Businesses see biggest relief as Colorado legislature approves additional property tax cuts during special session

Colorado lawmakers again approved property tax cuts during a special session of the legislature, but this time they hope the changes will stick around for longer than just a few months.

As property values ​​in the state have skyrocketed in recent years, the legislature has passed at least three bills aimed at offering short-term property tax relief. The latest special session, which ended Thursday, represents the third attempt to find a long-term solution.

“We will never be done,” said Sen. Barbara Kirkmeyer, a Brighton Republican who sponsored the main bill passed during the special session.

But if the deal approved during the special session between Democrats and Republicans holds, the new property tax mechanism approved this week should be in effect for at least six years.

That’s how long two conservative groups agreed not to bring initiatives that threaten massive property tax cuts to the ballot. After the bill passed the legislature on Thursday, the two groups, Advance Colorado and Colorado Concern, said they were working to pull their initiatives from the upcoming ballot.

Initiative 108 would have reduced the assessment rate used to assess residential and commercial properties, decreasing property taxes by approximately $3 billion by 2025. Initiative 50 would have imposed a 4% annual statewide cap on property tax revenue growth.

“They would completely decimate our public schools, our local governments and many of the services Coloradans rely on,” said House Speaker Julie McCluskie.

Gov. Jared Polis said he would sign the bill passed Thursday once the initiatives were withdrawn.

How does this affect homeowners?

The changes approved in the special session add to the property tax relief lawmakers had already created in the spring with Senate Bill 233. That bipartisan bill reduced property taxes statewide by $1.3 billion. The special session bill, House Bill 1001, added another $254 million to that figure.

The cuts in SB 233 resulted in a nearly $400 decrease in the average homeowners’ bill in 2025. HB 1001 increases the reduction by about $60, according to an analysis by the Colorado Fiscal Institute.

Property taxes, which are collected and used by local governments, vary widely but are generally calculated based on local taxes, the state assessment rate, and home values.

Who won the special session?

According to the Colorado Fiscal Institute, about two-thirds of the additional property tax cuts approved during the special session will benefit commercial properties. Lawmakers were proud of that impact.

“I think they deserve a property tax break,” Kirkmeyer said. “Let’s think about these small businesses.”

Sen. Dylan Roberts, D-Frisco, said he was glad to see the cuts for businesses.

“Reducing trade tariffs has always been one of my goals,” he said. “That was done in Bill 233 and now also in this bill.”

The bill passed with overwhelming support in both chambers, with only progressive Democrats and far-right Republicans voting against it.

How did school districts fare?

School districts, which are funded by local property taxes, saw no immediate cuts to their funding source during the special session.

The new property tax mechanism passed in SB 233 and HB 1001 set separate rates for school districts and all other local districts, such as fire departments. HB 1001 created $100 million in additional cuts to school funding, an amount that budget experts say can easily be recouped in the state budget.

The bill also created a 12% cap on property tax revenue for schools every two years.

This year, state lawmakers passed a budget for the first time in more than a decade that meets their constitutional requirements for school funding. While some advocates were concerned that the special session could undermine that promise, lawmakers are confident that won’t happen in the immediate future.

Taggart, a Grand Junction Republican and member of the powerful Joint Budget Committee, said he is optimistic the state will continue to be able to meet its obligation.

“I think we can continue to live within our means,” Taggart said. “We just have to prioritize appropriately.”

Well, but it’s politics, so who’s unhappy?

Bottom line: A lot of people were frustrated with the special session.

During the four-day special session, Democratic lawmakers, who hold supermajorities in both chambers, expressed anger at the way the additional property taxes were passed. Many said they felt forced to the negotiating table because of the aggressive ballot measures proposed by Initiatives 108 and 50.

They also complained that the deal between their party leadership and conservative groups was largely made without them.Many said they wanted more additional property tax cuts to go to lower-income Coloradans, such as renters and those with lower-value homes. Several bills introduced that would have attempted to do that were defeated on the first day. of the extraordinary session.

Meanwhile, some Republicans argued they wanted to give voters a chance to decide on Initiatives 108 and 50, saying the cuts in the deal still did not go far enough.

Fire district representatives also complained that additional cuts would deeply hurt their budgets.

Remind us how we got here?

Colorado lawmakers have struggled with property taxes over the past few years after voters in 2020 repealed the Gallagher Amendment, a constitutional amendment that prevented property taxes from rising too quickly. Property values ​​have skyrocketed since then, increasing an average of 40% during the most recent assessment period.

That set off a cascade of short-term property tax fixes. After several years of one-year fixes, Democrats, including the governor, proposed Proposition HH, which would have offered long-term property tax relief but would also have reduced the dollars available for annual refunds through the Taxpayer’s Bill of Rights by using that money to cover local services affected by the cut.

Proposition HH was soundly rejected by voters in 2023. Polis called a special session in response and the legislature granted more short-term relief and created the state property tax commission.

Following that commission’s recommendations, bipartisan lawmakers in the legislature passed Senate Bill 233. This spring, however, Advance Colorado and Colorado Concern said their proposed cuts were not enough and they would move forward with their more aggressive measures. This summer, negotiations began on the special session compromise.

Did anything else happen during the special session?

Thirteen measures were introduced, but ultimately only two bills passed. In addition to HB 1001, HB 1003 passed, which made permanent a property tax exemption for certain farm equipment.

Lawmakers also sought to limit the control that state ballot measures like 108 and 50 can have over property taxes in the future. A resolution that would have allowed voters to approve a new requirement for state ballot measures to receive local approval failed in its first committee hearing.

A bill that would have treated property taxes differently for primary and secondary homes He also died during the special session.