Colorado Governor Jared Polis has announced a special legislative session on August 26 to address proposed ballot initiatives that could have a negative impact on public financing, education, and local government funding in the state. These initiatives threaten to reduce funding for K-12 and higher education, prompting the governor to take action to safeguard critical institutions.
Initiative 50, scheduled for the November 5 ballot, seeks to cap total statewide property tax revenue growth at 4%, requiring voter approval to lift the cap. Initiative 108 aims to lower assessment rates for property taxes on residential and nonresidential properties, potentially affecting funding for schools and local governments. The lack of clarity in Initiative 50’s implementation plan has raised concerns among Colorado bond market professionals about potential litigation and increased borrowing costs for issuers.
Governor Polis has proposed a legislative framework that builds on Senate Bill 233, providing additional savings of $270 million on property taxes for 2025. The framework includes adjustments to assessment rates and revenue growth caps for local governments and school districts. The goal is to strike a balance between reducing property taxes for residents and maintaining funding levels for essential public services.
Property market professionals have raised concerns about the potential impact of the proposed ballot initiatives on metropolitan districts and public infrastructure financing. Negotiations between the governor, legislative leaders, and initiative proponents have led to a tentative agreement to remove the measures from the ballot in exchange for legislative action to address property tax issues. However, skepticism remains about the enforceability of this agreement and its long-term implications for special districts.
The proposed legislation, in conjunction with Senate Bill 233, aims to generate approximately $1.6 billion in annual tax savings by implementing property tax revenue caps for local governments and school districts. This legislative package represents a compromise between addressing property tax concerns and protecting essential public services.
As Colorado faces challenges related to property taxes amid a surge in home values, Governor Polis’s decision to call a special legislative session reflects a proactive approach to addressing funding issues. By engaging with stakeholders and proposing a comprehensive legislative framework, the governor aims to protect vital public services while providing relief to property owners. The outcome of the special session will have significant implications for the future of property tax policy in Colorado.