By Rocky Mountain Voice Staff
A bill passed yesterday, touted as the answer to skyrocketing property taxes, does NOT cut property taxes. Instead of paying an effective rate of 6.3% this year, you’ll be paying 6.8% next year.
Colorado lawmakers wrapped up their 2024 legislative session Wednesday evening by sending Gov. Jared Polis a last-minute property tax relief bill, Senate Bill 233. Introduced on Monday after months of negotiations, this was one of the final bills to pass before the Assembly adjourned for the year. Lawmakers hope the measure will dissuade voters from backing property tax measures on the November ballot that could significantly impact state and local government budgets. Colorado Concern, the group ready to push a ballot initiative, didn’t get on board.
Senate Bill 233 is touted as cutting taxes, but the average homeowner will only see a few hundred dollars annually in “savings” by holding residential and commercial property tax rates steady for this year, affecting taxes owed in 2025. The residential property assessment rate would be set at 6.7%, with a $55,000 value reduction, while commercial properties would see a 27.9% assessment rate and a $30,000 value reduction.
However, since current law stipulates these rates are supposed to increase, this “freeze” would cost schools around $350 million, a sum that will be reimbursed from the state’s education fund, sourced from income tax revenue. Local governments would receive approximately $10 million in reimbursements to offset their revenue losses compared to 2022 levels. Despite this, the majority of the local revenue hit will go unreimbursed, although rising property values have generally led to increasing tax revenues.
The legislation underwent a few amendments during its brief journey through the Capitol. The changes will affect tax years 2025 and beyond, when the state’s property tax structure will see a notable shift. Senate Bill 233 introduces separate assessment rates for schools and other local governments. For 2025, the residential assessment rate for local governments will drop to 6.4%, while for schools, it will rise to 7.15% to prevent significant losses in K-12 funding. The commercial assessment rate will fall to 27%.
Additionally, a 5.5% cap on local government property tax revenue growth will be implemented and remain indefinitely, unless overridden by a local referendum. However, this cap won’t apply to schools.
For the 2026 tax year, the residential assessment rate for local governments will be set at 6.95%, and homeowners will receive a 10% exemption on their property’s value, up to $70,000. The commercial assessment rate will decrease to 25% and remain there permanently. The residential assessment rate for schools will stay at 7.15% unless local property tax revenue statewide reaches 60% of K-12 funding.
While Coloradans will still face higher property taxes than in 2022 due to rising property values, Senate Bill 233 will prevent them from climbing as high as they could have. However, if Initiative 50 or Initiative 108 passes in November, the bill will be repealed. Initiative 50 seeks to cap statewide property tax revenue growth at 4% annually, while Initiative 108 would drastically cut property tax assessment rates.
Senate Bill 233 passed the Senate by a 33-2 vote and cleared the House 57-6 in just three days, the minimum time required to pass legislation.
Colorado’s property tax landscape remains uncertain as the November ballot approaches, with competing measures vying to shape the state’s fiscal future.