An Overview of Proposition HH

Proposition HH is one of the most complex measures put before voters in recent elections, proposing changes to property tax, local taxation policies, and school finance for the next 10 years, and granting the legislature the ability to renew the package following the initial 10 years.

Colorado’s residential property owners have experienced significant increases in property tax bills since 2020, driven by increases in home values and the repeal of the Gallagher amendment by voters, which reduced the proportion of state property taxes coming from residential. The General Assembly has passed temporary measures to reduce the impact of increased tax bills, and at the end of the 2023 legislative session, referred Prop HH to voters as a long-term fix.

Following is the ballot language for Proposition HH:

SHALL THE STATE REDUCE PROPERTY TAXES FOR HOMES AND BUSINESSES, INCLUDING EXPANDING PROPERTY TAX RELIEF FOR SENIORS, AND BACKFILL COUNTIES, WATER DISTRICTS, FIRE DISTRICTS, AMBULANCE AND HOSPITAL DISTRICTS, AND OTHER LOCAL GOVERNMENTS AND FUND SCHOOL DISTRICTS BY USING A PORTION OF THE STATE SURPLUS UP TO THE PROPOSITION HH CAP AS DEFINED IN THIS MEASURE?

Prop HH would lower property taxes owed for homes and businesses for at least ten years, compared to what would be owed under current law. This is made possible because Proposition HH would allow the state to retain money that would otherwise be refunded to taxpayers under the Taxpayer’s Bill of Rights (TABOR) through at least 2032.

HH would authorize the state legislature to retain revenue after 2032 without further voter approval if property tax decreases equivalent to those in the measure are maintained. The retained revenue is to be spent on education, reimbursements to local governments for some of their reduced property tax revenue, and rental assistance programs, and would distribute TABOR refunds to taxpayers in equal amounts for the tax year 2023 only and create a new limit on the growth of property tax revenue for most local governments.

SUMMARY OF ARGUMENTS FOR:

• Prop HH is the largest property tax reduction in Colorado history, while still preserving funding for the critical services that rely on property tax revenue, like our schools.
• The measure incrementally reduces the assessment rate for businesses over the next 10 years, saving Colorado businesses hundreds of millions of dollars in property taxes every year. Throughout implementation, the assessment rates for commercial properties will decrease by as much as 10%.
• Local taxing districts will be required to reduce their mill levies to comply with a new cap on the growth in property tax collections that is equal to the rate of inflation.
• Prop HH provides tax savings without hurting schools and other local governments by using a portion of the state surplus to backfill reduced property tax collections.
• The measure benefits low- and middle-income property owners by decreasing the amount of taxable property value through value reductions, a progressive mechanism that benefits lower-value homes more than higher-value homes.

SUMMARY OF ARGUMENTS AGAINST:

• Prop HH will effectively raise taxes by reducing or eliminating TABOR refunds.
• 30% of Coloradans rent their homes. Prop HH leaves them out of financial relief, and because Prop HH will reduce or eliminate TABOR refunds, their state taxes will increase. Their rent is also likely to increase because non-owner-occupied homes will be taxed at a higher rate, and landlords will pass on that expense.
• Prop HH is a school funding measure disguised as property tax relief.

Proposition HH has some good, and has some bad, and has many layers to it. We encourage local voters to research both sides and vote their conscience on Prop HH.

 Chris Romer is president & CEO of Vail Valley Partnership, the regional chamber of commerce. Learn more at VailValleyPartnership.com