taxes and that impacts their ability to send their students to school ready to learn. That property tax relief is important to our families and our educators, but this is also a mechanism that will protect our school funding." Amie Baca-Oehlert, president of the Colorado Education Association, in support of Proposition HH (Learn more)

"Coloradans expects and deserves better than Proposition HH. This measure forces homeowners and seniors to jump through more hoops to access Proposition HH tax benefits and creates confusion with new classes of residential property. Property tax relief should be clean and straightforward, not with strings attached. As a result, the measure makes it harder for people to access their tax benefits and navigate the housing market, opening the door to unintended consequences." - Tyrone Adams, Colorado Association of Realtors CEO, in opposition to Proposition HH (Learn more)

"Home values have gone up the last few years. That's good if you happen to own a home. But unfortunately, the side effect is that your property taxes would also go up. What this bill will do is it'll take $50,000 off the value of every property for tax purposes. So, knock it down 50 grand, and it'll also reduce the (tax) rate. It has the added advantage of also reducing the rate for businesses across the state for commercial property tax to help make Colorado more competitive." - Gov. Jared Polis, in support of Proposition HH (Learn more)

"Any gain in property tax reductions could be outweighed by long-term pain in state tax increases. If Prop HH passes, the increase in property taxes will be slightly less than under a current law adopted by the General Assembly in 2022, but households could lose $5,119 in TABOR refunds over the next decade." - Lang Sias and Chris Brown, Common Sense Institute, in opposition to Proposition HH (Learn more)

Measure Details