CML Opposes Proposition HH
Reduce Property Taxes and Retain State Revenue

The General Assembly referred Proposition HH to voters through SB 23-303 for the November 2023 election.

WHAT DOES PROP HH DO?

Please review CML’s detailed summary and analysis of Proposition HH, particularly the aspects that restrict local governments from properly addressing local government revenues.

Proposition HH contains three main components:

1. Provides some property tax relief by lowering assessment rates for both residential and certain types of nonresidential properties, providing a reduction in value for certain residential properties, and by increasing the senior homestead exemption and making that exemption portable.
   
   
2. Imposes a limit on growth in property tax revenue for local governments (except for school districts and home rule jurisdictions), which would be capped at the rate of inflation. Local governments can exceed the revenue limit if the governing body, on an annual basis, notifies the public, holds a meeting for public comment, and adopts an ordinance or resolution.
   
   
3. Seeks a voter-approved revenue change that would allow the state to retain and spend part of the state surplus (TABOR cap) up to the “Proposition HH cap.” This money will then be used to provide a partial and contingent backfill for the property tax revenues that local governments will lose out on because of the various reductions that will go into effect and to provide rental assistance; the largest portion of the state-retained revenue will go to fund K-12 education.

CML OPPOSES PROPOSITION HH

On Sept. 8, the CML Executive Board approved a position of opposition on Proposition HH, a measure on this fall’s ballot.

CML opposes Proposition HH because of the unnecessary constraints on municipal authority to provide appropriate localized property tax relief, and the restriction of municipal tax revenue.

If approved by voters, this measure will impact 2024 budgets for local governments, specifically property tax revenues.

MUNICIPALITIES ENCOURAGED TO DETERMINE LOCAL IMPACT BEFORE CONSIDERING A POSITION

CML encourages municipalities to first determine the local impact of Proposition HH before considering a position.

Municipalities may adapt this sample resolution in opposition if they choose to take a position on Proposition HH. The sample resolution includes areas for a municipality to describe how it relies on property tax revenue and the potential reductions in revenue. County data on the estimated revenue reductions under SB 22-238 and Proposition HH is available below and can be used to help estimate the fiscal impact on each municipality’s 2024 budget.  Municipalities should also consider the impact of backfill funding from the state in determining the fiscal impact of SB 22-238 and Proposition HH. Additional information to assist in calculating backfill funding is available below. Any resolution should be reviewed by your municipal attorney.

BUDGETING RESOURCES

Given that local governments are in the process of establishing 2024 budgets now, but do not know whether Proposition HH will pass, local governments should consider budgeting for 2024 under either potential outcome. To assist local governments in the budgeting process, the Department of Local Government has added some new resources to their Budget Information and Resources webpage, including a Modified Proposition HH Calendar that lays out potential budget date changes in the event Proposition HH passes in November 2023, as well as a Proposition HH Budget Planning resource created in collaboration with CML, the Special District Association of Colorado, and Colorado Counties, Inc.

Additionally, under SB 23-303, county treasurers were required to report certain property tax data for each taxing jurisdiction within the county to the State Property Tax Administrator by September 15, 2023. The reported data includes the estimated total property tax revenue reduction for the 2023 property tax year and the estimated increase in assessed value from the 2022 property tax year to the 2023 property tax year. Both the estimated revenue reduction and increase in assessed value must be calculated (1) based on the temporary reductions in valuation from SB 22-238, and (2) based on the cumulative temporary reductions in valuation from SB 22-238 and SB 23-303, if Proposition HH passes. The Division of Property Taxation (DPT) created two spreadsheets (one for standard reporting and one for reporting with TIF) that counties could elect to use in calculating this information for each taxing jurisdiction within the respective county. After creating the first iteration of this spreadsheet, DPT held a stakeholder meeting (recording available), primarily to educate county treasurers and assessors on how to complete the spreadsheet the State of Colorado additionally provided CML with the compiled spreadsheet from county submissions on September 15, and a link to individual county spreadsheets. CML recommends contacting your respective county treasurer or assessor if you have questions about this data when working on your 2024 municipal budget.

Finally, CML, the Special District Association of Colorado, and the Colorado Department of Local Affairs collaborated to create a Calculation Tool (as of Oct. 3, 2023) to assist in determining the amount of backfill your municipality should receive under SB 22-238 and Proposition HH.  The calculation tool includes directions for use, including that you will need to utilize data from the State’s compiled spreadsheet or from the individual county spreadsheets to complete the backfill calculations. Example calculations are also available for download.

CONTACT
Kevin Bommer| CML executive director