Proposition 120 – Reduce Select Property Tax Assessment Rates and Allow Short-Term Retention of Limited Compensatory Excess Revenue

Prop 120 was originally designed to reduce the residential rate from 7.15% to 6.5% and the commercial rate from 29% to 26.4% and to allow retention of excess state revenue up to $25M for 5 fiscal years to offset the loss of property tax revenue and state reimbursement of local homestead tax exemption.

After the ballot question was set, the passage of Senate Bill 293 “Property Tax Classification and Assessment Rates” (with bipartisan sponsors) limited the reduction in the residential rate to only multi-family housing and the reduction in the commercial rate to only lodging properties. Most voters will not see a change in their property tax rate as a result of the passage of Prop 120.

The $1.03 billion reduction for 2023 in the ballot language refers to the pre-SB293 impact of Prop 120. The estimated reduction post-SB293 is about $50M –about 5% of what the proponents hoped for.

Recommendation: NO/AGAINST

TABOR continues to be a thorn in the side of government budgets. State and local governments have to balance budgets. Prop 120 seeks to reduce taxes but makes no stipulation for making up the revenue. Fortunately, Prop 120’s worst effects have been pre-empted by Senate Bill 293. [In September the Boulder City Council similarly pre-empted Ballot Question 302.]

Prop 120 would reduce revenue for local governments, from counties to fire districts and school districts which rely on property taxes tied to assessment rates. The passage of BVSD Ballot Issue 3A in 2010 should mean that BVSD’s total program funding won’t be impacted, but BVSD’s 2016 property tax increase to fund construction, maintenance and technology would be impacted.

Prop 120 makes the state responsible for offsetting the loss of local property tax revenue, but only if the state has excess revenue, only up to $25M per year and only for 5 years. According to the Blue Book, the state spent $157.9M on homestead tax exemption reimbursements in budget year 2020-21. Prop 120 is a very bad deal for the state and would almost surely be a bad deal for local governments.

Website for the Yes side – Cut Property Taxes
https://cutpropertytaxesco.com/

Website for the No side
No known website – Info on an opponents’ website appreciated.

Analysis by Common Sense Institute, a policy research group which doesn’t endorse or oppose ballot measures
https://commonsenseinstituteco.org/proposition-120-property-tax/


Approved Ballot Language
Proposition 120 (Statutory)

Shall there be a change to the Colorado Revised Statutes concerning property tax reductions, and, in connection therewith, reducing property tax revenue by an estimated $1.03 billion in 2023 and by comparable amounts thereafter by reducing the residential property tax assessment rate from 7.15% to 6.5% and reducing the property tax assessment rate for all other property, excluding producing mines and lands or leaseholds producing oil or gas, from 29% to 26.4% and allowing the state to annually retain and spend up to $25 million of excess state revenue, if any, for state fiscal years 2022-23 through 2026-27 as a voter-approved revenue change to offset lost revenue resulting from the property tax rate reductions and to reimburse local governments for revenue lost due to the homestead exemptions for qualifying seniors and disabled veterans?

YES/FOR ____
NO/AGAINST ____

Proposition 120 initiative language filed with the Secretary of State
https://www.sos.state.co.us/pubs/elections/Initiatives/titleBoard/filings/2021-2022/27Final.pdf