Lawmakers have been told to prepare for a special session this month, presumably to tackle a compromise, under which Colorado residents and businesses would get more tax relief and halt two initiatives that would significantly decrease local governments' revenue.
Sources said the governor will issue the call on Thursday for the Colorado General Assembly to convene for a special session, which is slated for Aug. 26, 27 and 28.
"The session is happening," one source said.
If the special session, indeed, takes places, it would be the second time in less than a year that Gov. Jared Polis would have convened such a session to tackle property taxes. After voters rejected Democrats' proposed solution to soaring property valuations— some have seen 40% to 50% increases —last November, the governor convened a special session, in which lawmakerspassed legislation that reduced home's assessment rate and increased the amount that would be exempted from tax liability purposes.
In the last several days, lawmakers and political advocates have hinted that negotiations are underway to stop Proposition 108 and its companion measure, Proposition 50, in exchange for a bigger tax cut than what the legislature approved earlier this year.
Proposition 50 has already qualified for the ballot, while election officials have yet to conclude whether Proposition 108 also turned in enough signatures to appear on the November ballot, though its proponents are confident of its chances.
During a special meeting of the state Commission on Property Tax on Monday, lawmakers began to digest the framework for such a compromise, notably that it would cut both residential and commercial property tax rates, decrease the commercial assessment rate over three years and cap revenue growth.
The threat of significantly more tax cuts than what lawmakers enacted earlier in the year — and the corresponding loss in government revenue—has compelled the parties to try to negotiate and head offPropositions 50 and 108. Proponents have argued that the legislature has failed to provide meaningful and lasting relief to both residents and businesses.
The parties must act quickly, as the deadline to remove measures from the ballot is Sept. 6.
On Monday, analysts briefed members of theCommission on Property Tax on what the current tax regime looks like under Senate Bill 24-233, which Republicans and Democrats earlier passed, the fiscal effects if voters approved Propositions 108 and 50, and the parameters of the potential compromise that, assuming a deal is reached, lawmakers would then approve in the special session.
All told, the compromise would reduce property taxes by $255 million in tax year 2025, and by $295 million by 2025— compared to the base as modified bySB 233.
Analysts said the fiscal impact would be greater in the out years.
Finally, the plan would require a smaller increase in state aid— $83 million more in fiscal year 2025-26 and $105 million the year after—compared to the figures under the tax initiatives.
Just before the special meeting, more than 40 bipartisan organizations and the mayors of Aurora, Denver, and Colorado Springs — Mike Coffman, Mike Johnston, and Yemi Mobolade, respectively — submitted letters to the commission, expressing concerns about the potential impact of Propositions 108 and 50.
Most of the 19-member committee seemed agreeable to the compromise framework’s core elements, which include changes to residential assessment rates, non-residential assessment rates, and a revenue cap for both schools and local government rates.
An outline of the potential compromise said it would do the following:
The residential assessment rate for local governments would drop from 6.7% to 6.25% for the 2025 tax year.
Assessment rates for commercial and agricultural properties would decrease to 25% in the 2027 tax year. The change won't apply to the oil and gas industry.
Local government revenue growth would be capped at 5.25% annually, and school districts will see a new limit of 6%.
Some have remained skeptical, citing fears that even a compromise today would not stop a future ballot initiative seeking more tax cuts.
“Most of us don’t object to the policy, most of us don’t even object to a special session,” Summit County Commissioner Tamara Pogue said.” But I think what a lot of us do object to is being here over and over again and having no assurances whatsoever that we won't be back here next June having the same conversation.”
Proposition 108 seeks to reduce assessment rates to 5.7% for residential properties and 24% for commercial properties. Proposition 50, a constitutional amendment, would cap tax revenue growth to 4% and require voter approval for local government to retain dollars above the limit. Proposition 50 already qualified for the ballot, while election officials have yet to conclude whether Proposition 108 also turned in enough signatures, though proponents are confident it will get on the ballot.
A compromise would provide certainty to both sides: Proponents wouldn't have to spend money in what's likely to be an expensive fight to persuade people to vote for or against the two measures. To critics, a compromise opens the possibility of tax cuts that wouldn't be as deep as what Propositions 108 and 50 seek.
"We saw in May that the commission supported SB24-233," Sen. Barbara Kirkmeyer, R-Brighton, said of the legislation approved earlier this year. "And I believe they will support the negotiated framework. This is a common sense approach that makes minor changes to the historic bipartisan legislation that I co-prime sponsored and it will lead to Initiatives 50 and 108 coming off the ballot."
