(The Center Square) – Homeowners in Colorado could see a 25% increase in their property tax bills next year even though lawmakers passed legislation to lower assessment rates, a new analysis says.
That increase would mean an estimated $590 more per average household in the state, according to the Common Sense Institute’s report. Under previous rates, property tax bills would have gone up by an estimated $847.
“The Denver-Aurora-Lakewood Consumer Price Index rose 8% in 2022 and 5.22% in 2023, higher than national inflation,” according to the report written by DJ Summers, CSI’s director of policy and research. “Property tax revenue, in comparison, rose 7% in 2022 and could increase by 27% or $3.5 billion in 2023.”
The report also alerts taxpayers to watch how local governments make decisions regarding mill levies. Governments could lower the levies to offset the revenue growth.
“If counties lowered their mill levies 10%, it would reduce the state’s projected property tax revenue from $3.5 billion to $3 billion,” the report said. “Therefore, even if actions were taken at local levels to reduce mill levies, property taxes will likely still climb well beyond the historical rate.”
Democratic Gov. Jared Polis called a special session in November after voters defeated Proposition HH, which would have reduced property taxes and paid local government revenue shortfalls with money from Taxpayer’s Bill of Rights refunds. During the special session, Senate Bill 23B-001 lowered the residential assessment rate for the 2023 tax year from 6.765% to 6.7%. It also allowed homeowners to exempt $55,000 of their home’s value from the tax.
“The average Colorado homeowner could still see a property tax bill increase of 25% ($590) next year, even after the changes,” the report said. “That is down from 36% ($847) under prior law. However, it is still significantly higher than seen in the past three decades.”
House Bill 23B-1003, also passed during the special session, created a bipartisan task force with members representing every area of the state. The law directed the task force to meet at least twice a month starting the week of Dec. 18, 2023, and continuing through March 15. A majority of the task force members may vote to extend the work of the commission past March 15, however the committee’s report is due to the General Assembly and Polis on that day.
The property tax relief is only for 2023 and, barring additional changes in 2024, the assessment rate will rise to approximately 6.976% for a single-family residence and 6.8% for a multifamily residence, according to CSI.
“Between 2001 and 2023, Colorado total property tax revenues rose an average of $400 million per year,” the report stated. “Under the new laws passed in November, they could rise $3.5 billion this year. That is compared to a $3.8 billion increase, that could have occurred, prior to the actions taken during the special session.”
