Colorado voters rejected a new law that could have shaken up its housing market by lowering tax refunds but reducing property taxes longer-term.
On Tuesday, residents voted against Proposition HH, which would have lowered tax refunds but cut property tax increases over the next decade.
The vote has ensured Coloradans' Taxpayer Bill of Rights (TABOR) will remain unchanged. If HH had been passed, residents' tax refunds would have been reduced, but their property tax increases would have been smaller over the next decade.
The TABOR payments are sent out every year once Colorado meets a certain tax revenue cap. Last year, the payments were $750 per taxpayer.
Under the now-rejected law, those who owned $500,000 homes would pay somewhere between $186 and $275 less based on their local tax rate. Annual savings for those with a median home, which costs $723,000, would be around $685.
But the potential lower taxes would come at the cost of a reduced TABOR refund. Proposition HH would have ensured homeowners saw the benefits of lower taxes, but renters would just get smaller refunds each year.
TABOR payments would have gone to school districts' budgets, with the state earmarking up to $20 million for rental assistance.
The vote did not come without its controversies. Supporters of Proposition HH said it would help seniors and working families avoid property tax increases, but others suggested it would cost taxpayers more in the long run.
Dana Lubner, a Denver resident, told Newsweek about her concerns with the bill. She said while it appeared to provide relief, it would end up causing an overall property tax increase and less money in renters' pockets to make ends meet.
"Proposition HH has garnered attention for its promise of property tax relief in Colorado, but my concerns run deep," Lubner told Newsweek. "This proposal, in my view, is complex and perplexing, posing a risk to TABOR refunds that are vital to many Coloradans."
"Requiring homeowners to navigate a convoluted application process for a market value reduction is a recipe for confusion and frustration. What's more, the lack of immediate voter oversight allows the state legislature to tweak local property taxes for an entire decade without accountability."
Others said the benefits of Proposition HH outpaced any cons for the state at large.
"In a state like Colorado where people have seen their property tax amounts run up over the past decade, that is pretty appealing," Paul Miller, founder of FamilySkier and a short-term rental owner, told Newsweek.
"Money to fund municipal and state services will need to come from somewhere," Miller said. "If property tax increases are not a vehicle for additional revenue in the future, I expect the revenue to come from other ways."
Some naturally were set to benefit more than others if Proposition HH went through. Those with primary residences would get a higher tax reduction than those with second home or rental houses, for instance.
Coloradans aged 65 and older would have also been able to take a tax break even if they decided to get a smaller home, no matter how long they've lived in the unit.
The failed tax law was proposed by Democrats in an effort to keep property taxes low over the next decade by exempting a portion of a home's value from being taxed and reducing the assessment rate to calculate your tax owed.
While the statewide assessment rate is currently set at 6.765 percent, it would have been moved at 6.7 percent. In 2025, the percentage is set to increase to 7.15 percent, but the rejected law would have made it stay at 6.7 percent.
And in 2023, $50,000 of the value of a home would have been exempt from being taxed, while that number would have moved to $40,000 in 2024.
Property values generally increase each year, with current assessments finding a surge in value of up to 45 percent in Denver and 60 percent in other areas of Colorado.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
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