New lawsuit could void Colorado property tax relief

The ink was not even dry on the new proposal to reduce property taxes and radically alter Tabor that is supposed to go to voters in November when a lawsuit was filed.  Although, many legislators are acting surprised, the lawsuit was so obvious based on how the bill was written.  What is in the new lawsuit? Will the lawsuit stop the new tax proposal?

 

What is in the new lawsuit to void the property tax proposal?

A conservative group has launched a legal challenge to a ballot measure aimed at blunting the looming property tax spikes by increasing the cap on state revenue.

Advance Colorado and Englewood City Council member Steven Ward filed the lawsuit Monday in Denver County District Court to challenge the measure. The measure was referred by lawmakers, through SB23-303, in the waning day of the recently concluded legislative session.

The lawsuit alleges the bill behind the measure violates the state constitution’s single-subject rule for legislation and clear intent provisions.

“All of the stuff in there shows this is multiple subjects,” Michael Fields, with Advance Colorado, said. “We’re talking about TABOR refunds going to education, we’re talking about money going to renters, we’re talking about long-term changes to TABOR formula, and we’re talking about limited property tax relief in the same measure. They’re clearly trying to pair something that is unpopular with something that is popular to pass it.”

What is the single subject rule in the Colorado Constitution?

Every proposed constitutional amendment or statutory proposition must be limited to a single subject, which must be clearly expressed in its title. In other words, the text of the measure must concern only one subject and one distinct purpose. (Colorado Secretary of State)

(5.5) No measure shall be proposed by petition containing more than one subject, which shall be clearly expressed in its title; but if any subject shall be embraced in any measure which shall not be expressed in the title, such measure shall be void only as to so much thereof as shall not be so expressed. If a measure contains more than one subject, such that a ballot title cannot be fixed that clearly expresses a single subject, no title shall be set and the measure shall not be submitted to the people for adoption or rejection at the polls.

Will the new lawsuit stop the current property tax legislation?

Litigation is always unpredictable, but on the surface, the new property tax bill clearly addresses a litany of issues including TABOR, rental relief, property tax relief, how TABOR refunds are distributed, etc… and is not even close to a single subject.  Although the subjects in the bill are loosely related, there are a ton of different topics covered.

What will happen with Colorado property tax relief?

Since this legislative session has ended, it is too late to develop a new property tax relief bill which will likely lead to two options.

1. No tax relief: 80% probability. I think the courts will rule against the new property tax relief bill how it is written today and force a rewrite.  Unfortunately this legislative session is over so I’m not optimistic that a new bill could be agreed upon prior to the November election.
2. New citizens ballot initiative: 20% probability There have been some rumblings of a citizen initiative to cap property taxes. I haven’t seen any formal proposals or heard of signature gathering so unfortunately these proposals might run up against the clock and not make it on the ballot.
3. Mill levy relief: 0% probability There have been multiple proposals that would allow municipalities to adjust their mill levies down with the ability to raise them back to where they are now at a later date.  I haven’t heard of any municipalities offering to lower mill levies to reduce taxes.

Summary

Lowering taxes should be a simple single subject issue.  The quickest solution would be to cap tax revenues to the greater of inflation or 5%.  Unfortunately it is not surprising that the legislators took a simple issue and stuffed it full of unrelated items that will ultimately lead to the demise of the bill.

Property owners are going to be fuming with the huge increases in values that have led to windfalls for local governments.  If a citizen initiative can get on the ballot, that would be the only hope for true property tax relief.

 

Additional Reading/Resources

1. https://law.justia.com/constitution/colorado/cnart5.html
2. https://www.denverpost.com/2023/05/17/colorado-property-tax-relief-tabor-lawsuit-ballot/
3. https://www.coloradosos.gov/pubs/elections/Initiatives/guide/2-BallotTitle.html

 

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Written by Glen Weinberg, Owner Fairview Commercial Lending.  Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine,  The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.

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