July 30, 2024 12:04 PM UTC

Initiatives 50 and 108 Falling Apart Amid Basic Scrutiny

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• by: Colorado Pols

In the waning days of the 2024 legislative session in Colorado, both Democrats and Republicans came together on a property tax reduction bill to help Colorado families.

This bipartisan group believed that SB24-233 would have the side benefit of preventing two different property tax measures from appearing on the November ballot. A Big Business-aligned group called “Colorado Concern” had been negotiating with lawmakers on such a proposal until they withdrew their support — without much in the way of explanation. Now “Colorado Concern” and a right-wing group called “Advance Colorado” — helmed by anti-government crusader Michael Fields — are pushing two convoluted and potentially crippling ballot measures of their own so that wealthy corporate interests can save a few additional bucks on their tax bills.

Initiative 50 is a proposed Constitutional amendment that will appear on the November ballot and needs at least 55% of the vote in order to pass. Initiative 50 would limit statewide property tax revenue growth to 4 percent each year unless voters later approve exceeding this fairly arbitrary cap number.

Initiative 108 does not yet have approval for November but is likely to make it onto the ballot (where it only needs a majority of votes to pass). Initiative 108 would cut residential and non-residential property tax assessment rates by significant amounts compared to SB24-233; that legislation reduced the assessment rate by 0.1%, but Initiative 108 would cut the residential assessment rate by a full percentage point. It would also cut the non-residential tax rate to 24%, a five-point reduction from its current rate of 29%.

The thing about cutting taxes is that you are also cutting revenue for state and local governments — revenue that funds services such as fire protection, police, libraries, and schools. This has caused concern even among Republicans who would normally align with Advance Colorado and Colorado Concern. As Andy Kenney reported for Colorado Public Radio in May:

State Sen. Barbara Kirkmeyer was concerned about the initiatives’ potential effects on schools and local governments in particular. They could obligate the state to come up with billions of dollars in “backfill” to make up for the effects of small local tax collections for schools.

“I want to make sure that we adhere to the Constitution, which requires, again, whether you like it or not, things are balanced up,” she said.

Colorado Concerns’ rejection of the legislative deal also met with opposition from one of its own board members. Janine Davidson, president of Metropolitan State University of Denver, stepped down from the board last Thursday.

“[Colorado] Concern’s proposed direction on the property tax issue poses significant challenges and adverse effects on our colleges and universities, our students, and our Colorado community,” she wrote in a letter obtained by CPR News. [Pols emphasis]

Backers of Initiatives 50 and 108 have been clear about what happens next. They don’t care.

And it is this response that even has folks like Jon Caldara of the Independence Institute — exactly the sort of person who you would expect to support 50 and 108 — crying foul. Here’s what Caldara wrote on social media after the Independence Institute published the group’s 2024 guide to property tax policy changes:

The first is Initiative 50, a well-intentioned attempt to rein in property taxes. This Constitutional amendment would limit property tax increases to 4% a year, which is not a bad idea. The fatal flaw is the unworkable mechanism to do so.

Instead of limiting each of Colorado’s 4,000 or so taxing districts to grow by no more than 4% a year, this proposal would put every property from all 4,000 districts into one massive, unruly collective bucket, and that bucket cannot grow by more than 4% a year.

The problems with this become obvious very quickly. When that bucket grows by more than 4%, which of the 4,000 taxing districts are going to take a haircut? If one district raises taxes, what districts will be forced to lower taxes to keep under the 4% limit? Will local districts have to go to a statewide vote for a mill levy increase? Will the liberal Denver-Boulder corridor voters raise property tax for the rest of the state?…

…Quite simply, Initiative 50 is like giving a machine gun to a monkey. I hope the backers pull it. [Pols emphasis]

Oof.

Caldara is concerned, like many others who have observed this debate, about the prospect of setting a blanket cap on property tax rates and then telling the state legislature that it is their problem to figure out where to make billions of dollars in cuts. As the Independence Institute explains in its property tax primer:

The initiative neither specifies how individual local governments would reduce revenue to stay within the statewide limit nor how revenue over the statewide limit could/would be refunded to taxpayers. There is speculation that if revenues exceed the 4% limit, that money could be refunded to property owners, similar to how TABOR refunds work. However, that hope is not spelled out in the language of Initiative 50. Thus, these details would likely be left to the Colorado General Assembly to decide with clarifying legislation should voters approve the initiative…

…However, it is just as possible that because the state collectively cannot collect over 4% from the previous year, an unspecified number of districts will be required to make significant cuts to stay under the revenue limit on the front end, and no such refund would be implemented. These unspecified details/districts would create the opportunity for more regulation, oversight, and picking of winners and losers among taxpayers, regions, and government services by the state legislature. Furthermore, the measure is unclear as to how voters would even approve/disapprove of governments keeping a revenue surplus over the 4% limit. Despite the limit affecting local revenues, the initiative does not specify whether the state or local governments would refund the surplus revenue…

…Initiative 50 creates many dangerous opportunities for the state legislature to control property taxes, which are fundamentally the purview of local government. [Pols emphasis]

If either 50 or 108 pass in November, they will also automatically negate SB24-233. Caldara and the Independence Institute are more enthusiastic about Initiative 108, for reasons that don’t make logical sense considering their concerns about Initiative 50. Initiative 108 would require the state to reimburse local governments for any decrease in revenues resulting from property tax cuts and maintenance of the state education fund. This would be fine if the State Budget had a bunch of excess money sitting around. But it doesn’t — and that would mean MASSIVE cuts in places such as higher education funding.

In short, a handful of wealthy donors believe they know better than your own elected representatives on reducing property taxes…but they also want those same elected representatives to fix the problems created should their initiatives pass. This makes absolutely zero sense from a policy perspective unless you are very wealthy and don’t care about anything other than lowering your tax rate at any cost.

Voters will hopefully realize this as they learn more about the convoluted and sloppy initiatives. It’s a good sign that the wheels are already coming off regarding support for Initiative 50.