“A call from the governor, even before the polls closed, told me that he thought Prop HH was going to fail,” House Minority Leader Rep. Mike Lynch.
The failure of Proposition HH, the tax proposal put forth by Governor Jared Polis and top Democrats, has left many Coloradans asking, "What's next for millions of homeowners left holding the bag with ridiculously high property tax bills?"
The ballot measure, which aimed to provide relief from rising property taxes, was decisively rejected by 60 percent of voters. Now, the Democrat-led state legislature is scrambling to find a solution as homeowners and businesses continue to face significant property tax increases.
Even Governor Polis seemed to be preparing for the sinking of Proposition HH.
According to Republican Minority Leader Mike Lynch, he received an uncharacteristic call from the governor just hours before the polls closed on Tuesday. Lynch says this was his "first indication" that Prop. HH was going to fail. The two discussed alternative plans for property taxes moving forward, highlighting the fact that the governor may already be shifting his focus to a "Plan B."
One option being considered is calling lawmakers back to the state Capitol for a special session within the next few weeks. This could be the only way to prevent a substantial increase in property taxes for homeowners and businesses, as local property tax rates must be finalized by December 15th. However, a special session would require navigating a divide within the Democratic Party, as some progressive lawmakers are calling for targeted tax relief for lower-income homeowners.
The failure of Prop. HH has also sparked a debate about prioritizing property tax relief over other pressing issues, such as affordable housing and rising eviction rates among renters. Democrats argue that Colorado already has some of the lowest property tax rates in the country, but Republicans argue that a balance must be struck to prevent overburdening property owners.
One major question that both parties are facing is how to pay for property tax relief. One option is tapping into the TABOR surplus, a pool of billions of dollars that is set to be refunded to taxpayers in the coming years. However, this decision would have to be made carefully, as using this money for property tax relief would leave less funding for other important services such as schools and emergency services.
On the other hand, House Republicans continue to hold out hope that during any special session, lawmakers would pass substantive tax reform and not just place a band-aid on the festering problem. The minority wants to introduce House Bill 23-1054, which languished on the shelf last session.
Sponsored by Rep. Lisa Frizell, HB 1054 would go directly to the heart of the issue by addressing the assessment valuation of property in Colorado.
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Additionally, the failure of Prop. HH could have significant implications for local governments as they finalize their budgets. Changes to property tax rates could force them to reevaluate their plans, potentially causing financial strain.