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.
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.
HB24B-1001 Expands Untargeted, Broad-Based CutsHB24B-1001 reduces assessment rates for residential and nonresidential property as follows.
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.
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.
CFI’s Take: Fiscal Responsibility is Keeping Property Taxes LocalProperty 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.
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