August 13, 2024 02:37 PM UTC

Special Legislative Session Needed to Stop Bad Actors from Wrecking Colorado Economy

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• by: Colorado Pols

For the second time in less than a year, Colorado legislators will be called into a special legislative session to discuss property taxes. But unlike the special legislative session that took place in November 2023, this version needs to happen in order to stop a couple of bad actors from going forward with two confusing ballot initiatives that — if passed — would absolutely wreck state and local government budgets and cause a massive disruption to Colorado’s economy as a whole.

As Brian Eason and Jesse Paul report for The Colorado Sun:

Another special legislative session on Colorado’s property taxes appeared imminent Monday after a long list of top civic and business groups from across the political spectrum said they supported a deal to stop a pair of measures from appearing on the November ballot.

The deal would cut property taxes by an additional $255 million in 2025 for taxes owed in 2026 — on top of the $1 billion cut the legislature already passed this year during its regular legislative session.

In exchange, Michael Fields, who leads Advance Colorado, a conservative political nonprofit, said he would pull Initiatives 50 and 108 off the statewide ballot. Doing so would prevent even larger tax cuts that elected officials in both parties feared would lead to recession-like cuts to state and local services… 

…Initiative 50 would amend the state constitution to enact a strict cap on annual statewide property tax growth, while Initiative 108 would cut property taxes by $2.4 billion. The measures are being supported by Advance Colorado as well as Colorado Concern, a conservative-leaning nonprofit that represents state business leaders. [Pols emphasis]

At the end of the regular legislative session in May, lawmakers and Gov. Jared Polis THOUGHT they had a deal in place that would lower property tax rates and prevent right-wing asshats like Dave Davia of Colorado Concern and Michael Fields of Advance Colorado from trying to ram through two ballot measures in the fall that would benefit rich people and screw pretty much everyone else. A bipartisan group of lawmakers worked to pass SB23-233 as a compromise to the demands of Davia and Fields, who together represent a handful of big business interests in the state. A number of influential lawmakers believed that they had a deal with Davia and Fields, only to find out later that their last-minute scramble still wasn’t good enough to stop Initatives 50 and 108 from moving forward.

The two initiatives would do much more than just reduce property tax rates; they would create massive restrictions on how state and local governments budget for important things like firefighters, police officers, schools, and libraries in order to give a fat tax cut to wealthy business interests. A few days after it became clear that Davia and Fields were going to press forward with their ballot measures, in fact, Metro State University President Janine Davidson resigned from the board of Colorado Concern, saying in a letter that she “cannot support actions or positions that put the vitality of our state services at risk, including higher education.” Around the same time, Colorado Concern disappeared a list of board members from its own website.

Initiatives 50 and 108 were so poorly crafted that they didn’t even specify how necessary cuts would really work if the measures passed in November; the proposals basically left it up to elected officials to figure out the problem later. Within a month, municipal bond investors were already threatening to leave Colorado over concerns about how the initiatives would handcuff options for new construction in the state. As Eason and Paul wrote in a separate story last month for The Colorado Sun‘s “Unaffiliated” newsletter:

In June, a group of eight law firms sent a letter to Advance Colorado and Colorado Concern, another supporter of the initiative, predicting that the tax-limiting measure would have a “severe” and “immediate” impact on the municipal bond market across the state. In July, the Colorado Municipal Bond Dealers Association weighed in with an open letter of its own, saying Initiative 50 will raise the cost of borrowing for local governments and slow the flow of capital to Colorado.

“I think it’s a dangerous game that we’re playing,” said Zach Bishop, a bond underwriter who heads the special district group at Piper Sandler. “The potential implications of passage of Initiative 50 are an increase in home prices for Coloradans because the land development process becomes more challenging for home builders.”…[Pols emphasis]

…The tax cuts that would result are likely to lead to lawsuits, Leichman suspects. If special districts cut taxes as required by the amendment, bond holders might sue over a breach of their contract, which typically calls for taxes set at a certain level to repay the debt. If the district doesn’t cut taxes, taxpayers could sue.

Even if courts side with the bond holders, industry insiders say it could still have a chilling effect on new debt, which wouldn’t be protected by contractual guarantees in place before the cap.

These clumsy initiatives continued to pick up widespread scrutiny — even from the likes of anti-tax crusader Jon Caldara of the Independence Institute — which put Davia and Fields in the terrible position of promoting destructive ballot measures that even former allies were starting to oppose. Eventually, Davia and Fields went back to Gov. Polis and legislative leaders hoping to cash in a “Get Out of Jail Free” card in the form of a special legislative session. What they’ll try to do now is squeeze out more property tax reductions in exchange for dropping their terrible initiatives — a deal that lawmakers thought they had already done in May — so that the funders of their dumb ballot measures can recoup some of their investment.

It’s a shame that Davia, Fields, and their backers will get a second chance at crafting a property tax deal that should have been finalized in the regular legislative session. State leaders could just call their bluff and hope that these idiotic ballot measures fail in November, but the risk to Colorado’s economy is too great.

The silver lining in any big error is that those involved can learn from their mistakes going forward. For Colorado elected officials, that lesson is clear: You simply cannot negotiate in good faith with Davia, Fields, and their respective organizations. When Colorado Concern and Advance Colorado come calling again ahead of the next legislative session in January, nobody should pick up the phone.