PROPOSITION HH P 1 of 2

♪ (Music playing) ♪ - Welcome to the Aaron Harbor show this is part one of the special two-part series, featuring the big issue which would be on your ballot for the upcoming November 7 general election that is proposition HH, my guests include former state of Colorado treasurer Cary Kennedy, and current state Senate president Steve Fenberg who support proposition HH and Advanced Colorado Institute Pres.

Michael Fields and State Senator Barbara Kirkmeyer who are opposed to proposition HH.

So thanks to all of you for joining me let's start out and find out what proposition HH is all about?

Sen. Fenberg.

- Thank you for having us Aaron spending time on this important issue.

So proposition HH is a referred measure from the legislature.

It really came about because I don't think it's a secret anybody that the cost-of-living, especially when it comes to housing, has skyrocketed in Colorado recently.

And that's been made even worse by the increase in property taxes which is a result of property values going up and up over the recent years.

Pop HH is the governor and legislature, community leaders coming together to figure out what we can do to provide real relief to families out there and businesses that are suffering from this cost-of-living increase, especially on property taxes.

But do it in a way that provides relief for everyone across the board, not just some, and do it in a way that does not hurt our schools.

And keeps them whole because we know schools, fire districts, safety districts and water districts rely almost entirely on property tax revenue.

So when you cut property taxes you have to be thoughtful about it and that's what proposition HH is it provides real relief, for everybody and we know that the average increase in property values recently is 40%, proposition HH provides meaningful relief over the next 10 years it actually cuts it in half and again it does it so it's not on the backs of teachers and firefighters.

- Okay Cary do you want to add anything to that or is Steve totally comprehensive?

- Yeah, I mean folks got notices in the mail on how much their home values went up, I know my husband and I were both shocked, with our house and all of a sudden all the neighbors are talking about it, there are a lot of reasons that home property values have gone up so much here in Colorado, but a lot of people are worried, about what's going to happen to their tax bill.

And that those bills are coming out in December, and prop HH is an opportunity wonderful opportunity for people across the state who do not want to see the property tax bills shoot up as their home values have, and again as Senator Fenberg pointed out cut the increase in half, and make that savings permanent, at least through the next 10 years and save that money on your property tax bill and do it in a thoughtful way that make sure that the schools and all of the local governments water districts, fire districts, parks districts around the state, do not lose the money that they need to maintain their operations when we cut those taxes.

- So if this passes on November 7, will it that immediately impact those tax bills in December?

- Yes.

- Okay good to know.

Michael and Barb, tell me why this is a bad idea.

It sounds like it saves me money.

- It sounds like it and I wish it was correct, that it's going to see a bunch of money and that it's real property tax relief the reality is this your property taxes are still going up because the increase, the slight decrease in the assessment rate that was put into proposition HH I think it's 0.0695... is just going to decrease or increase.

So property taxes are still going up and I agree, people are greatly concerned and would really like to have true property tax relief, for me personally I check mine out and I know how to figure mine out.

It's $120 so instead of my property tax rates going up by $800 they will go up $680.

So I don't really think that's property tax relief, so again people are worried, we could have at the state through legislature like we did the last two years we could have passed real property tax relief and lowered the assessment ratio which is clearly under our purview as legislators, we chose to lower it but then put it on the ballot with a TABOR refund that you're going to not get.

So I think it's kind of the scheme and this bait and switch is going on on the one hand we are trying to say you are going to get real property tax relief when you really aren't, the property taxes are still going to go up but on the other hand legislators my Democrat colleagues are saying no we want your TABOR refund check.

- Michael talk a little bit more about that because I don't think most viewers know what Barb is talking about but exactly what's going to happen with the interplay between property tax relief and TABOR refunds?

- Yes we need to be clear about this that the only reason it's on the ballot is because of the TABOR side of things that anything else in this bill the legislature can pass and lower assessment rate and make senior homestead exemption portable, everything else they can do what they do is can't go ask for more of your TABOR refunds.

You fear remember last year we got these Colorado cashback checks, the $750 $1500 per couple, they all went out to every Coloradan and they got these checks and really needed during this time inflation was high costs are high, and this year they're going to come back and say we're going to adjust the formula is population plus inflation we will add 1% to that every single year, which basically ends the TABOR refunds.

And so when you look at this the only reason it's going to voters is to say we want to give you property tax relief and take away your refunds and as Barb said, your property taxes are still going to go up 31% is the average that we will see under HH and this is a $4 billion property tax increase.

And it's the failure that the legislature has had, they knew it was coming for years since Gallagher was repealed but this is all a tax grab, it's a tax increase over the next two decades and that's what you will not hear about from them.

- Steve I want you to respond to that because I see you kind of grimacing but what's the net difference between the property tax relief and the loss of TABOR refunds?

Give me some numbers.

- Aaron I think even in that question there is some information that needs to be corrected.

This does not get rid of the refunds in the next few years as Michael said, it's absolutely not what it does in fact HH makes some of the reductions and assessment rates that we have done of the last couple years and legislature it makes them permanent and then makes them bigger.

And it does it in a way that is responsible so if you just cut property taxes and do not worry anything about who gets that revenue you're cutting school budget, you're cutting the budgets of those who respond to our fires, and so the reality is that if HH passes, as Michael said last year people got a $750 refund check if HH passes, you will actually get for the average Coloradan you will get an increase in your TABOR refund in 2023.

It will be $820 or so, and that is more than what 62% of Coloradans would have made if HH would have gotten if it did not pass.

The reality is there's a small reduction in the refunds and in the future years in 2024 it's projected to be $46.

It does not get rid of your refund, it takes 1% and adds it to a TABOR cap, has a pretty minor impact and it does in a way that provides resources to schools and fire districts etc.

so they do not get harmed when we cut property taxes for people.

- So is it 1% for the 10 years or adding 1% more each year for 10 years so you are at 10% plus compounded?

- It adds to the TABOR formula so the formula right now is inflation plus population growth and that's every single year, is simply as 1% to it, it's a modest change in our opinion and it's less of a change as Ref C was, it is responsible and it's a way to do this to allow our school districts and firefighter districts to get the budgets that they deserve and they need and frankly they've been underfunded for years.

So it does it in a way it provides relief.

- I know you to want to ask but let me ask one other question just for clarification, what I don't understand is if this passes, property taxes still go up and they don't go up as much as they would why but if property taxes are going up and assuming mill levies aren't changed, then why would fire districts or school districts or park districts or other special districts, why would they be getting less aren't they going to get more if proposition HH does not pass they will get more and if HH does pass they will still get more.

- It's a really important question that you're asking but I want to address your last question first which is what is the net average homeowner in Colorado is going to see about $1000 in property tax relief over the next two years and no 500 in the first year 600 in the second year, and 520 in 23, but 600 2024 they will lose $46 off their TABOR refund and so you're still talking about over thousand dollar benefit savings to taxpayers.

And so to address your question it's a great question what we don't think about a lot is the growth that you are seeing in home values while I see it in my house in Denver, and folks are really seeing it in Vail and resort communities, yeah you are on the front range or the I 70 corridor have a tremendous amount of growth.

Sen. Fenberg pointed out the proposition HH is giving the same property tax relief to everybody in the state, bringing those assessment rates down for everybody.

And folks that have homes and places in other parts of the state aren't seeing that kind of growth, and when we cut those rates, they're actually in a position where they do not bring in enough revenue to maintain the operations.

That's a lot of rural fire districts, a lot of rural water districts, it's a lot of smaller areas of the state Sen. Kirkmeyer when we were debating this, in the Senate was a real champion for the smaller district in her area and making sure that we backfill that.

The second reason is K-12 education.

A lot of these districts just frankly need the funds.

We've been in a very lean period.

In terms of their ability to raise money for decades under both the Gallagher amendment and the TABOR amendment, you're now in a position where your schools if they are not able to capture the growth that we are seeing in this economy and they are funding, they are already in a critical teacher shortage statewide, we already have drastic needs out there across the state, to keep quick K-12 funding and so if you come in and you start cutting all those property taxes, those districts are not going to have the revenue that they need to serve the kids.

- All right.

Do you have anything to say?

- Yes I think we both have a lot to say, first of all let's be clear.

It's not straight across the board property tax cut, you have to apply for it.

So if you own several properties, if you own several properties you are not going to, if you own several residential properties you will not get it on every single residential property you own.

Only on the one you are owner occupied.

- That's not accurate.

The assessment rates go down for literally every single property in the state of Colorado.

Commercial properties, residential properties, AG properties, you name it.

Assessment rates will go down and we provide targeted additional relief to working families that live in the home that they own, to seniors, and renters.

- So you have to apply for it.

- It's additionally on top of the relief that everybody gets from proposition HH.

- So if you are a senior, currently there is a senior exemption, I don't know 50 grand or something like that, I forgot what it is.

- It's 100 grand.

So you don't have to apply for that, that's applied automatically, you have to apply?

- You have to apply.

- Oh you do, okay.

So in this case you would have to apply for it's going to be increased from 100 to 150 for the first year and then it goes down 140, 9 through 10 and then I can't understand why that made no sense to me why not just do 150 for all 10 years but either way, so you have to apply for that additional benefit and then the other he said there was another benefit special benefit what was that?

- For seniors?

- No, that was the seniors I just talked about.

- Seniors also importantly the exemption becomes portable for them so right now seniors across Colorado lose that homestead exemption if they move if they downsize, because there's a requirement that you've lived in your house for at least 10 years in order to qualify.

So all over Colorado, seniors who move they want to downsize, we had a lot of seniors downsize during Covid they lost that exemption and sometimes seniors don't they choose not to downside because they lose that exemption so prop HH would allow them to get that same $100,000 deduction plus the additional relief that all property owners are going to get under prop HH and they will not lose that benefit if they move.

- Just to be clear, right now it's 100,000, so proposition HH is adding 50,000?

Or 150,000, so it's moving it from 100 to 150 and then back down and then 140.

- Okay Michael, you've been so quiet.

- I just want to answer your question directly about TABOR refunds and basically you don't have to go far you just look at legislative counsel put the information out this is going to be in your blue book that says how much TABOR refunds you will lose over time and that 1% compounding every year makes it to where you lose $10 billion over 10 years, so this is going to basically eliminate TABOR if it doesn't in the first decade they can also continue prop HH beyond 10 years without voter approval, the legislature just has to come and say we will continue this on.

- You are saying that's part of HH?

Giving away authorizes them and to do that for how long?

- For as long as they want to.

- If the property tax cuts stay in effect.

- If you look at the second decade and then Common Sense Institute put out a really good study showing the impact over time they said if it gets you know continued on in the second decade, that's where you see this huge differential between the $21 billion of property tax relief in the $42 billion in TABOR refunds comes over two decades this is the 20+ billion dollar increase, this is a grab for even more money and this is property tax relief and I think that's where people have the biggest problem with this is this is going after the refund trying to end TABOR on the other side saying no this is really about cutting your property taxes because there's a crisis right now and I think that ploy that they are trying to do is what's making people upset.

- I think there's the question as well how long before your taxes actually really go up again?

Because again the reality is your property taxes will still increase your local government and local tax amenities will still see an increase tax revenues, coming into their [indiscernible] to deal with the issues that they talk about, the fire district the counties, those types of things, they will still be able to deal with the roads and fires and fire district services and those types of things so that is still going to keep increasing, now here's what happened, when we had Gallagher we had this ratcheting down effect when you included the Gallagher amendment which was a safety net that kept our residential property taxes down low and if I was still in place, we would not have gotten rid of that amendment constitutional amendment back in 2020, our residential assessment rate would be at about 4.9 right now.

Instead of 7.1 and instead of the legislature trying to come up with these gimmicks on how do we just decrease it just enough to make people feel like maybe we will give them some type of decrease, while at the same time we will take their TABOR refund check.

So again, property taxes are still going up, property taxes are basically in effect because of three things.

Because of the value of your home, the assessment ratio which can be controlled by the legislature, we don't need to go do a ballot initiative to lower the assessment ratio, we can do that all on her own without taking the refund check or without getting rid of TABOR eventually.

And then the third way is through the mill levy that local tax and cities do, so sure, we are going to give you .0695 decrease this year and the assessment ratio which will mean maybe on average across the state, I just know what my taxes what it means and it needs about 120 bucks this year so when we have reappraisal year, which comes into effect in 2025 and your property values go up, if we don't lower that assessment ratio your taxes are now going to increase even more.

So in two years, your taxes will even increase more so they're going to increase now, they're going to increase again as your property values go up and I don't think any of us wish to have anyone's property values go down so that's the reality of this, it's kind of like the scheme that's going on, so instead of giving real property tax relief, we've decided to play this game.

We will keep talking about school funding, the reality of that is, we have close to $5 billion, interfund balances in the state education fund and the permanent trust fund and in unrestricted reserves.

That could have been spent on education, we could've fully funded education this year and then we have the ability to fully fund education next year and for years to come.

But Gov.

Polis came in and said I don't want to fund it all this year and so my Democrat friends in the legislature would not fully fund education even though there's a constitutional amendment that says we need to fully fund education.

So when you hear this all we're going to use this to help fund education, they did not do that after amendment 23 where there's a constitutional amendment, they figured out a workaround the Constitution and a couple of years ago, Sen. Fenberg had a bill that increase people's property taxes throughout the state in certain school districts.

- All right speaking of amendment 23, we have one of the sponsors sitting here on the panel.

Do you want to talk about what Barb said and Steve I know you do.

- Yes I would say Gov.

Polis has done a wonderful job of making sure that we are reducing our tax rates, making sure we have among the lowest tax burdens and tax rates in the country and also making sure that we are fully funding our schools.

That's why he supports proposition HH because it strikes that balance, it gives people real property tax relief I will point out you know Michael you mentioned the Common Sense Institute report, they are even showing average homeowners will save $400-$600 per year so this is over $1000 in savings for the average homeowner for a couple years, and that's real relief for homeowners who are seeing their values go way up, cutting those increases and their bills and half and doing it in a way where a small portion of your refund $46 in 2025 would go to backfill your school districts, your fire districts your other local governments, and make sure that we can continue to fully fund public education.

This is striking the right balance Sen. Kirkmeyer brought up the Gallagher amendment, and she's absolutely right a huge bipartisan coalition Republicans, Democrats, business leaders, community leaders, advocacy groups from all over the state came together and back to the repeal of the Gallagher amendment and it passed with a two thirds majority with each chamber, of the legislature and was approved by the voters and the reason is because it was an automatic formula pilot formula that was really hurting the revenue that was being generated for schools, fire districts, you saw the firefighters on the TV ads saying we need your help, vote yes, prop HH is the solution that balances giving real property tax relief without hurting the local services.

- So what was the total of the TABOR refund last year?

How much did the state refund?

- About 2.6 billion.

- Okay, so that gives us a context of what you were talking about Michael, Steve please.

- I just want to respond to a few things, Sen. Kirkmeyer said that we could reduce assessment rates in legislature she is absolutely right, we have done that, this is the next phase of doing it and making it permanent and doing it in a way that's responsible, she says it's a game.

It is not, it is responsibility, and we are doing this in a way that makes sense for people and for our business community and our communities themselves the services that matter to everybody.

- The general assembly does not have the authority to do it for 10 years, but the people do.

- Yes they do.

We can reduce assessment rates for 10 years.

Forever.

- We could do five days a year, it's all about TABOR refunds.

- The reality is if we did that and we did not provide backfill, school, fire, districts and local communityes would seriously lose that deal.

So we were not willing in a state that 72% of our school districts are already on a four-day school week, in a place where where one of the worst in the last fer years in per-pupil funding in a state where we know seniors on fixed incomes cannot keep up, and the services that they need are at risk, we were not willing to make a cut being responsible and making sure that it was paid for.

- 72% of the school district but not of school students?

What percent of school students are on a four-day schedule?

- A lot.

- It's mostly in the rural schools.

It's going to be a small amount.

If it's that.

- A lot of these districts are being forced into it, because we have had formulas in our Constitution that have denied the schools the revenue that they need to maintain basic levels of services.

- That is not true.

That is not accurate.

- The alternative out there that Michael Fields is working on right now absolutely would get school district funding because it provides cuts with no backfill and it's not paying for those cuts whatsoever.

- Michael has never made a tax cut that he doesn't like so you cannot fault him for that, but I want you to respond to that.

- I think a couple things, one is that you have to talk to these local officials.

I live in Douglas County and we see a 47% increase right?

And it used to be 39% you talk to our County commissioners and they say we need over these two years a 9% increase so to your question of 9%, your question of how much backfill is needed when these budgets are still growing tremendously, it's not that much, so you think about the fact that this has a human side to it, so in Douglas County they have a town hall 1100 people showed up upset about the property tax increases, HH doess not do nearly enough what they can do they can call a special session and come in and fix this problem without taking TABOR refunds.

- Hold on hold on.

We are going to continue this conversations, this was part one of our special two-part series with our four expert guests on proposition HH so make sure you watch part two and you can see all of our election programs on PBS 12 every Friday evening at 9 PM and Sundays 12 noon you can view both of these proposition HH shows 24 seven on PBS12.org, I would like to think my guess for joining me Cary Kennedy, Steve Fenberg, Michael Fields and Barbara Kirkmeyer and please thank channel 12 for providing this nonpartisan public service.

Thanks for watching and make sure to watch part two.

We will see you next time.

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