Colorado Governor Jared Polis has announced a special legislative session scheduled for August 26 to address proposed ballot initiatives that could have negative impacts on public financing, education, and local government funding in the state. The Governor emphasized the urgency of the situation, highlighting the potential risks associated with inaction.
Initiative 50, set to be on the November 5 ballot, proposes a 4% cap on statewide property tax revenue growth that can only be lifted with voter approval. Initiative 108, awaiting certification, aims to lower assessment rates for residential and nonresidential properties. These initiatives have raised concerns among Colorado bond market professionals due to their lack of detailed implementation plans and potential adverse effects on issuer borrowing costs.
The proposed legislative framework builds upon Senate Bill 233, which was enacted earlier this year, to further reduce assessment rates and adjust property tax revenue growth caps for local governments and school districts. This initiative aims to provide property owners with an estimated $270 million in savings on their 2025 tax bill.
Zach Bishop, a finance expert, highlighted that the latest draft of the framework protects local government and metro district debt, addressing concerns raised by bond market professionals. However, skepticism remains among stakeholders, such as Ann Terry, CEO of the Special District Association of Colorado, regarding the Governor’s and legislative leadership’s ability to ensure the removal of the initiatives from the ballot.
The proposed legislation, combined with existing measures, could result in nearly $1.6 billion in annual tax savings. State lawmakers have been grappling with rising home values and the absence of mechanisms to regulate property taxes, following the repeal of the state’s Gallagher Amendment in 2020.
The upcoming special session presents an opportunity for Colorado lawmakers to address critical issues surrounding property tax cuts and ballot initiatives. Balancing the need for tax relief with the preservation of essential public services will be crucial in navigating the complex landscape of property tax reform in the state. Stakeholder collaboration and careful consideration of the proposed legislative framework will be essential in ensuring a sustainable and equitable solution for Colorado residents.