By Caroline Nutter
Colorado is one of the most expensive states, especially for housing costs, which have escalated in recent years. Proponents of property tax ballot Initiatives 50 and 108 claim they will help ease home ownership costs for Colorado families.
This couldn’t be more untrue.
The budget ramifications of Initiatives 50 and 108 are severe and will ultimately result in increased costs for everyone. If these initiatives pass, it would involve significant cuts to school funding, libraries, healthcare services, infrastructure upkeep, and even fire prevention efforts, all of which heavily depend on property tax revenue.
Initiative 50 proposes capping property tax revenue growth at 4% statewide, regardless of revenue ups and downs in various counties, and mandates statewide voter endorsement if property tax revenue is expected to surpass 4%. This robs local communities of the right to make decisions for themselves and turns that control over to a statewide vote.
Initiative 108 aims to modestly cut the assessed value of a home from 6.4% to 5.7% of its actual value but slashes assessments on commercial property from 27% to 24%. This means big cuts for large corporations, leaving Colorado families to foot the bill. While 108 requires the state to replace lost revenue to local governments, it does not give the state any way to pay for those losses without devastating state services, like K-12 and higher education, health care, road maintenance and safety.
Both of these short-sighted measures would cut funding from property taxes that state and local services rely upon, threatening quality of life and affordability across our state. Both initiatives would provide significant tax cuts for affluent homeowners and large corporations, while offering minimal benefits to seniors, the middle class, or rural residents.
When local budgets and services get cut, we risk firefighter jobs and leave communities vulnerable to slower response times and unexpected fire threats. This drives up the cost of homeowners insurance and we all pay more.
When state budgets are reduced, families are forced to dig deeper into their pockets for college tuition and school supplies. They also have to travel farther, wait longer, and pay more for healthcare services. Budget cuts result in congested roads that increase wear and tear on our vehicles. Furthermore, essential services like prisons, courts, foster care, and behavioral health centers face significant funding reductions. While a tax break may seem appealing, the repercussions for essential services are too significant.
Proponents of these measures suggest the General Fund reserves could compensate for any budget cuts. However, using our emergency fund for tax reductions would be financially irresponsible. With a 15% General Fund reserve amounting to $2.2 billion this year, it wouldn’t even be sufficient to cover the estimated $3 billion expense for a single year of Initiative 108 cost.
History has shown that significant tax reductions of this nature often lead to financial challenges. Let’s look at Kansas. In 2017, a $900 million budget deficit emerged due to significant tax reductions made five years earlier, posing a serious risk to its schools and infrastructure. To address this, the Kansas legislature decided to overturn the cuts. Unlike Kansas, Colorado can’t reverse tax cuts, because of TABOR. If we mistakenly cut too much, we can’t undo it in five years.
At the end of the day, 50 and 108 are too risky. They are also unnecessary. A bipartisan, overwhelming majority of the Colorado legislature already passed responsible property tax relief for families this past year through SB24-233. These property tax cuts are fully paid for and will not affect state or local funding for public services. The average Colorado homeowner saves $550 through this measure and businesses save, too. However, this bipartisan tax reduction plan will not be implemented if voters approve Initiatives 50 and 108.
Families need relief — and our state has acted in a thoughtful and collaborative way to reduce property taxes and ease housing costs. Initiatives 50 and 108 would create an unfunded mandate leading to huge, disastrous cuts to local and state programs that families rely on.
Keep property tax decisions local, and say ‘No’ to Initiatives 50 and 108 on the ballot this November.
Caroline Nutter is the legislative coordinator at the Colorado Fiscal institute. She researches and analyzes state fiscal policy issues and advocates for policies that bring equity and prosperity to all Coloradans.