County assessors in Colorado offer mixed views on property tax compromise

County assessors from around the state offered their insights into the compromise legislation that lawmakers approved at the conclusion of a special session on Thursday.

The product of negotiations between Gov. Jared Polis, legislators, and the groups behind a pair of ballot initiatives seeking deeper property tax cuts, House Bill 1001 is relatively similar to the property tax bill that passed in the final days of the regular session in May but includes notable changes.

What the bill does

House Bill 1001’s aims to slow property tax growth, which has been increasing exponentially in Colorado since the Gallagher Amendment was repealed in 2020. The 30-plus-page bill includes a number of provisions for different property types, including residential, nonresidential, and special districts. Here are some of the key takeaways:

• Local Government Property Tax Cap: Reduced from 5.5% to 5.25% annually
• School District Tax Cap: Set at the highest amount collected in any previous year, with an annual increase determined by either 6% every two years or the “school factor” — a combination of the General Assembly’s increase in per-pupil state funding and the percentage increase in statewide student enrollment
• Residential Property Tax Rate: Lowered to 6.3% or 6.4%, depending on assessment growth
• Commercial Property Tax Rate: Reduced to 25% starting next year
• Revenue Cap Overrides: Local governments can exceed the revenue cap with voter approval, and school districts can override their cap at the statewide level

The biggest changes from Senate Bill 233 

Douglas County Assessor Toby Damisch said the two most important aspects of the bill are the introduction of a property tax cap for school districts and the consolidation of commercial and industrial properties into a single taxation category.

Senate Bill 233 had categorized the two property types separately, which Damisch said made things extremely complicated for assessors.   “This seems like no big deal, but it’s a huge deal, because the identification by which the assessor or appraiser as to whether a property is commercial or industrial is not objective. It’s a subjective thing,” he said. “So, if we’re gonna get in the business of creating different rates for different property classes, then the property classes must be perfectly defined in law so there’s zero guesswork.  This bill doesn’t go back to the way it was (before SB 233), but it took a big step back to a more simple, more clear, more transparent approach,” he said.

Damisch contended that the cap on school districts, which was absent from SB 233, is crucial to the deal, as 40% of the property tax increases that Coloradans saw in 2023 were directed to the state education fund.  “Now, all of a sudden, if there’s another value spike like what we had in 2023, instead of half of your property tax being capped, the whole thing is being capped,” he said.  Senate Bill 233 also created two separate assessment rates for residential property, but HB 1001 eliminated that provision, Damisch said.

Damisch and the other county assessors expressed worries about the complexity of measures, such as SB 233 and HB 1001, which they said reduce the transparency that they strive to provide to citizens when it comes to their property taxes. “When Gallagher existed, the concept of assessment rates was very simple: Basically, you had the residential assessment rate, which has been hovering around seven the past few years, and everything else was at 29, and it had been that way for 40 years, until Gallagher was repealed,” Damisch said. “Since Gallagher, the assessment rates have gotten more and more complicated, and the more complicated assessment rates get, the more difficult it is for assessors to actually practice it in a clear, transparent, objective manner,” he added. “It was complicated already before, and we’ve just exponentially made it more complicated. It’s just not fair to ask citizens to understand this, and they shouldn’t have to.”

Chaffee County Assessor Rick Roberts said he anticipates that Coloradans will likely see property taxes rise in the coming years. He said he and his fellow assessors across the state are often the ones fielding complaints about rising property taxes, even though they’re not responsible for them. “We have no control over what the entities are asking for in the bill, but we’re the ones that take the brunt of the anger when property taxes go up,” he said. “In my personal opinion, is this gonna fix that? Probably not.”

Chaffee County, like many rural and resort counties, is grappling with significant property value increases as a result of the pandemic.   “We were discovered, and people came to the conclusion that they could work anywhere as long as they had good internet, and lets be realistic — most young people would rather be 20 minutes from mountain biking and ski areas, rather than two hours and 20 minutes, so they moved up here and our values went crazy,” Roberts said.  Roberts said HB 1001 is an improvement over SB 233, which he called “a mess.” “It was not playing well with our software,” he added.  Roberts is also optimistic that the reduction in commercial rates might attract more businesses to the state.

Eagle County Assessor Mark Chafin said his county has seen property value increases to other resort counties in the state. He said his views on HB 1001 vary, depending on whether he was offering a professional opinion or a personal one. “I think that this is a genuine attempt on the part of the governor’s office and the lawmakers to reduce property tax, and I say that as an assessor with the years of experience that I’ve had in this business,” he said. “As a taxpayer, on the other hand, I along with many of my neighbors, saw a significant increase in their property taxes this last go-around. So, I hope that where the legislature’s going with this bill is enough and that the state of Colorado doesn’t end up with a Proposition 13 similar to California,” he said.

Property taxes are still expected to rise but by how much is still unclear

To Damisch, predicting the amount by which property owners can expect to see their taxes increase is simple — just refer to the caps specified for each property type in the bill.

“My view is that whatever caps are established, property owners should expect their taxes to go up by that amount because once you create caps, it becomes both a ceiling and a floor and encourages everyone to go to that number,” he said. “It’s very likely that you’ll see all your property tax entities go to the cap.” He added: “I guess over the long term, these caps will create trends which yield annual tax increases that will more than likely be close to the caps.”

Other assessors aren’t as confident about predicting exact figures.

“It’s nearly impossible for me to say,” Chafin said. “I know that in Eagle County right now, with the data we’ve collected and analyzed, moving toward reappraisal we’re going to see potentially a 7% increase in residential property values on average across the county, and commercial property is going to be basically flat.” However, with 64 different counties each having highly varied property values, Chafin admitted he has no way of predicting what the future holds for property owners in other parts of the state. “I wish I could project, but there’s just too much stuff moving around right now to really nail it down,” he said.

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Article by Colorado Politics