| Summary | Section 3 of the bill requires the secretary of state to refer a ballot
issue to voters at the November 2023 election that asks voters whether
property taxes should be reduced and that seeks voter approval to retain
and spend excess state revenues that will be used to backfill some of the
reduced property tax revenue. Most of the bill only becomes effective if
the voters approve the ballot issue.
Local government property tax revenue limit. Beginning with
the 2023 property tax year, section 6 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, which does not change the
gross mill levy, that is 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.
Valuation changes. The valuation for assessment (valuation) of
nonresidential real and personal property, excluding producing mines and
lands or leaseholds producing oil or gas, is based on an assessment rate
of 29% of actual value, but currently, there are temporary reductions in
the valuation for certain subclasses of property. Section 8 creates the
additional temporary reductions. For the 2023 property tax year:
•
For lodging property, property listed under any improved
commercial subclass code, and all other nonresidential
property, excluding agricultural property and renewable
energy production property, the assessment rate is reduced
from 27.9% to 27.85%;
•
For renewable energy agricultural land, which is a newly
created subclass of agricultural property that is valued
under section 7, the assessment rate is reduced from 26.4%
to 21.9%.
Thereafter, the assessment rate for lodging property and all
nonresidential property, excluding agricultural property and renewable
energy production property and property that is not under a vacant land
subclass, is reduced from 29% to:
•
27.85% for the 2024 through 2026 property tax years;
•
27.65% for the 2027 and 2028 property tax years;
•
26.9% for the 2029 and 2030 property tax years; and
•
25.9% or 26.9% for the 2031 and 2032 property tax years,
depending on the increase in the valuation in the 32
counties with the smallest increases from the 2030 to 2031
property tax years (revenue increases).
The assessment rate for agricultural property, excluding renewable
energy agricultural land, and renewable energy property is reduced from
29% to:
•
26.4% for the 2025 through 2030 property tax years; and
•
25.9% or 26.4% for the 2031 and 2032 property tax years,
depending on the increase in the valuation in the 32
counties with the smallest revenue increases.
The assessment rate for renewable energy agricultural land is
reduced from 29% to 21.9% for the 2024 through 2032 property tax
years.
Beginning with the 2033 property tax year, all of the temporary
valuation reductions expire and the valuation of all nonresidential real
property is 29% of the actual value of the property.
The valuation of residential real property is based on an
assessment rate of 7.15% of actual value, but currently, there are
temporary reductions in the valuation. Section 9 further reduces the
valuation of residential real property. For the 2023 property tax year, the
valuation is reduced from 6.765% of the amount equal to the actual value
minus the lesser of $15,000 or the amount that causes the valuation to be
$1,000 (alternate amount) to 6.7% of the amount equal to the actual value
minus the lesser of $40,000 or the alternate amount.
For the 2024 property tax year, the valuation is reduced as follows:
•
For multi-family residential real property, the valuation is
reduced from 6.8% of the actual value to 6.7% of the
amount equal to the actual value minus the lesser of
$40,000 or the alternate amount; and
•
For all other residential real property, the valuation is
reduced from an estimate of 6.98% of the actual value to
6.7% of the amount equal to the actual value minus the
lesser of $40,000 or the alternate amount.
For the 2025 through 2032 property tax years:
•
For multi-family residential real property and primary
residence real property, including multi-family primary
residence real property, the valuation is reduced from
7.15% of the actual value to 6.7% of the actual value minus
the lesser of $40,000 or the alternate amount;
•
For qualified-senior primary residence real property,
including multi-family qualified-senior primary residence
real property, the valuation is reduced from 7.15% of the
actual value to 6.7% of the amount equal to the actual value
minus $140,000 or the alternate amount; and
•
For all other residential real property, the assessment rate
is reduced from 7.15% to 7.1%.
Beginning with the 2033 property tax year, all of the temporary
valuation reductions expire and the valuation of all residential real
property is 7.15% of the actual value of the property.
The bill also establishes that all of the temporary reductions in
valuation for residential and nonresidential property created in the bill are
contingent on the state's ability to retain and spend state surplus up to the
proposition HH cap. If, for any reason, excluding a legislative enactment
by the general assembly, the state is not permitted to retain and spend this
money, then the temporary reductions in the bill do not apply.
Section 11 creates the residential subclass of primary residence
real property for owner-occupiers 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. Section 11 also creates the residential
subclass of qualified-senior primary residence real property, which is a
property with an owner-occupier who previously qualified for the senior
homestead exemption for a different property and who does not qualify
for the exemption for the current property tax year.
Sections 1, 12, 13, 15, and 16 delay deadlines as necessary due to
the valuation changes for the 2023 property tax year.
The state is currently required to reimburse local governmental
entities for property tax revenue lost as a result of the reductions in
valuation enacted in Senate Bill 22-238. Section 14 modifies this backfill
mechanism by:
•
Specifying that the amount of revenue lost for a property
tax year is based on a local governmental entity's mill levy
for the 2022 property tax year, excluding specified mills;
•
Including the additional property tax revenue reductions
that result from the bill in the backfill for the 2023 property
tax year;
•
Eliminating the maximum amount of the backfill for the
2023 property tax year that is a refund of excess state
revenues;
•
Extending the backfill for the 2024 through 2032 property
tax years for the valuation reductions in the bill, but making
a local governmental entity that has an increase in real
property total valuation of 20% or more from the 2022
property tax year ineligible for the backfill;
•
Creating the local government backfill cash fund, which
includes a $128 million general fund transfer, and requiring
the money from the fund to be used to backfill revenue to
local governments beginning with the 2024 property tax
year; and
•
Beginning with the 2024 property tax year, proportionally
reducing the amount that each eligible local government
receives, if necessary to avoid exceeding the total amount
that is available for the backfills statewide.
Section 14 also modifies the backfill mechanism to treat cities and
counties as counties instead of municipalities, and this change is not
contingent on voter-approval of the ballot issue. Section 18 requires the
department of revenue to calculate the amount of excess state revenues
that will be refunded for the fiscal year 2022-23 with and without the
changes from the bill.
Voter-approved revenue change. If the voters approve the
referred ballot issue, then the state will be authorized to retain and spend
revenues up to the proposition HH cap, created in section 3. For the
2023-24 fiscal year, the proposition HH cap is equal to the excess state
revenues cap for the prior fiscal year, adjusted for inflation plus 1% and
population changes. Thereafter, the proposition HH cap is equal to the
proposition HH cap for the prior fiscal year, adjusted for inflation plus
1% and population changes. The proposition HH cap is also annually
adjusted for the qualification or disqualification of enterprises and debt
service changes.
If the general assembly does not enact assessment rates for the
2033 property tax year that are the same or lower than the assessment
rates for the 2032 property tax year described above, then the proposition
HH cap is reduced to be equal to the excess state revenues cap, and the
state will retain $0 under this authority beginning with the 2031-32 fiscal
year. Thereafter, the general assembly may partially or wholly restore the
proposition HH cap without additional voter approval if the general
assembly enacts valuation reductions equal to or greater than those for the
2032 property tax year.
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 bill and
Senate Bill 22-238, and the remainder is transferred to the state education
fund to offset the revenue that school districts lose as a result of the
property tax changes. Section 5 requires the state controller to include the
new voter-approved revenue change in the annual report on TABOR
revenues.
Sections 2, 4, 10, and 17 make conforming amendments related
to the valuation changes and related procedures and the voter-approved
revenue changes.
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