Download the Proposition 130 Fact Sheet

Vote No on Proposition 130 

Enhancing public safety throughout the state has been a key focus for communities and local leaders for many years. Proposition 130, which will be on the ballot this November, aims to address the issue of public safety through increasing state funding for local law enforcement. Proposition 130 proposes to allocate an additional $350 million state dollars to expand policing across Colorado—that’s more than 10 times the amount of recent state funding for local law enforcement.

City police departments and sheriff’s offices would be able to apply for a portion of the $350 million through the Colorado Department of Public Safety (CDPS), but other public safety resources like firefighters or first responders are not eligible for this money. This approach is not a solution for promoting public safety. Proposition 130 is an expensive and ineffective investment, especially when considering the types of crime that are most common in Colorado and the underlying causes.

In the first half of 2024, Colorado recorded nearly six times the number of property crime incidents compared to violent crimes. Research indicates that poverty is a major factor contributing to property crime. Research and data support that increased policing and incarceration does not reduce the rate of violent crimes, and incarceration is both expensive and ineffective in reducing property crime. Considering that the vast majority of crime is property crime and heavily influenced by cycles of poverty, it is clear that the solution is not investing $350 million towards expanding surveillance, force, and punishment. 

Proposition 130 would also require the state to establish an ongoing fund that provides a $1 million death benefit to the family of each law enforcement officer who loses their life while policing. Currently, families of most law enforcement officers receive ongoing survivor benefits through the officer’s pension. Some local law enforcement agencies provide their own death and disability benefits.

This measure seeks to drastically increase the state’s contribution to local police funding. Eighty-eight percent of law enforcement funding comes from the local level; additional funding is also allocated from the federal level. The majority of state law enforcement funding has historically been allocated towards state troopers and the Colorado Bureau of Investigation, not expanding local policing. Over the past two years, Colorado has granted local law enforcement agencies $30 million through the Colorado Department of Public Safety (CDPS) for police recruitment and retention.

Funding Proposition 130 would require cutting budgets for essential services and programs that are data-supported to reduce poverty and crime, such as affordable housing, education, healthcare, food access, direct cash supplements, and targeted tax credits, like the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), and Colorado’s Family Affordability Tax Credit (FATC).

The $350 million dollars needed to fund Proposition 130 would also impact the state legislature’s ability to pass any new legislation that needs funding, which would leave a gap for the state to make up for any funding cuts in current or new programs that help meet the basic needs of Coloradans.

Fiscal Impact

This $350 million provision is a new cost with no new funding source. The $350 million is to be allocated to CDPS with no guidelines for equitable distribution across the state. Furthermore, this significant additional police funding comes with no additional accountability requirements.

For FY 25-26, the Office of State Planning and Budgeting (OSPB) forecasts that available revenue under the TABOR cap will grow by only 3.4%, which means only $650 million would be available to cover inflation costs and capacity increases across the state’s budget.

$350 million invested elsewhere could fund

• 5,758 K-12 teachers’ salaries based on the current Colorado average teacher pay ($60,775/year).
• 41,194 students at Colorado’s current average base per pupil spending level ($8,496.38/year).
• more than double the FY 2024-25 allocation into Colorado’s Affordable Housing Fund from $317 million to $667 million.

Police Funding in Colorado

In 2021, Colorado ranked 13th highest nationally in state and local police funding per capita. Police funding was $2.4 billion that year, which is $419 per Colorado resident spent on policing. 88% of that $2.4 billion police budget came from local funding. 

The passage of Proposition 130 would impose a significant financial burden on Colorado’s state budget and divert funds from other essential services and programs. Given the limited budgetary flexibility under the Taxpayer’s Bill of Rights (TABOR), this initiative would compromise the state’s ability to invest in critical areas such as affordable housing, education, food access, and health services, which are all essential for promoting public safety. 

We urge Coloradans to consider these significant fiscal and social impacts when evaluating Proposition 130. We recommend exploring alternative measures that focus on poverty reduction, rehabilitation, and crime prevention rather than the unaccountable expansion of policing, surveillance, and incarceration, which has proven to be both costly and ineffective.

It’s time for another Forecast Five, where CFI gets down in the details so you don’t have to. Check out our top five takeaways from the Legislative Council’s presentation on the economic and fiscal outlook for Colorado.

1. Twists in the New School Finance Formula Trigger

For 30 years, Colorado has used the same formula to distribute revenue among its 178 school districts. However, in 2024, , the formula received a significant update due to HB24-1448, which will add an additional $95 million into schools. But the bill also included several conditions that could delay implementation of this new formula. One such condition was related to potential cuts in property taxes which could have occurred if Proposition 108 passed in the upcoming ballot this November.

Fortunately, the special session agreement led to the withdrawal of Proposition 108 allowing the implementation of the new formula to proceed. However, another condition which could postpone the new school finance formula might now come into play. This condition stipulates a pause if a five percent drop in the State Education Fund revenue occurs. It appears there will indeed be a five percent drop, not because of falling income tax revenue, but because of an accounting adjustment. So some statutory clarification may be necessary in January 2025 to keep the implementation of the new school finance formula on schedule.

2. The Impact of the Upcoming Election

Business confidence has recently dipped with the uncertainty of who will win the White House. The election could mean changes to the Tax Cuts and Jobs Act (TCJA)which could impact  Colorado’s budget since Colorado’s income tax revenue is coupled with the federal tax base. Changes to the tax base at the federal level could flow to Colorado. While the TCJA lowered income tax rates, it actually expanded the tax base causing Colorado to collect more state income tax revenue. That would change if TCJA changes. This could also impact revenue for Prop FF, which funds school meals but capping the amount of tax deductions tax filers making over $300,000 can take. That could result in $30 million less in Prop FF revenue.

3. General Fund Outlook: Can’t Keep Up in Real Terms

Next year’s budget isn’t expected to keep up with caseload growth, inflation, scheduled capital maintenance while maintaining a 15% General Fund Reserve. Next’s year’s budget will fall short by $921 million, resulting in a 9.2% reserve instead of the target 15%. This situation illustrates how revenue available below the TABOR cap is insufficient to meet demands. Revenue was also adjusted downward due to less optimistic income tax collection data.

Although the state remains in a TABOR rebate scenario, the anticipated TABOR rebate amount of $365 million for 2025 is well within forecast error range. Concerns such as deteriorating household budgets, slowing global economic conditions, high borrowing costs, and deteriorating labor market conditions present the heaviest downside risk to the forecast. Though the General Fund was revised downward for the next three years, the newly established Family Affordability Tax Credit (FATC) and expanded Earned Income Tax Credit (EITC) will be funded in full through 2027. 

4. Economic Growth Surpasses Expectations this Year, but Shows Signs of Slowing

Economists expect 1.7% GDP growth in 2025 after 2.7% in 2024 and 2.5% in 2023. Consumer spending has been resilient in the face of a high interest rate environment. Though the household savings rate of 2.9% is well below the historical average of 5.7%, households are tapping into savings to cover the costs of rising inflation. Colorado’s unemployment rate of 3.9% continues to creep up in recent months but it is below the 4.2% of the nation as a whole. However, revisions to the jobs numbers after additional survey data comes in is expected to show an actual unemployment rate that’s worse that the currently reported figure.

5. First Interest Rate Cut after Two Years of Rate Increases by the Federal Reserve

The Federal Reserve cut rates by an unusually large half a percentage point this week in response to signals that the inflation is under control and worries about a deteriorating labor market. That reverses 11 rate hikes by the Federal Reserve since 2022. Inflation continues to fall, and Denver’s inflation rate is now below the U.S. after being above the nation all of 2023. Colorado’s rate is below 2% recently after peaking above 9% in 2022. The housing and transportation components of inflation are coming down in Denver. As expected, the tight monetary policy has been putting a damper on home construction.  

This Labor Day it’s worth celebrating that 7 out of 10 Americans support labor unions. This marks the highest public approval rating since 1965, almost on par with the popularity of hot dogs as a staple at Labor Day barbecues. As summer winds down and we enjoy our last juicy Palisade peaches, it’s an opportune moment to recognize the wide-ranging advantages that labor unions offer Colorado’s working families, our state’s economy, our democracy, and the brighter future possible for our state if more Coloradans had the ability to unionize.

While growing enthusiasm for unions reflects broad public awareness that collective bargaining is key to improving wages and workplace safety, it remains far too difficult for most workers who want to come together to form a union under current U.S. and Colorado laws. Weak, outdated labor laws and decades of fierce anti-union attacks from big business have taken a toll on unions and left our economy increasingly off balance. Between 1973 and 2007, the reduction in private sector union membership (dropping from 34% to 8% for men and from 16% to 6% for women) coincided with a more than 40% increase in wage inequality. Research shows this is not a mere coincidence; shrinking union density accounts for much of the increase in income inequality.

Increased union membership yields a positive “net fiscal impact” through two mechanisms: reduced reliance on public benefits, and more tax dollars due to more income. It would also help reverse growing inequality and make the most of our constrained General Fund budget. 

Ensuring better access to unions is key to transforming Colorado into a state where everyone, regardless of their race or background, can prosper. Working-class union households have a median wealth of $201,240, nearly four times greater ($201,240) than nonunion counterparts ($52,221), and union membership also raises the likelihood of families owning a home. While all union households benefit, Black and Latino/a families in Colorado experience even greater advantages, contributing to the reduction of racial and ethnic wealth gaps statewide.

Research tells us that unions help boost average earnings and household income not just for union members, but working families across our economy. On average, a worker covered by a union contract earns 10.2% more in wages than workers in the same industry with the same education, job title, and experience. But unions also raise the bar for entire industries, meaning non-union Coloradans would benefit from increasing unionization, too. And without a strong union presence, a race to the bottom has too often become the norm. Had union density remained at its 1979 level nationally, weekly wages of nonunion, private-sector male workers would be 5% higher, and 8% higher for nonunion workers without a college education. 

Workers in areas with higher union density fare better during economic downturns; the U.S. Treasury points out that unionization reduces inequality and helps promote economic resilience for all working families and Colorado as a whole, by reducing the financial fragility of households with the bottom 95% of incomes. Unionization helps us build more equity into our economy at baseline, which serves as a natural automatic stabilizer. 

While the economic advantages are significant, it’s important to recognize the additional civic engagement benefits of unions, especially during election seasons. Workers are involved in the union’s democratic processes, so voting comes naturally; union members are 3-5% more likely to participate in voting. Another analysis revealed that a 1% rise in union density correlated with a 9.8% increase in the number of ballot drop boxes per person.

Research shows that relative to non-union workers, unionized workers are almost two-thirds more likely to have employment-provided health insurance and retirement benefits because they have the bargaining power necessary to negotiate the benefits they need to care for their families. With about a third of our state budget allocated to Medicaid, more employees accessing essential benefits through their jobs would free up General Fund resources to drive economic progress instead of compensating for low-wage employers who boost their profits by refusing to provide basic benefits. There’s clear evidence demonstrating that allowing low-wage workers a seat at the bargaining table to win benefits would reduce the cost of state safety net programs. 

While TABOR limits how much of our tax revenue could be invested back into Colorado by the legislature, the long-term implications of passing policies to boost worker’s power to unionize are clear; this is a smart policy choice to boost income for middle and working-class Coloradans and reduce reliance on public assistance. This Labor Day, remember that unions can help a Colorado economy that works for all of us.

The Colorado Fiscal Institute (CFI) analyzes all tax policy proposals and changes using a set of tax principles focused on efficiency, effectiveness, and equity. Below, we have summarized the changes made in HB24B-1001 Property Tax, and outlined how the bill does not meet our principles for efficient, effective, or equitable tax policy.

HB24B-1001 Adds Historically Harmful Revenue Caps to Districts and Schools

The bill sets a local government cap at 10.5% every two years (5.25% annually), which excludes voter-approved to pay for bonds that are still outstanding and voter-approved mill levy increases on or after 2024, among more technical circumstances. It sets a school district cap at 12% every two years (6% annually) or the “school factor”*, whichever is bigger. The school district cap excludes revenue increases from new construction, oil/gas/mines, revenue that has been voter-approved to pay for bonds that are still outstanding, and revenue increases from voter-approved mill levy increases on or after 2024, among more technical circumstances.

*The “school factor” is the % by which the General Assembly increases statewide per pupil funding PLUS the % increase in pupil enrollment statewide. E.g., if BPPF increased by 5% and pupil enrollment statewide increased by 5.5%, the “school factor” would be 10.5%, and the 12% cap would be chosen as the cap since it is bigger.

If school districts exceed their cap, the residential assessment rate is temporarily lowered so that revenue meets the 6% cap for that property tax year. Local government caps can be waived by the members of the local government district through voter approval. School district caps, on the other hand, must be waived by the entire state, but would apply to the entire state as well. The voters of an individual school district may not elect to waive the cap for their district.

How does CFI evaluate the proposed revenue caps in HB24B-1001?

HB24B-1001 Expands Untargeted, Broad-Based Cuts

HB24B-1001 reduces assessment rates for residential and nonresidential property as follows.

How does CFI evaluate the proposed assessment rate cuts in HB24B-1001?

Additionally, reducing assessment rates statewide will adversely affect certain counties more than others. Front Range counties like Adams, Boulder, and Denver saw huge assessed value increases from 2021 to 2023 — and the impact of any rate cuts was zeroed out by growth. Moffat, Hinsdale, Baca, and Dolores counties, however, didn’t grow fast enough to negate assessment rate cuts. Smaller, rural counties will bear the brunt of statewide assessment rate reductions, especially in years where the state cannot provide full backfills. 

HB24B-1001 Promises Reimbursement Requirements, But Can It Guarantee Them?

By the end of the 2026 session, with information given to them by assessors about how much property tax revenue districts have lost due to SB24-233 and HB24B-1001, the General Assembly will issue reimbursements to local districts through the State Treasurer. The bill creates a Local Government Entity Lost Property Tax Revenue Cash Fund, and will be funded by all interest and income from the Local Government Entity Backfill Cash Fund created by SB24-233, which is funded by one percent of revenue appropriated to the General Fund reserve. If there aren’t sufficient funds to fully reimburse districts, the Treasurer will reduce reimbursements proportionally.

How does CFI evaluate the proposed reimbursement requirements in HB24B-1001?

CFI’s Take: Fiscal Responsibility is Keeping Property Taxes Local

Property taxes are a local issue, and local governments should not be forced into one-size-fits all state solutions. Arbitrary caps, especially on schools, move us backward on progressive fiscal reform, and fly directly in the face of what voters have already shown us they want. Untargeted, broad-based tax cuts return the most money to the wealthy few at the expense of sufficiently and adequately funding critical public services in our state. Reimbursement promises are easy to keep in good years, and harder to keep in bad ones. Any changes to SB24-233 must prioritize effectiveness, efficiency, and equity. Let’s not make 2024 the last year we fully fund schools for another two decades. 

Since the repeal of the Gallagher Amendment in 2020, advocacy groups and state leaders have been working to address the challenge of offering property tax relief to strained homeowners facing rising property values. They’ve aimed to balance this relief with ensuring adequate funding for essential services supported by property taxes such as, schools, emergency response, and local government programs. 

Initiatives 50 and 108 are the latest efforts to cut costs for cash-strapped families. Nevertheless, these efforts might result in budget cuts at the state and local levels that could curtail resources for their communities. The potential crisis and public outcry has prompted Gov. Polis to call for a special legislative session starting on Aug. 26 to decide the fate of these measures on the November ballot.

Here’s what you need to know before it starts. This brief will delve into the history of property tax law in Colorado (Gallagher Amendment), the current governing law (SB24-233), and potential future amendments to that law (HB24B-1001) which are expected to be discussed in the upcoming special legislative session.

1. Gallagher Amendment

2. SB24-233

3. HB24B-1001

4. Conclusion

How are Property Taxes Calculated 

If you have a $560,000 home and the assessment rate is 6.7%, you only pay property taxes on $37,520 of the home’s value. That assessed value is multiplied by your locally approved mills for your school district, county, city, and special districts like fire protection districts and libraries. All property taxes are local. No property taxes go to the state budget. 

A Brief History of Property Taxes in Colorado

Between 1982 and 2020, property taxes were governed by the Gallagher Amendment. If residential property taxes increased at a higher rate than non-residential property taxes, the assessment rate – the portion of a home’s value subject to property taxes – had to decrease.

During Gallagher’s time, the assessment rate dropped from 21% to 7.15%. Gallagher also limited the total residential property in the state, leading to scenarios where certain areas experienced significant growth while services were reduced in other regions. In 2020, voters overturned the Gallagher Amendment.

With Gallagher no longer driving down rates, the assessment rate on homes would remain at 7.15% unless state legislators lowered it, which they did with a series of bills to help counteract the recent spikes in home values.

The residential assessment rate dropped to 6.95% in 2021, 6.765% in 2022, and 6.7% in 2023 and 2024. In addition to the lower assessment rates on homes, a portion of the home’s market value was also exempted. In 2023, $55,000 of the market value of a home was subtracted. Subtracting a flat rate gives a bigger cut to homes of lower value. 

Current Law Property Taxes 

Today, property tax laws in Colorado are governed by SB24-233.They impose a residential assessment rate (RAR) of 6.7% and a $55,000 subtraction from market value for 2024. It gets more complicated in 2025 under current law, with two different assessment rates on homes: one for schools (RAR of 7.15%) and one for other local governments. And even more complicated in 2026, where the first 10% of the home’s market value up to $700,000 is subtracted for the non-school local government portion.

SB24-233 vs Other Proposals

This memo compares current law (SB24-233) to an amended version, which is likely to be debated during the upcoming special legislative session (HB24B-1001), and to the ballot initiative 108.  

For property taxes on homes, the amended version of 233 is very similar to the original except with lower residential assessment rates. Instead of 7.15% for schools, HB24B-1001 would drop that rate to either 7.05% or 6.95% (depending on whether growth in property is above or below 5%). For other local governments, the residential assessment rate would be 6.25% or 6.15% in 2025 instead of 6.4% and 6.8% or 6.7% instead of 6.95% in 2026. 

Initiative 108 would lower the residential assessment rate to 5.7% for all local governments including schools with no subtracted value. In addition, if Initiative 108 passes, the property tax cuts in SB24-233 go away for property tax year 2024. This means no value subtraction and a RAR of 7.07% in 2024. This would cause the average homeowner to pay $512 more in property taxes in 2024.  

Homeowner Impacts

HB24B-1001 would lower property taxes for the average homeowner by $62 in 2025 compared to current law and $179 in 2026. Initiative 108 would raise taxes for the average homeowner by $512 in 2024, then lower them by $539 in 2025 and $504 in 2026 compared to current law.

State and Local Budget Impacts

HB24B-1001 would lower property taxes by $255 million in 2025 and $295 million in 2026 and onward. The state would be required to backfill a portion of lost property tax revenue to school districts and local governments.

Initiative 108 would lower property taxes by $2.25 billion in 2025 and would require the state budget to backfill all the revenue that local governments lose out due to the property tax cuts. Backfilling the entire cost of 108 to local districts would require the state to reduce its entire budget by 18% each year, a bigger cut than the 11% reduction the state implemented after the Great Recession.

Changes to Non-Residential Property Taxes 

Initiative 108 would cut all the non-residential assessment rate to 24% whereas current law (233) only lowers the non-residential assessment rate to 27% from 29% for commercial and agricultural property classes and excludes some other non-residential class. HB24B-1001 would expand that 27% rate for other non-residential property classes (industrial, vacant, natural resources, and state assessed). 

Under HB24B-1001, 62% of the additional property tax cuts go to non-residential property owners. A big portion the property tax savings of Initiative 108 would go to non-residential property owners.

Revenue Caps 

Under current law (233), some local governments will be subject to a 5.5% revenue cap starting in 2025. The limit is based off 2023 collections grown annually by 5.5%. There are, however, a lot of exclusions and exemptions. It doesn’t apply to school districts, home-rule local governments, local governments that currently have a TABOR limit or another 5.5% limit. It also doesn’t count revenue generated from new voter-approved mill levies, mills levied for bonded debt, new construction, and oil/gas/mines. 

Initiative 108 doesn’t include a cap. 

HB24B-1001 would build upon the revenue limit framework in 233 but also include a cap on school districts of 6% (12% per two-year cycle), unless inflation plus student growth is greater than 6%, in which case the cap would be the inflation plus student growth rate. 

Initiative 50

Initiative 50 would cap annual property tax revenue at 4% growth statewide.  

The cap is all but unworkable. It might make sense if all property taxes went to the state budget. But they don’t. Property taxes in Colorado are completely individual to local areas. This means tax rates and property growth vary dramatically from city to city and county to county. Unlike the caps in 233 which are unique to each local government, the cap in Initiative 50 is applied to total property tax revenue in the state. 

So when property tax collections grow faster than 4%, the state and local governments will have to make changes, but the initiative doesn’t detail exactly how that would work. Will local governments grant tax refunds? Will the legislature approve discounts across the state? What about growing counties compared to shrinking population counties? Local governments will be pitted against each other to fight over revenue to fit under the cap.

In 45 of the past 60 years, property tax revenue has grown faster than 4%. A cap like this would result in billions of dollars of cuts to schools, fire districts, libraries, and county budgets.

Conclusion

The state budget is currently unable to keep pace in real terms, falling short of meeting the requirements to accommodate caseload growth, inflation, salary increases, and other operational necessities. To maintain stability in real terms, an additional $1 billion is necessary, yet the available revenue under the TABOR cap is only $650 million. This year, we successfully met the voter-approved school funding levels from 2000 after 15 years of insufficient funding due to the budget stabilization factor. Further reductions in revenue pose a threat to Colorado’s ability to adequately support our schools. Therefore, we are cautious about additional property tax cuts, such as those proposed in HB24B-1001. Initiatives 108 and 50 would have detrimental effects on funding for public services and schools if they were to pass in the ballot. While HB24B-1001 would be more acceptable if it did not impose revenue limits on local governments, the constraints on school districts’ revenue in HB24B-1001 are particularly concerning.

Immigration policies have taken center stage in public debates this year, but much of the conversation has been driven by emotion, not data. A new in-depth national study from the Institute on Taxation and Economic Policy aims to help change that by quantifying how much undocumented immigrants pay in taxes – both nationally and in each state.

Here in Colorado, undocumented immigrants contributed $436.5 million in state and local taxes in 2022 – a number that would rise to $537.8 million if these taxpayers were granted work authorization, according to the study.

Other key findings:

• Nationally, undocumented immigrants contributed $96.7 billion in federal, state, and local taxes in 2022. Of this, $37.3 billion went to state and local governments.
• For every 1 million undocumented immigrants who reside in the country, public services receive $8.9 billion in additional tax revenue. On the flip side, for every 1 million undocumented immigrants who are deported, public services stand to lose $8.9 billion in tax revenue.   
• Nationally, providing access to work authorization to all current undocumented immigrants would increase their tax contributions by $40.2 billion per year, to $136.9 billion.
• More than a third of the tax dollars paid by undocumented immigrants are toward payroll taxes dedicated to funding programs – like Social Security and Medicare – that these workers are barred from accessing.
• Similarly, income tax payments by undocumented immigrants are affected by laws that require them to pay more than otherwise similarly situated U.S. citizens; as one example, they are often barred from receiving meaningful tax credits like the Child Tax Credit or Earned Income Tax Credit. However, many states have made their versions of these credits more immigrant-inclusive in recent years.
• In Colorado and 39 other states, undocumented immigrants pay higher state and local tax rates than the top 1 percent of households living within their borders. In Colorado, undocumented immigrants pay an effective tax rate of 7.8 percent, which is almost a full percent more than the top 1 percent income earners, who pay a 7 percent effective tax rate.

“This study is the most comprehensive look at how much undocumented immigrants pay in taxes. And what it shows is that they pay quite a lot, to the tune of nearly $100 billion a year,” said Marco Guzman, ITEP Senior Policy Analyst and co-author of the study. “The bottom line here is that regardless of immigration status, we all contribute by paying our taxes.”  

In Colorado, 42 percent of the tax contributions are through sales and excise taxes, while 33 percent are through property taxes, and 24 percent are through personal or business income taxes.

“Immigrants are integral members of Colorado communities and play a pivotal role across state and local economies,” said Colorado Fiscal Institute Policy Analyst Sophie Shea. “In Colorado, immigrants generate 10 percent, or about $49.1 billion, of our state’s economic output, and new research finds that undocumented immigrants pay a higher effective tax rate than the top 1 income earners in this state. Colorado’s diverse economy does not run without immigrant workers. Coloradans benefit from the state’s investment towards welcoming and integrating immigrants, and modernizing and expanding the work authorization process is essential.”

While this study is the most comprehensive analysis of taxes paid by undocumented immigrants, it is worth noting that it does not attempt to quantify broader impacts that flow from the increased economic activity created by these individuals. Taking those economic ripple effects into account would likely reveal undocumented immigrants to have an even larger significance to public revenues than is documented here.

This study is another reminder that undocumented immigrants are contributing to our economies and our shared public services, and that immigration policy choices made in the years ahead will have significant consequences for public revenues.

Contact: Hannah Morris at CFI (morris@coloradofiscal.org) or Jon Whiten at ITEP (jon@itep.org or 917-655-3313)

Landlords and property managers’ use of rent setting algorithms to determine housing costs across the US is under scrutiny, as the FBI investigates algorithm services such as RealPage over antitrust and collusion allegations. A bill from Colorado’s 2024 legislative session sought to address the use of these rent setting algorithms, but died in the last days of session due to disagreements over amendments.

HB24-1057 Prohibit Algorithmic Devices Used for Rent Setting attempted to clarify that under the Colorado Consumer Protection Act, the use of algorithms containing non-public competitor data is illegal collusion for the purpose of price-fixing, and the bill as introduced would have prohibited the use of these anticompetition algorithms as a deceptive trading practice. 

One such rent algorithm service called RealPage admits that its algorithm is helping drive rents higher with marketing like “Pricing Optimization That Outperforms the Market 2%-5%,” on its website.

In the inception of RealPage, which is one of the first and biggest rent-setting algorithm services in the United States, one property management company found that turnover rates increased about 15 percentage points after it implemented the algorithm service. But that wasn’t a problem for the business: despite having to replace more renters, the company’s revenue grew by 7.4%. 

The CEO of the property management company was quoted saying, “The net effect of driving revenue and pushing people out was $10 million in income,” Campo said. “I think that shows keeping the heads in the beds above all else is not always the best strategy.” 

So we see that from the outset of rent-setting algorithms, the express goal has always been to use private data to artificially drive up prices through anti competitive collusion between landlords and management companies, and this practice has driven the rise in rent costs across Colorado. 

In Denver alone, the cost of thousands of units is determined with rent-setting algorithms. CFI analysis comparing California and Oregon’s rent rates to that of the Denver metro area from 2011-2024 finds that rent rates in the Denver metro area have risen faster than most of the major cities in California and Oregon that were analyzed.

Too many Coloradans are struggling to keep up with rising rent costs, and the use of these rent-setting algorithms further contributes to and exacerbates our housing affordability crisis. On average across the state, a person must work 85 hours a week at minimum wage to afford a modest one bedroom apartment at the statewide average Fair Market Rent, which is about $1,600/month. For comparison, spending around $900 on rent is considered affordable for a Coloradan who earns 30% AMI––that’s almost half of the Fair Market Rent rate. 

Across Colorado, people on fixed incomes, working people, and their families struggle to afford to remain housed. Essential service workers, teachers, and nurses often cannot afford to live close to where they work. A single mother earning an average teacher’s salary in Colorado cannot afford to house and support her family without a second job.

Renters are considered cost burdened if they spend 30% or more of their household income on housing costs, and in Colorado, 51% of renters are cost burdened, according to 2022 ACS data. Housing is simply unaffordable for most Coloradans, and rent setting algorithms that artificially inflate housing prices cannot be allowed to continue flagrantly disregarding antitrust laws that are in place to prevent these anti-competitive practices.

Housing is necessary for Coloradans to be able to thrive. Access to affordable and stable housing is essential for economic mobility, community-building, and public health and safety. More technological innovation demands more guardrails, especially as it relates to basic human needs like housing. As we continue to follow federal action on this issue, we hope to see a bill aiming to robustly protect renters from the use of rent setting algorithms return and succeed next session.

Since it’s creation as a standalone organization, CFI has led on research and advocacy at the intersection of fiscal and immigration policy. Over the years, our research has demonstrated the positive impacts and benefits that pro-immigrant policies -including driver’s licenses for all– have on our families, communities, and economies. Conversely, CFI has also produced research showing the immense costs that policies like the infamous “Show Me Your Papers Law” and other family separation policies have on children, parents, our communities, and to our state and local economies.

For these reasons, CFI along with several leading state and national immigration partners, including the National Immigration Law Center (NILC), are encouraged to see the Biden administration’s recent plan to provide relief for some immigrants who are married to U.S. citizens by ensuring families can stay together. According to White House estimates, this policy has the potential to support about 500,000 noncitizen spouses and approximately 50,000 noncitizen children under the age of 21.

This announcement comes however, after the administration’s previous executive order severely limiting access to asylum for many individuals and families seeking safety in our state and country. CFI believes that policies that keep individuals and families safe, together, and whole, allow them to thrive and be contributing community members and taxpayers. Even as we hold the reality of these two policies, we also continue to advocate for a permanent and accessible path to citizenship for all immigrants.

To read more about CFI’s immigration research and advocacy click here.

Read the White House fact sheets for these programs here:

Limiting Access to Asylum

Action to Keep Families Together

The Joint Budget Committee’s June Revenue Forecast is out. See our top five takeaways and hang on for the ride!

1. Consumer Pressure Heating Up

The economic outlook continues on a positive – though waning – trajectory. Inflation continues to slow in Colorado, while inflation in the U.S. has stabilized. However, the cost of housing in the Denver-Aurora-Lakewood metro area continues to grow at a faster rate than the prices of energy, food, and transportation. This, combined with high borrowing rates and lower household finances, is placing mounting pressure on consumer spending.

Since late 2023, the unemployment rate in Colorado and in the country has been steadily increasing. In early 2023, the Colorado unemployment rate exceeded that of the U.S. The rate of growth has slowed and Colorado once again sits below the national average of 4% at 3.7% . But signs of a weakening labor market, with slower growth in added jobs, means Colorado’s unemployment rate is slowly ticking up.

2. Tax Credit Palooza Budget Impacts

Despite strong revenue collection and a healthy economy, the Legislative Council has predicted a large downward revision in General Fund revenue — almost entirely from legislation passed in the 2024 session. A number of tax credits passed last session that will see almost $900 million deducted from collections. The largest of which, the Family Affordability Credit (HB24-1311), will reduce the General Fund revenue by $648 million in FY 24-25, representing the bulk of redirected revenue.

The Family Affordability Credit (FATC) and the expansion to the Earned Income Tax Credit (EITC) depend on revenue growth to be triggered. Thanks to how these statutes are written, both credits will be available unconditionally during the years that revenue growth is negative. When expectations for revenue return to relative normalcy, with 8% growth expected in FY 25-26, the credits are set to be dependent on growth.

What this means for the surplus is that we are likely to see much smaller rebates than before — and changes during the 2024 session impact those as well. SB24-228 adjusted the six-tier sales tax refund mechanism and created a new temporary income tax rate reduction mechanism. For the next three years we will see these new mechanisms at play. For FY 23-24, the income tax rate cut will be triggered, and the six-tier will distribute the rest of the surplus. For the FY 24-25, the identical rebate will be triggered, and there will be no rate cut. And finally, for FY 25-26, the Legislative Council has predicted that the rate reduction and six-tier will return.

3. Ballot Measures Could Squeeze the General Fund Even Tighter

Revenue available for FY 2025-26 is expected to be $1.26 billion more than the FY 2024-25 budget. To give budget writers perspective, forecasters provide them with Scenario A (which keeps spending constant) and Scenario B (which takes into account caseload growth, inflation, and other obligations). It’s not good news for the General Fund. Under Scenario B, the budget will be $576 million short. But the elephant in the room is Scenario C: one where voters approve huge property tax cuts that force the state’s General Fund to pay back the revenue lost to local governments like cities, schools, and fire departments. This could require between $2.25 and $3 billion be taken from the General Fund to pay for property tax cuts. To give that figure context, the Human Services General Fund budget is $1.3 billion. Higher Education is $1.66. The 15% General Fund reserve is $2.2 billion. The state could need to cut the whole of the Higher Education and Human Services budgets to pay for these local tax cuts.

4. State Education Transfer Fund Adjustment

Voters in 2000 passed Amendment 23, which required a transfer of one-third of 1% of taxable income to a dedicated fund for schools: the State Education Fund (SEF). The SEF is like a savings account;. money from the SEF and the General Fund go toward paying the state share of K-12 funding. This ends up being around 7% of state income taxes that is no longer counted toward the TABOR revenue limit.

The tricky part is that “taxable income” isn’t reported on a fiscal year basis, so adjustments are made for any corrections. This has meant a cumulative under-transfer of $135 million since 2005 that is now being accounted for. This requires moving dollars out of the General Fund into the SEF, but it has a net zero impact in terms of the General Fund picture since that $135 million also reduces TABOR rebate revenue, which would have been paid out of the General Fund.

5. The Prop FF Puzzle Continues

Proposition FF, passed in November 2022 by voters at the ballot, created a universal school meals program using revenue from reducing the amount of deductions taxpayers making above $300,000 were able to claim. During the 2024 session, the JBC had to do some fiscal finegling to ensure that the program — which saw much higher usage across the state than anticipated — was able to operate in its first two years. Now, another wrinkle — the pay-for has brought in more revenue than anticipated. Good news for universal school meals, but bad news for the proponents who now need to return to the ballot and ask voters permission to keep the extra revenue. TABOR continues to mandate such complexity.