Governor Jared Polis signed an executive order Thursday to convene a special legislative session dedicated to addressing property tax increases. The session will run from November 17 to November 22 and only involve policies to provide immediate, short-term relief for the 2023 tax year. More long-term changes will come when legislators convene for the regular legislative session in January, according to Polis.
"We need to act for short-term property relief, now," the governor said during Thursday's announcement. "The cost of inaction is too high."
Prop HH would have reduced property tax rates for at least ten years and made up for some of the lost revenue by keeping money that would otherwise be returned to taxpayers through refunds from the Taxpayer’s Bill of Rights, also known as TABOR.
Despite passing in Denver, HH wound up failing miserably at the ballot box, with nearly 60 percent of voters rejecting the measure, according to preliminary results available the afternoon of November 9.
Colorado homeowners now face major boosts in property tax bills next year, without any sort of solid plan for relief. The taxable value of the average Colorado home increased by 37 percent from 2022 to 2023, peaking at 81 percent in Pitkin County.
This is only the second time Polis has called a special session — the first being in 2020 to address the economic impacts of COVID-19. The move is a last resort, with the governor announcing the special session by swinging a bat at an emergency box labeled, "In case of no Prop HH, break glass."
The glass did not break, though Polis's spokesperson says it wasn't supposed to.
Republican legislators have repeatedly called for a special session since May. Polis rejected the requests in order to let voters weigh in on Prop HH.NEW: @GovofCO is calling a special session to address upcoming property tax increases — something the @cologop has called for since May. Polis’s change of heart comes after the voters rejected his property tax relief plan, Prop HH, on Tuesday. pic.twitter.com/5yE8VPZXpq
— Hannah Metzger (@hnmetzger) November 9, 2023
“Instead of addressing the concerns of homeowners a year ago we now have only days to correct a mess that was avoidable,” House Minority Leader Mike Lynch said in a statement Thursday. “While it’s disappointing that it took the overwhelming defeat of Prop HH to get their attention, it’s certainly my hope that the governor and Democrats will now agree to common sense reforms to Colorado’s property tax mess."
The special session needs to happen quickly to affect next year's property tax bills. Local officials have until December 15 to set their mill levy rates.
Polis said he wants legislators to finish their work before Thanksgiving, which gives them eight days to prepare policy before the special session starts and six days to debate and pass the policies during the special session.
Debates over what, exactly, those policies would be have already begun on social media.
In response to Prop HH’s failure, progressive Democrats Senator Nick Hinrichsen, Representative Lorena Garcia and Representative Javier Mabrey have all called for targeted property tax relief to benefit low- and middle-income households, and for reforms to benefit renters.
“Whatever the path forward is after HH, the answer is not massive tax cuts for the wealthiest Coloradans, while the working class gets left out,” Hinrichsen said on X Wednesday.
This doesn’t align with the plan Republicans put forward last month, when the conservative lawmakers promised to introduce at least three bills if a special session is called.
One of the proposals includes making the same broad property tax rate changes as Prop HH — lowering assessment rates to 6.7 percent for residential property and to 27.9 percent for most non-residential property — while using the general fund to backfill lost revenue instead of relying on the TABOR surplus. The other two bills would make the Senior Property Tax Exemption portable (which Prop HH also tried to do) and reduce the state income tax rate to 4 percent.
Democrats argue that general fund revenue won't cover the property tax decrease in the long term, but Republicans see the bills as a good starting point for negotiations.
“It is imperative that we address the property tax crisis in Colorado,” Senate Minority Leader Paul Lundeen tells Westword. “People will be taxed out of their homes if we fail. We need to do it now, before the end of the year. … The only way to do that is to a special session.”
Voters could also get the chance to decide the fate of property tax reform theselves next year: In November 2024, Initiative 50 will try to cap the growth of property taxes at 4 percent a year, requiring voter approval for the state to keep revenue that exceeds the cap.
Proponents of Initiative 50 call it a simple way to keep property tax bills low, while opponents argue that it would cause complications for local governments and hurt their ability to fund schools and basic services.
With Prop HH’s failure, critics fear that not taking immediate action on property tax increases will bolster support for Initiative 50. Michael Fields — president of Advance Colorado, the group behind the initiative — told Colorado Public Radio he would withdraw Initiative 50 from the ballot if legislators can pass acceptable property tax relief during the special session.
“It’s unclear tonight what the pathway forward is, but it’s clear the answer is not Initiative 50,” Senate President Steve Fenberg said in a statement on election night.
Besides Prop HH, this year’s only other statewide ballot measure — Proposition II — passed with over 67 percent voter approval, according to preliminary election results.
Prop II will spend a total of $23.65 million on expanding Colorado's free preschool program. The measure lets the state use the surplus collected from nicotine taxes to fund the preschool program and maintains those current tax rates, instead of reducing them.
While Polis didn’t comment on HH’s failure until his special session anouncement, he released a statement Tuesday applauding II’s success.
“Coloradans value early childhood education and I am thrilled people voted in favor of providing more funding for our free universal preschool program that is saving families money,” Polis said. “Thank you to all voters who made their voices heard, and thank you for continuing Colorado’s clear history of supporting early education.”
