The state legislature鈥檚 special session on property taxes adjourned Thursday after almost four days, ending the threat of ballot initiatives that could have devastated state and local government budgets, while also rejecting progressive measures and despite concerns over special interest groups' use of ballot initiatives to influence the legislative process.
Lawmakers passed one major piece of legislation this week that reduces property assessment rates and limits how much tax revenue local governments can collect, marking the latest milestone in Colorado鈥檚 so-called 鈥減roperty tax wars鈥� that have been ongoing for years.
鈥淭oday marks an important moment in that journey,鈥� bill sponsor Sen. Chris Hansen said on the Senate floor. 鈥淲e have untied this knot together. We have done it in a bipartisan way. We have put our education system on a sustainable path.鈥�
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The legislation, or untied knot, is , a measure that builds on tax cuts signed into law in May that prevented taxes from climbing too sharply while also avoiding or backfilling local funding losses, especially for schools.
鈥淚 get to go tell my 94 year-old friend, my neighbor, that she can still stay in her home,鈥� Hansen鈥檚 co-sponsor Sen. Barbara Kirkmeyer, R-Brighton, said. 鈥淭hat we're gonna give her additional property tax relief, that I can guarantee she gets property tax relief next year, and then additional each and every following year thereafter.鈥�
The legislation was also part of a pre-established deal between Gov. Jared Polis, legislative leaders and conservative political organizations to remove two initiatives from the November ballot that would have decimated funding for schools and other local services. In Colorado, property tax revenue funds higher education, public schools, fire departments and other local services.
The bill is expected to reduce property taxes for the average homeowner by $62 in 2025 compared to current law, according to an . That will jump to $179 in 2026. Lawmakers鈥� estimates were slightly higher. Colorado Fiscal Institute also found that the majority of the tax cuts in the bill will benefit nonresidential and commercial properties.
The changes will also result in hundreds of millions of dollars in lost property tax revenue for governments and school districts and put the state budget on the hook for much of the backfill. They would not, however, require nearly as much state backfill as the property tax ballot initiatives would and preserve the historic recent change to the public school financing formula.
Property Tax Wars
The longstanding debate over property taxes kicked into high-gear in 2023 when assessment rates signaled an alarming spike in property taxes due to rising property values. Since then, lawmakers have proposed a slew of solutions.
Proposition HH, an initial property tax relief plan from Democrats and Gov. Polis was rejected at the ballot box last November, prompting a previous special special session on the issue last fall to come up with short-term solutions. Then, lawmakers passed a bipartisan property tax relief bill this spring as a long-term fix.
Some conservative interests, however, still weren鈥檛 satisfied with that policy and wanted to see more aggressive tax cuts. Business group Colorado Concern and political nonprofit Advance Colorado placed and on November鈥檚 ballot, which lawmakers say would upend the state鈥檚 property tax system by deeply cutting taxes without compensating for losses in local funding.
Gov. Polis called this week鈥檚 special session to avoid any possibility that the initiatives would pass. His office and key lawmakers, including Sen. Kirkmeyer, held negotiations with Colorado Concern and Advance Colorado ahead of the special session, and the groups agreed to withdraw their initiatives from the ballot in exchange for the additional property tax reductions lawmakers passed Thursday morning. Polis said he will not sign the bill until the ballot measures have officially been removed.
Lawmakers mostly supported the tax reduction measure, despite hesitation from some. Republicans ultimately voted for it, but also said more work can be done to cut taxes even more.
鈥淲e would have always looked for additional, maybe some broader property tax cuts,鈥� said House Minority Leader Rose Pugliese, R-Colorado Springs. 鈥淏ut I think in the end, we wound up in a good compromise position and we were able to get additional relief for the people of Colorado.鈥�
Other lawmakers saw the special session as an example of private interests like Colorado Concern and Advance Colorado using ballot measures to influence the lawmaking process. House Assistant Majority Leader Jennifer Bacon, D-Denver, said Gov. Polis and special interest groups are not responsible for making laws.
鈥淚 don鈥檛 work for somebody who is not on this floor, or even, dare I say, behind the glass,鈥� said Bacon, referring to the governor's office on the floor below and the lobbyists who watch House proceedings through the lobby windows. 鈥淚t is our job to make law.鈥�
Bacon and others who were not involved in the pre-session negotiations said they felt they were being forced to vote on a deal that they did not agree to. Democrats have become increasingly concerned in recent months over special interests鈥� use of ballot measures to sway legislation.
Rejected Measures
A slew of measures were also rejected during the special session, in part to preserve House Bill 1001 and the deal to withdraw Initiatives 50 and 108.
A particularly controversial measure from two Democrats, including House Bill 1001 sponsor Sen. Hansen, would have given local governments and their voters control over property taxes by making a change to the state constitution. The proposed amendment would block statewide property tax ballot measures or legislation going forward with the goal of avoiding future state-level property tax gridlock that negatively impacts local funding.
鈥淲hy does it make sense that voters in Douglas County are impacting the San Luis Valley, or voters in Denver are impacting agricultural communities on the eastern plains?,鈥� Rep. Mike Weissman, D-Aurora, said. 鈥淲e don't need to keep doing that. We can put control of local government property taxes more squarely where it ought to be, which is in the hands of local communities around our state.鈥�
Republicans called the amendment a 鈥渄ealbreaker鈥� and an infringement on the ballot initiative process, an important part of Colorado鈥檚 democracy. Even though it passed the House, it was quickly killed in the first round of Senate committee hearings Wednesday.
The rejected measures also included several bills backed by progressives, including that would have blocked some of the property tax cuts from applying to second, third or subsequent homes. Sponsor Democratic Rep. Javier Mabrey told KUNC that tax revenue is needed for rental assistance programs and affordable housing development.
鈥淚 was trying to make sure that was targeted at people who are actually struggling to stay in their homes, not wealthy, out of state investors who maybe have five, six homes here in Colorado,鈥� Mabrey said.
Mabrey also said he is considering bringing the measure back during the regular session in the spring. Committees killed two other progressive measures that would have cut taxes for homes worth less than about $550,000 while raising taxes on higher-valued homes. Those might come back into play during the regular session as well.
