Government & Politics  June 9, 2023

Kefalas: State Legislature — Intentions v. unintended consequences

The first regular session of Colorado’s 74th General Assembly went to the wire and ended on May 8, completing a 120-day legislative session, in accordance with the Colorado Constitution. This legislative session was fast-paced and intense, especially in the closing weeks.  

For those keeping scores, 617 bills were introduced (compared with 657 in 2022) — 311 House bills and 306 Senate bills. Of these, 486 bills passed, and 131 bills went down — either lost in committee or because there was not enough time to go through the legislative process.  These bills directly or indirectly affect Larimer County residents. Local control and unfunded mandates are important lenses that counties use to assess the impact of legislation on county services.

State legislators have good intentions with the bills they sponsor. From my experience, there is a greater chance for unintended consequences when a late bill is introduced with insufficient time to consider its pros and cons. There were many late bills this session, and hopefully, lessons will be learned. Key issues during this session involved property taxes, land use, natural resources, affordable housing, child welfare, and behavioral health. In response to the dramatic increases in our 2023 property values that will impact our 2024 property taxes, the state legislature passed various bills including SB23-303, HB23-1311, and SB23-304. 

SB-303 asks voters to approve Proposition HH, a 10-year property tax relief proposal that would reduce residential and nonresidential assessment rates and taxable property values through 2032 and would also limit local property tax revenues. In other words, Proposition HH would lower our property taxes due next year because our assessment rates would go down, and the reductions in valuation would expand from $15,000 to $50,000 in 2023 (a home value of $500,000 would drop to $450,000 for calculating taxes owed). After this year, the reduction would be $40,000. Seniors and others who receive the Homestead Property Tax Exemption would deduct $150,000 [2023] and $140,000 thereafter from their taxable value [a home value of $500,000 would drop to $350,000 for calculating taxes]. There is also a provision that removes the 10-year residence requirement and would allow seniors to downsize without losing their exemption.

Regarding the local property tax limit, Proposition HH [SB-303] would limit property tax revenue growth to the rate of inflation [Denver area CPI] over the previous year’s property tax revenue. This would apply to Larimer County with serious implications for county services and operations. The provision would also apply to special taxing districts, but voter-approved mill levies, school districts, and home-rule cities and counties would be excluded. Voters would also be asked to raise the Referendum C Cap [passed in 2005] by 1% for 10 years, and the additional revenue of about $167 million per year would help local taxing districts make up some of the revenue loss. However, this will not help Larimer County’s services and operations.

Given the uncertainties about which citizen-initiated ballot measures, along with Proposition HH, may be on the November ballot and what voters will decide, we have prepared various 2024 county budget scenarios and are tightening our belts. The county budget will be balanced, and we will do our utmost to ensure the continuity of quality services and operations. Remember too, that 25% of our property taxes (and less if you live in a metropolitan district) goes to Larimer County along with many other taxing districts, depending on where in the county you live. 

If voters do not approve any of the ballot measures, we are prepared to reduce the mill levy temporarily to provide some tax relief. We’ve done this before, and it is not our intention to cash in on a windfall of property tax revenue, especially at the expense of homeowners and business owners struggling to pay their bills. 

John Kefalas is a Larimer County commissioner representing all of Larimer County.