Ballot questions address high property taxes that go hand in hand with rising property values – Daily Bulletin
The front entrance to one of seven nearly completed redT Homes homes in Denver. (Helen H. Richardson/The Denver Post/TNS)
No state illustrates this year’s spate of property tax cut votes better than Colorado, where the results of two likely voter questions could lead to cuts in funding for schools, roads, emergency services and other municipal services.
The ballot measures in Colorado are just two of nearly a dozen pending property tax issues in states across the country, including Arizona, Florida, Georgia, New Mexico, North Dakota, Virginia and Wyoming. While they vary in scope, the measures all aim to reduce taxes for some or all property owners.
One question in Colorado is already approved for the ballot, and another appears to have many more signatures than are needed to get on the ballot. (A third Colorado property tax question, less controversial than the others, that has been approved for the ballot would increase the amount of tax exemption that disabled veterans can claim.)
“Property taxes are a deeply unpopular but fairly efficient tax,” said Jared Walczak, vice president of government projects at the Tax Foundation, a conservative tax analysis group that advocates for lower, broader taxes. “So they’ve always pitted economists and policy experts against ordinary homeowners who are very frustrated with their property taxes.”
Property taxes are typically collected at the local level, and the revenue is used to fund schools, public safety, fire departments and roads. Ballot measures being considered across the country could have a significant impact on the funds raised by these taxes — potentially leading to service cuts or pressure on state legislators to make up the difference.
Local authorities regularly assess the value of properties and then set tax rates based on those estimates. According to real estate data company Zillow, home market values nationwide have increased by about 50% since August 2019.
“(Many homeowners) are paying dramatically more for the same property and don’t feel like they’re being treated any better by the government,” Walczak said. “That’s the reason for the discontent that’s reflected in votes and pressure on state lawmakers to remedy the situation.”
According to experts, property taxes tend to make a bigger impression on taxpayers because they are often paid in a larger lump sum a few times a year, unlike income or sales taxes, which are paid in small installments.
In Colorado, a ballot initiative would limit annual growth in state property tax revenues from residential and commercial real estate to 4%.
Another proposal, also expected to be voted on in November, would reduce property tax rates on residential and commercial properties. Since this reduction would bring in less money, if this initiative passes, the state would have to reimburse local governments for the lost revenue – an estimated $3 billion.
In May, the Colorado legislature passed a bill to reduce property tax rates in a hard-fought compromise worth $1.3 billion. The new law provides for short-term reductions in property tax rates and long-term structural changes to the property tax law, and prioritizes funding for schools over other government services. The law also caps revenue growth from property taxes at 5.5%.
But conservative groups wanted more and pushed for stricter property tax limits to be put to a vote in November.
“The bill that passed was a good start,” said Sean Duffy, spokesman for Advance Colorado, a conservative advocacy group and a key proponent of the initiatives.
“But a lot of Republicans and a lot of taxpayers and people across the state thought it would be really important to make a more significant and permanent cut,” Duffy said.
The other organization supporting the referendums is Colorado Concern, a conservative group founded by Larry Mizel, who founded one of the largest home-building companies in the country and was a major fundraiser for former President Donald Trump.
Duffy said voters still have concerns about property taxes despite the legislature’s action.
“Real estate prices in Colorado have shot up like a hockey stick,” Duffy said, a trend mirrored in many other states. “It’s not like, ‘I don’t want to pay for my schools or my fire department,’ it’s just been a huge bucket of water in the face.”
But Colorado Democratic Rep. Chris deGruy Kennedy, who co-sponsored the bill that eventually became law, said the popular initiatives went too far.
He said the proposed 4% increase in the cap on property tax revenues would not take into account inflation or regional variations – or new construction, which tends to reduce private property within a jurisdiction.
DeGruy Kennedy, who is term-limited, this summer became president of the Bell Policy Center, a left-leaning nonprofit research and advocacy organization that supports upward social mobility for middle- and low-income individuals.
Florida also has a ballot bill that could save homeowners money while reducing local tax revenues. The initiative would allow an annual inflation adjustment of the property tax exemption for people whose property is their primary residence. It is supported by a group of Republican lawmakers but opposed by the state’s Association of Cities.
In Arizona, a vote on a property tax has more to do with the volatile issues of homelessness and vagrancy, says Ryan Byrne, senior editor of the Voting Project at Ballotpedia, a nonprofit that tracks every candidate and referendum across the country.
If passed, the measure would allow property owners to apply for a property tax refund if the municipality fails to enforce laws against illegal camping, loitering, panhandling, public urination, public consumption of alcohol and possession of illegal substances. The Legislature put the measure to a vote on a tie vote, with Republicans in favor and Democrats against. The League of Cities also opposes the measure.
In North Dakota, former Republican Rep. Rick Becker is leading a referendum to completely abolish property taxes.
“Do you really own your property if the government can take it away from you?” he asked, referring to cases in which the homes of people who don’t pay their taxes could be foreclosed on.
“In North Dakota, like many other states, people hate the property tax,” he said, arguing that lawmakers have plenty of other pots of money from which to replace the revenue.
A nonpartisan research institute estimated that eliminating property taxes in North Dakota would cost the state $1.3 billion a year.
The ballot proposal in the state of Georgia would allow municipalities to create a property tax exemption for homeowners whose property is their primary residence.
The measures in New Mexico and Virginia would provide veterans with more property tax relief.
Wyoming’s ballot initiative proposes to create a new property class for taxation purposes by placing owner-occupied housing in a different category than rental properties.
Stateline is part of States Newsroom, a national nonprofit news organization focused on state politics.
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