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Pair of special session bills heads to governor’s desk as property tax relief nears finish line

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Sara Wilson

(Colorado Newsline) Two bills from the Colorado Legislature’s special session on property taxes are headed to the desk of Governor Jared Polis after weekend work, and lawmakers could wrap up work on the rest of the legislation as soon as Monday.

While Polis called the special session to focus on softening the impact of rising property taxes in the state, his call also made room for work on other topics.

They included adjustments to the state’s earned income tax credit for the 2023 tax year. That’s a tax credit for low-income working families that affects over 400,000 Coloradans and ranges in amount depending on income.

“People aren’t getting paid enough. They aren’t making enough to live. And the earned income tax credit is a direct target to our working class and our working poor,” bill prime sponsor Chris Kolker, a Centennial Democrat, told the Senate Finance Committee on Saturday. “The people who would benefit from a boost of the EITC refund are predominantly renters, disproportionately people of color and people living with disabilities — the people who might not feel the direct impact of property taxes.”

Currently, the state’s refundable EITC equals 25% of the federal credit amount a household receives. House Bill 23B-1002 would double that.

Colorado Democrats advance property tax agenda during special session

For a family with two children that makes $52,918, the maximum federal EITC for next year is $6,604, according to the IRS. Under current law, the state would provide an additional $1,651, but with HB23B-1002, that amount would increase to $3,716.

For next year, the federal EITC benefit ranges from $600 to $7,430 and is determined by household size and income amount. Higher earners get a higher benefit.

“Expanding our EITC is likely to boost first-time claimancy, drawing down more federal money to be spent in every part of the state,” bill prime sponsor Rep. Mary Young, a Greeley Democrat, said on the House floor.

The increase would cost the state about $180 million from the Taxpayer’s Bill of Rights surplus.

TABOR is a state constitutional amendment adopted in 1992 that limits the amount of revenue the state can retain and spend. The limit rises based on inflation and population growth, and revenue collected in excess of the limit must be refunded to taxpayers. There are a variety of refund mechanisms, such as different tax breaks and direct checks to taxpayers.

Republicans were opposed to HB23B-1002 because it uses the TABOR surplus and would affect how much the average taxpayer gets refunded next year. They contend that voters rejected Proposition HH — which would have raised the TABOR cap and used the surplus to pay for property tax cuts — on the basis that it would have reduced TABOR refunds.

“There is a mandate from my district and from the people we represent that we leave TABOR refunds alone,” Rep. Richard Holtorf, an Akron Republican, said on the House floor.

If passed, HB23B-1002 would cost taxpayers about $48 on their refund check, Kolker said.

The Legislature passed a bill in the spring to raise the EITC to 38% for the 2024 tax year, using $150 million from TABOR surplus. That bill had bipartisan support. Historically, TABOR surplus has been used for the EITC state credit.

HB23B-1002 passed the House on a 39-20 vote Saturday. Rep. Bob Marshall of Highlands Ranch was the lone Democratic no vote. The bill then passed the Senate on Sunday morning on a party-line vote.

Treasury staffing

The Legislature also passed a bill to expand staffing in the state’s Treasury Department for the property tax deferral program, which lets homeowners defer a portion of their property taxes if they increase by more than 4% over two years. That will cost about $90,000 in general fund money. Democrats Sen. Dylan Roberts of Frisco and Sen. Rachel Zenzinger of Arvada voted with Republicans against it.

Lawmakers still need to give final approval on five other Democrat-led bills, including the priority short-term property tax relief bill. In the Senate, that relief bill was amended to increase a home valuation exemption to $55,000 and alter the growth threshold for which local governments would be eligible for backfill funding to 15% from 13.5%.

The bill still needs final passage from the House, which debated and passed it on second reading Sunday night.

Lawmakers are also considering a bill to make TABOR refund checks equal to all taxpayers next year and another bill to establish a task force to study long-term property tax solutions.

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