(The Center Square) – Colorado taxpayers could lose $512 per year in Taxpayer’s Bill of Rights refunds for the next decade if voters approve Proposition HH in November, according to a new report.
The Common Sense Institute, a free enterprise research group, published a 45-page evaluation of the long-term impacts of the initiative. The organization said the item “is one of the most complicated ballot measures ever presented to voters.”
A poll of Colorado voters found 54% favored Prop. HH, but support fell to 43% when respondents were informed of the measure’s state and local tax policies.
Prop HH, referred to voters by Senate Bill 23-303, will ask voters if the state should reduce property taxes and replace the revenue with money from TABOR refunds.
Before Democrat Gov. Jared Polis signed the bill into law in late May, Advance Colorado, a conservative advocacy group, filed a lawsuit to stop the ballot measure, arguing its multiple subjects violate the Colorado Constitution and its title is misleading. The case is currently before the Colorado Supreme Court.
If voters approve Prop HH, it would lower residential assessment rates from 7.15% to 6.7% in 2023 and 2024 and reductions would continue in future years for primary residences. While property tax rates would be reduced if the initiative passes, the report found Coloradans will still pay high property taxes.
“When comparing the property tax increase to lost TABOR refunds, most taxpayers will pay more over the next 10 years if HH passes than if HH fails,” the report said. “Prop HH does not provide certainty or help to regulate the fluctuations in property taxes. A median priced home under current law would see a 42% tax increase from 2022 to 2023, and under Prop HH that same median average home still sees a large tax increase of 31%.”
The report also revealed the state will be able to collect and spend an additional $9 billion in taxes if voters approve the proposition as it authorizes a 25% increase in the annual growth rate in the state’s spending limit. Plus, the measure allows the legislature to extend the proposition.
“If Prop HH were extended by the state legislature through 2040, which is allowed without voter approval, it could produce a $21 billion net tax increase, as property taxes are reduced by $21.49 billion while state taxes increase by $42.38 billion,” the report said. “While the full tax impacts depend on revenue growth, historic trends indicate revenue is likely to continue outpacing the Proposition HH spending cap.”
While those filing joint tax returns could lose an estimated $5,119 in TABOR refunds during the next 10 years if the measure passes, renters wouldn’t realize any benefits and would bear much of the cost for the $9 billion in new spending the proposition requires, according to the report.
The legislation does provide up to $20 million annually for rental assistance. However, 80% of the money retained under the proposition will go to education “with no accountability measures or spending guidelines,” the report stated. The other 20% will reimburse local governments for lost property tax revenue, but the report stated the money needed to backfill is probably lower.
