Colorado Gov. Jared Polis said he wanted the special legislative session that begins Monday to bring an end to the state’s property tax wars.
But first, lawmakers will get their say in the high-stakes fight – and it’s increasingly uncertain if the deal Polis struck to cut taxes and prevent a pair of November ballot measures from upending the state budget will survive.
Many Democratic and Republican lawmakers in the House and Senate aren’t happy about being called back to the Capitol to approve a compromise they never agreed to. Some of them plan to introduce bills that could crumble the pact negotiated between Polis, legislative leaders and two conservative political nonprofits who agreed to pull their ballot initiatives if their demands for tax cuts were met.
The deal was hammered out in private earlier this month among a small group of negotiators that included the governor’s budget director, Mark Ferrandino; state Sen. Chris Hansen, a Denver Democrat; and state Sen. Barbara Kirkmeyer, a Republican from Brighton.
But Polis’ call for a special session – just days after the proposal was first presented publicly to the state’s Property Tax Commission – frustrated some lawmakers who felt they were being asked to rubber stamp a negotiation they were shut out of, without the chance to advocate for their voters’ interests.
“A deal can only be made when everybody who has to take part in a deal is engaged,” said state Rep. Lorena Garcia, an Adams County Democrat who is pushing to use the special session to make the tax code more progressive.
“They want to do a wham-bam-thank-you-ma’am and call it good on something this controversial?” said state Rep. Richard Holtorf, an Akron Republican. Holtorf complained that he hasn’t had enough opportunity to vet the agreement – a feeling he shares with many Democrats.
The debate will play out over at least three days – the minimum time it takes to pass a bill in Colorado’s Legislature. Many of the lawmakers who will be participating thought their time in the General Assembly was done because they leave office at the end of the year, which may further complicate the special session.
“It’s a little awkward because I’ve already said goodbye,” said Sen. Rachel Zenzinger, a term-limited Arvada Democrat. “I was already thinking of myself as having moved on. And now I have to get back in the game.”
Zenzinger said while the special session is inconvenient – she had already packed her office and has been focusing on her campaign to become a Jefferson County commissioner – protecting K-12 funding is worth it. Initiatives 50 and 108, the two property tax measures on the November ballot, would jeopardize the state’s new school finance formula.
Even worse, state budget officials say it could return Colorado to the days of the budget stabilization factor – the period following the Great Recession in which plummeting property tax rates contributed to a cumulative school funding shortfall of over $10 billion.
“The only reason we’re going back to the Capitol is because 50 and 108 are so reckless,” Senate President Steve Fenberg said. The Boulder Democrat, because of term limits, also thought his time in the Legislature had ended in May when the General Assembly’s normal lawmaking stretch ended.
Brought by business alliance Colorado Concern and the political nonprofit Advance Colorado, Initiatives 50 and 108 represent the conservative response to years of rising tax bills and temporary tax cuts that business groups say haven’t gone far enough.
Initiative 50 asks voters to amend the constitution to enact a 4% statewide cap on annual property tax growth, a limitation that would shrink residential and business property tax bills significantly over time. Historically, property tax revenue has exceeded that mark 45 times in the last 60 years, a Colorado Sun analysis found, as property values rise and population growth and new development add to the tax base.
Initiative 108 would cut taxes by $2.4 billion by slashing assessment rates for residential and business property, starting in 2025 for taxes owed in 2026. It would also require the state to reimburse local governments for some of the loss – but competing interpretations of the ballot language offer wildly different estimates of how much.
The backlash to the ballot measures has been fierce and bipartisan. In recent weeks, political and business groups from across the political spectrum signed on to letters saying they represented a “real and significant threat” to Colorado communities that would deplete public services and cause municipal bond investors to flee Colorado, cutting off a major source of financing for new housing development.
Supporters have shrugged off those concerns as fearmongering, and blame lawmakers for never delivering the promised replacement for the tax-limiting Gallagher Amendment, which voters repealed in 2020.
The proposed deal builds off Senate Bill 233, a $1 billion tax cut passed near the end of the 2024 legislative session.
It would cut property taxes by an additional $255 million starting next tax year, for taxes owed in 2026, with additional assessment rate cuts for residents and some businesses phased in over the following years. Local tax rates vary greatly from one community to the next, but for the typical homeowner, the deal is expected to provide less than $100 in tax savings in the first year of the deal.
It also would strengthen the measure’s local cap on property taxes, limiting revenue growth to 10.5% over the two-year tax assessment cycle for local governments and special districts, with exceptions for new construction and things like rezonings, which can change how a property is taxed.
School district property tax collections would be limited to 12% growth statewide every two years.
Top Democrats are also pushing to include some state funding for fire protection districts and other local services that would lose money due to the cuts.
In exchange for the tax package, the initiatives’ backers said they would be taken off the November ballot ahead of a September deadline. They also agreed not to bring similar measures forward within the next decade – as long as future lawmakers don’t alter the agreement.
“I think it’s great that subsequent discussions have led to another bite at the apple that can de-risk the November ballot and provide the long-term stability that homeowners need and that our schools and fire districts need,” Polis told The Colorado Sun in an interview earlier this month.
But not everyone thinks a special session is the right antidote.
“I did not believe a special session was necessary,” said House Speaker Julie McCluskie, a Dillon Democrat. “I believed that we could find a path forward to creating a possible compromise framework that could have been considered by the General Assembly in January.”
And some aren’t so optimistic that the intense atmosphere of a special session is the right one to resolve the property tax debate for the long run. After all, lawmakers have repeatedly failed to put the matter to rest in the last year, with far more time to negotiate.
First, voters in November 2023 rejected Proposition HH, a complicated ballot measure backed by Polis that would have cut property taxes, while tapping into taxpayer refunds to boost funding to schools and local governments. Later that month, lawmakers reconvened for a special session where they passed another round of temporary tax cuts and created a bipartisan Property Tax Commission tasked with coming up with a long-term solution. But a permanent solution never emerged from the commission, and lawmakers moved forward a plan of their own in the final days of the legislative session.
Holtorf, who won’t be returning to the Legislature next year after making a failed congressional bid, said it’s too big an issue to be solved quickly and, he said, House Republicans haven’t gotten enough information on the compromise to analyze its efficacy.
“If we’re really going to have a special session on property taxes, it’s going to take more than three days,” he said.
There are signs that the special session may be as complicated as Holtorf believes.
A group of liberal Democrats wants to use the special session to try to make the tax code more progressive.
State Reps. Steven Woodrow and Javier Mabrey, two Denver Democrats, plan to introduce a bill that would offer a bigger property tax break on people’s primary residence than on their second or third homes.
The measure would make a $70,000 reduction in taxable value available only to primary residences. That’s irking the short-term rental industry, which includes many homes offered for rent as vacation properties. Airbnb last week was encouraging Coloradans to tell legislators not to make such a change.
“I know we’re scared,” Woodrow told his House Democratic colleagues Thursday during a virtual caucus meeting. “We have a gun to our heads. They’re making us the proverbial offer that we can’t refuse. I just want to put on record that that’s a pretty terrible way to legislate.”
Garcia plans to introduce a bill that would offer more relief to people who own lower-value homes.
“Most of the bills you’ll see from us are ensuring we are offering targeted relief where it’s most needed,” Garcia said.
She brushed off concerns that it may roil any deal made to prevent Initiatives 50 and 108 from being on the ballot.
“We still have our jobs to do,” Garcia said, lamenting how only a few lawmakers were involved in negotiating the compromise. If there is any finger-pointing, any deal-breaking, that lies solely with the proponents of 50 and 108. It’s on them.”
There’s also a push to adopt a resolution that would place a measure on the November ballot asking voters to amend the state constitution to prevent property tax changes from happening anywhere but on the local level. To pass, the resolution would need two-thirds support in each the House and Senate, and then require 55% of voters’ approval to be adopted.
Republican lawmakers, meanwhile, are planning to introduce property tax measures of their own that would offer more relief.
One measure, from Republican state Sens. Mark Baisley and Kevin Van Winkle and GOP Rep. Brandi Bradley, would ask voters to amend the state constitution to further limit the growth in property taxes levied by special districts. Another proposal, from state Rep. Ken DeGraaf, a Colorado Springs Republican, would expand the taxable value exemption for seniors, veterans and the surviving spouses of members of the military who die in the line of duty.
Michael Fields, who leads Advance Colorado, the conservative political nonprofit behind Initiatives 50 and 108, wouldn’t say what bills may cause him to back out of his promise to remove the measures from the ballot.
“I don’t even know what bills are coming,” he said, “so I’m not going to comment on any of them. We have a deal with the Legislature and I hope that that works out and we are able to pull down our measures.”
The political – and literal – temperature will be hot. There’s not much air conditioning under the gold dome in Denver. Democratic leaders in the House have adjusted the dress code to try to help.
Instead of coats and ties, representatives will be allowed to dress business casual.
