The House’s regular 2024 session ended in May, but Democratic Gov. Jared Polis called them back to work to negotiate a deal that would get two conservative groups to withdraw two initiatives from the November ballot and pledge not to bring similar property tax proposals to future votes. Those initiatives, the House’s Democratic leadership warned, would drastically reduce property tax revenues and have disastrous consequences for state finances.

“What we are doing here today, at the governor’s call, is to govern with great responsibility. This is a moment for us to contain the threat of two ballot initiatives that would upend the state, that would deal catastrophic blows to the investments we have made over the past few years – particularly in public education, in the services delivered locally in our state and in special districts,” House Speaker Julie McCluskie, a Democrat from Dillon, said before the session began Monday morning.

The Democrats have a strong majority in both houses of Parliament.

Property taxes are collected by local governments and fund services such as schools and fire departments. Although Colorado has some of the lowest tax rates in the country, Colorado property taxes have risen sharply in recent years, largely due to rising real estate prices.

“I look forward to delivering a little more property tax relief to those who need it most, but most importantly, removing the existential threat posed by Initiatives 50 and 108 from the ballot and from the equation for the future of our communities,” said Senate President Steve Fenberg, a Boulder Democrat.

Hope for sustainability and security

In recent years, lawmakers have pushed for gradual reductions in the state’s property taxes, including a special session last November and a bipartisan bill in May that cut rates and saved more than $1 billion, but failed to convince supporters to remove the measures from the ballot.

The deal at hand would lower assessment rates on residential properties and many other properties beginning in the 2025 property tax year. It would also change the cap on local property tax revenues and set a cap on school districts’ revenue growth.

Overall, the bill would provide savings of about $248 million in fiscal year 2025 and about $271 million in fiscal year 2026, according to a bipartisan analysis of the state. It includes a mechanism to reimburse schools and local taxing districts $81 million in the first year and $92 million in the second year.

The initiators of the bill say that it builds on the property tax relief bill from the beginning of the year.

Savings for individual homeowners will vary by location, but are expected to be less than an additional $100 per year. Sponsors hope this will provide a level of sustainability and security for local households.

In a letter Monday, the conservative organizations Advance Colorado and Colorado Concern, which are behind Initiatives 50 and 108, said they would not introduce any ballot initiatives that would reduce property tax revenues for at least six years unless the legislature, executive branch or courts “depart from the terms of the agreement.”

Initiative 50 would amend the state constitution and limit property tax revenue growth statewide to 4%, while Initiative 108 would reduce property taxes by an estimated $2.4 billion.

Proposed constitutional amendment

In addition to the original compromise draft on property tax, the MPs introduced twelve further bills for the special session. The committees rejected the majority, but left some intact.

That includes passing a bill by Democratic Rep. Mike Weissman of Aurora that would put a constitutional amendment before voters this year that would require local authorities to also approve through an election any successful statewide referendum that affects property tax revenue.

Republicans have already criticized the bill as an attempt to prevent Colorado citizens from using the citizen initiative process, while supporters say it would be a way to return control of property taxes to local governments.

“I’m very curious to see which of the usual supporters of local control are opposed to giving voters the opportunity to decide if they want more of it. Because that’s what this is about,” said Kevin Bommer, executive director of the Colorado Municipal League, in support of the Weissman bill.

Another bill by Democratic Rep. David Ortiz of Littleton would lower assessment rates for newly built accessible housing.

Among the bills that failed in committee were one that would have based the property tax on land value rather than property value; one that would have adjusted assessment allowances based on property value to provide greater relief to low-income homeowners; and one that would have reinstated the Gallagher Amendment, a 1982 constitutional measure that kept assessment rates low for residential properties while raising them accordingly for nonresidential properties.

This is a developing story and will be updated.