PROPOSITION HH P 2 of 2

♪ (Music playing) ♪ - Welcome to the Aaron Harbor Show, this is part two of the special two-part series featuring the biggest issue on your statewide ballot for the upcoming November 7 general election.

It's proposition HH, my guests include former Colorado treasurer Cary Kennedy.

And current State Senate President Steve Fenberg who support proposition HH and advanced Colorado Institute president Michael Fields and State Sen. Barbara Kirkmeyer who are opposed to proposition HH.

So Steve I want to start off with what happens if prop HH does not pass?

People do not get relief from it, seniors will continue to not be able to downsize or have portability with their senior homestead exemption.

People will not get the $50,000 off the top deduction from their taxable home values and people won't get their assessment rate redeductions over the next 10 years, and I think the consequences are quite dire these property tax increases, on small businesses and commercial properties on seniors and people on fixed incomes, it's very serious and you know the relief in prop HH is meaningful, it cuts the increase in half more than $1100 in savings over the next two years for the average homeowner, and does it in a way again that's not on the backs of our teachers and schools and fire districts.

- So Michael if prop HH fails to pass, we are all going to get hit with massive tax increases.

- This is still in the hands of the legislature, I got a handwritten note from an 80-year-old grandpa yesterday he said I cannot afford the property tax increase and can't give up my TABOR refund and that's the kind of people you have to think about when HH goes down the next day governor should call a special session and say we don't need to take your TABOR refund we can lower the assessment rate or we can cap property taxes so we don't see this big spike so to think it's HH or nothing right now is not the case and again legislators can come in and do all these changes, lower the property taxes on their own and I hope they do it and loses in November.

- So if there is not a special session, the Gen. assembly does not meet until January, we already would've gotten our property tax increase notices.

- You already received those.

- Well we will get the bills, we will get the bill.

- You will have to make the payment.

- And we'll have to make the payment and the legislature...

But what?

- You receive that value.

- The local government.

- There's two things that could happen.

- What you're saying unless the legislature steps up, before December, unless there's a special session we are out of luck?

- And I think people will choose the option to put the pressure back on the legislature and governor because they do not want to give up the TABOR refunds, because it's the $5000 that is over 10 years permanently ending TABOR refunds, it is a bad deal for Coloradans, so legislature trying to put you in the position, vote to give up your TABOR refunds take a little bit of property tax which will still go up over 30%, people need to say no put the pressure back on them.

- The numbers on the TABOR refunds are made up.

They are manufactured.

- No the state puts out the numbers.

Look at counsel it's $2.2 billion in the 10th year, added all up $10 billion over the next 10 years in TABOR refunds.

- That came from legislative counsel?

- It does not permanently end refunds and the $5000 number you just said.

- Hold on hold on so first of all, technically it does not end TABOR refunds, so hold on hold on if prop HH passes, it does not technically say TABOR refunds end, you are saying the arithmetic effectively ends TABOR refunds so is that a fair way in your opinion?

- This is legislative counsel saying how much it's going to impact TABOR it's not us making it up right here.

- You, the treasurer, straighten this out for me.

- The $5000 number that Michael is referring to is for two people who earn $200,000 a year and to get there... You have to presume that the modeling that where that came from which is the Common Sense Institute model assumes constant and continuous growth every year going forward no downturn.

No recession constant growth to get you to that number and if that were to happen, that same couple would still get back $1000 a year in the TABOR refund.

So prop HH asked folks to give up a portion of their refund in a growing economy but they would still be getting $1000 a year back in the refund.

- Barbara please.

- It's legislative counsel services.

Who are saying that over the next 10 years it will be a $10 billion decrease in TABOR refunds, so that eventually will affect your TABOR refunds, if proposition HH does not pass, it's the same thing we've been saying that my Republican colleagues have been saying in the legislature hold the special session, let's do our job and we can decrease the assessment rate without even a factoring TABOR refunds at all.

We don't even need to do that, and the other thing I've heard here in our first part is oh we are going to reimburse local government, well when I was on the Senate floor, this bill asking for an amendment to change the base year, because the base year is January 1, 2022, and I believe there still is 20% increase that happens in a local government they have a 20% increase in their values, then there's no reimbursement for them, there's no backfill for them and if it happens in your one it goes throughout the whole 10 years, if it happens in the whole 10 years whenever it happens you never get to go back.

And that's what I believe is still in the bill, and I thought I read through it and it still says that, but we got this bill back into the Senate, at about 8 o'clock or so on a Monday night on the last day of session and it was not even on our desk and we are being asked to vote on it, so not everybody got to see what was going on in the bill but I believe that's still there, but what I was asking for the amendment to change the base year from January 1, 2022 because we have reassessments and property taxes every two years like let's change the base year if we are really trying to look out for local governments here maybe we need to change that base year so they do not hit the 20% threshold.

We were told no.

In fact Sen. Hanson said no it was not intended that we would be reimbursing local governments for a full 10 years.

So again another type of game that's going on here, the TABOR refund and the TABOR you know raising the cap is about state revenues, the property tax revenues are about local government taxing revenues, so we are saying look we are going to need your TABOR refund so that we can give them some reimbursement maybe, and for the most part I'm not sure anybody's going to figure it out yet, how many local governments and tax entities, so your fire district or hospital districts, your library district, your junior college, community college we are not sure if they have a huge increase like what happens in Weld County we are not getting any reimbursement, eventually that will go away.

- Why do you want the state to give them more money?

I got you do not want backfill.

- I don't, but I'm just explaining you keep saying Sen. Fenberg keeps saying and I've heard the governor say this as well, thinking how important it is to keep reimbursing and backfilling those governments the reality is and they know this, that goes away.

But they don't tell you that, it will eventually go away.

Because the base year never changes from January 1, 2022, so we are already there, so it goes away and again this is just a game they are playing, your taxes are going up, they may not go up as much but they're going up.

Local governments know how to deal with fluctuating taxes, if proposition HH does not pass, to give property tax relief to their constituents, they can do the same thing that I did as County Commissioner and lower the mill levity.

- But for the 2024 year in which payment is due, unless there's a special session, we are going to be stuck with whatever bills get mailed out in December and local governments prior to those bills being sent out, could they lower mill levies right now?

There's nothing to stop them from doing that?

- They could there's nothing to stop them from doing that and in fact prop HH if it is approved by the voters, requires them to do that, so one of the pieces we have not talked about is prop HH puts a cap on future growth of property tax collections, so people get a nice big reduction in this year when they are seeing their values go up, but then in the future there's ongoing relief that they continue to keep the reduction but in the future there's also a new cap that comes in, it is tied to the rate of inflation, so property tax collections cannot grow more than the rate of inflation and it allows for local governing bodies, property taxes are a local tax and they are collected by library districts, fire districts and water districts and counties, they are not a state tax they are a local tax.

It gives those local jurisdictions the authority and ability to have a conversation with the community and provide notice to the property owners, if they want to, they can not raise the rate without a vote that is still constitutional law.

Nobody can increase the rate but if they want to keep revenue.

- If you lower your mill levy, if you then wanted to raise it so you, County commissioners could lower a mill levy by a vote of the County commissioners but if in the future if they wanted to raise that mill levy, they would have to go to a vote if the people or not?

- They could temporarily lower it but I think the key here and you brought up education, education is exempt from what Cary Kennedy was just talking about that is says that almost half of your property tax bill goes to education and that inflation cap is not an education and not touched at all, the thing is the interesting thing there's polling public polling that came out about this and the thing that got the worst reaction from voters across Republican Democrats and unaffiliated was the fact that there's a cap there but the cap politicians can vote to go beyond it so we are used to in Colorado voters deciding that this is saying you have an inflation cap, you can go above if the politicians want to do that and it exempts education and so it's really trying to throw something out there and say there's a cap there it's not real and you're still going to see because the education side huge increase, even in localities where they would like to lower the rate and keep it below the 30 to 40%.

- There's nothing to stop them from lowering the rate.

- These are not politicians, these are like the board members of your local fire district and your water district.

These are community members, generally speaking complete volunteers who manage the budgets of the services you rely on every single day.

We put this piece in the legislation the cap at the local level so that the people closer to the community can have the community conversation and make a decision on how fast their property taxes should go up, we don't think we should be making the decision it should be at the local level especially the people who are running the budgets and are members of the community.

- So let me step back, big picture for a second, if nothing happens will save if the proposition did not pass, the governor does not call a special session, is it fair to say that most of the entities that rely on property taxes for their revenues, are going to see a very significant increase in the revenue next year?

Is that a fair statement?

- Unless the local elected governing body did that.

- And probably none of them are doing that because... - No they are.

- I think most are waiting to see what happens with the proposition but who's doing it?

- There's counties across the state I know a group of County commissioners that I spoke with that are waiting to see what happens with prop HH but they are also telling folks now what we are now looking at it, we can now lower the mill levy, you do not need to give every TABOR refund check.

- And your solution to the vote issue is to do it as a temporary measure?

- Well you can, but if you don't, what if you don't pass it as a temporary one?

- If you do anything permanent in terms of drops, it would take a TABOR vote to do it, so the legislature can temporarily lower attacks, if they do it permanently then they would have to go to voter approval.

- Which we have done, we have temporarily lowered the assessment rate.

- Carrie, do you want to jump in?

I know Steve did, so I want to go back to Steve.

- I think the take away for the whole conversation is that prop HH gives property owners and we have not talked about renters, but anyone who's out there that's got an apartment, they know that we saw an apartment building commercial values go up just the values of the apartments buildings go up by 45% during the cycle, they know that their landlord is going to show up and say sorry, taxes went up, valuing him, and they're going to pass that through as rent, so everybody in Colorado really has a stake in this every renter and every owner every business, every property owner, who's seen the property tax bill becomes something that they cannot afford to pay, prop HH gives them the ability to avoid seeing their tax bills go up as the values go up.

- Stepping back, does any of this make sense when you think about it in terms of how we fund the government?

I mean we are funding so many different entities, so many different districts with property taxes, inflation has gone up in the last three years, 25% or whatever, and now we're looking at a 40% increase in property taxes, is there any kind of relationship I mean because property values have skyrocketed in Colorado, does that make sense to-- - To get rid of TABOR?

No.

- No it does not, and in fact that's why TABOR passed in 1992.

- I'm saying it doesn't make sense the funding mechanism makes sense when you have such an incredible increase in property values.

- So that was why one Gallagher was passed, and in fact that was passed by two Democratic legislatures and I don't know who was on the other side, but was it Sen. Stewart from Boulder County at the time?

And Sen. Gallagher?

Right, were they both senators at the time?

But anyways, they were the ones who came up with the Gallagher amendment and the whole purpose behind it was to ensure that residential property taxes did not go through the roof and that people could afford to stay in their own home types of things-- - But commercial property taxes were not excited about it.

- No actually the commercial assessment ratio went down when Gallagher was put in and put through, it went down to 29, yes it did, go look.

But anyways.

- That was 20 or 30 years ago.

- 40 years ago.

- But what happened was the part of the reason TABOR passed is because what could happen with Gallagher is counties, cities, could increase their mill levy, if the assessment ratio was to drop which it was doing, was continually dropping because of the Gallagher amendment, prior to TABOR, local governments could adjust their mill levy and float them up or down mostly up, to make up for any lost revenue and keep it going, so TABOR past because people were like we don't want to be able to keep doing that, and so you will have to go to vote if you want to increase my mill levy at this point and so that's why part of the reason why TABOR was so popular and is still so popular.

- That does not change under prop HH.

- I think your question certainty is important, local governments know how much money they'll be getting, homeowners need to know how much they will be paying and businesses need to know how much they're paying and with these huge spikes up and down it's not a good system when somebody's like I have to deal with a 40% increase, my income only went up 3% or inflation might be 8% this year but the revision of the year people need that certainty but to the point about renters, renters are the ones I think the key to this election is this ballot measure gonna pass again is renters because of the impact it has on them because if you think about it, if landlord to property taxes are going up 31%, rent is going to go up by a significant amount and then on the flipside, the TABOR refund side, renters lose their TABOR refund over the years, and so they have no property tax relief because they don't own property the rent is going up anyways because landlord are paying more now they are losing their TABOR refund so I think renters will be at the heart of the discussion in this ballot measure in November.

- They get significant relief.

Because if your property taxes landlord property taxes go up 40% your rent is going to go up to close to that, so if you reduce the increase then it's going to be less harmful on the renter, and there is no validity to the fact that they lose those TABOR refund altogether, it is a slight reduction and the benefit far outweighs it, there's also $20 million per year in this prop HH to provide relief to renters.

- The change to the TABOR refund is 1% a year.

If prop HH passes, everybody watching this is going to get $850 back this year in their refund if prop HH passes last year everybody was super excited to get $750 if prop HH passes, they will get $850, in addition to $500 or $600 of property tax relief, so it's a huge savings for Colorado taxpayers I don't know why Michael is not jumping up and down supporting prop HH.

In the following year... - [Cross talk] - And I believe exactly, you do.

But here's the thing Sen. Fenberg finally said it correctly-- - What is my TABOR refund next year if prop HH does not pass?

- It depends on how much revenue grows, but right now it is forecasted to be $500 which will be $46 less than what you would get so you would get $546 and you will get $500 and you will get $600 in propert tax relief.

- Your question was if HH does not pass.

- It depends on your income.

There's no clear answer to provide.

- It depends if the legislature changes the formula by which we get back.

- Let's say we do the flat amount for everybody.

So I mean what would the amount be?

- 300 bucks for most people, $350, going up to over a thousand if you are upper income.

- What if we did what we did last year where we wrote the same check for everybody?

- Well it's $820.

- The forecast is going to be 750 million so that's one fourth of what it is.

So... - What they're asking you to do is ignore the fact that your property taxes are going to go up 30%.

- You're saying after Prop HH.

- Whether it passes or not 40% or 31% so ignore the fact that they are going up and we are not doing anything about that and ignore the fact that in TABOR over the next 6, 7, 10 years you are going to be losing billions of dollars in TABOR refunds, look at just this one year thing that saying it's going down and it's actually going up, this is what they're trying to do so you look at the big picture and you look at the property tax side, HH is a bad deal they need to come back and give real property tax relief.

- The real reality is TABOR refunds are entirely determined by the economy and the growth and the economy, it's not HH primarily, it is the economy and so as senator Kirkmeyer said there are projections for what a TABOR refund might be the following year, nobody really knows because it depends on what the economy does, the numbers they are throwing around about the ten year projections of what is going to do to your refund is assuming that we never have a downturn, there's no recession and no problem in our economy over the next decade and that's not reality, we know that there are ups and downs, and when there's a down that impacts TABOR refunds of the times that TABOR has been in effect, half of the years there was no TABOR refund not because prop HH, it did not exist, because the economy did not have growth above that TABOR.

- Well actually because of REF C the referendum C that passed in 2005 and the changed the base and there's a limit and a cap, and this would increase the cap by 1% more compounded annually.

So, legislative council has said it was not me, it was not Michael, it was legislative council services has said over the course of the next nonpartisan over the course of the next 10 years we will lose $10 billion in TABOR refunds and they did a very conservative estimate in the out years of 2.5% increase.

- 10 billion out of how much?

- 10 billion.

- How much over the 10 years would TABOR refunds be?

What's the gross amount of TABOR refunds because if it's 10,000,000,000/20,000,000,000 that's a big deal if it's 10,000,000,000/200,000,000,000 or then it's not a big deal.

So give me a sense of how big of a deal it is.

- I don't have the total number.

I only know that if you look at the Common Sense Institute study where it came from, that same couple says they're going to lose their refund it's not accurate, then continue to get almost $1000 a year back in a surplus check.

- So we only have-- quick comments.

- I was just going to say because we're getting down to, the reality is this, and Sen. Brett Fenberg actually said it, you're going to get a reduction in your increase.

So your property taxes are still going to go up regardless if it's proposition HH passes or does not pass, it's either do they go up by 40% more or 31%.

But they're still... - But prop HH cuts the increase that everybody was flabbergasted by in half and does it in a way not on the backs of teachers.

- The teacher's thing is not even part of this conversation because we've already talked about education but here's the thing, your property taxes still increase, they are still increasing so to me when somebody says you're going to get meaningful tax reductions I'm thinking that means I'm going to spend less on property taxes than I did on last years.

- No, I don't think they did.

[Cross talk] - Back in 2020 when the Gallagher amendment was going through Gov.

Polis said in November of that year right before the vote that if you do not vote for this, repeal the Gallagher amendment your property taxes are going to go through the roof.

Look what happened, they voted for it, if passed, two thirds vote, now they've gone through the roof.

- The voters got rid of Gallagher; it was a public policy on the ballot and voters approved it.

- We have one and 1/2 minutes left so Cary, a quick final comment.

- Yes, so the average homeowner's property tax bill when it comes in December is going to go up by a thousand dollars.

It's a lot of money and a lot of people cannot afford it and if prop HH passes it cuts the increase in half and saves folks $500- $600 a year throughout at least the next decade in property taxes.

- Steve last comment.

- There are major consequences if proposition HH does not pass I think those will be consequences and will be felt by everybody in our economy and businesses and on individuals on renters and seniors, if it does pass it provides very meaningful relief and to say it's not meaningful, I think is offensive to people who are living paycheck to paycheck.

We know that this is real relief and it does not do it on the backs of our schools.

- Michael you have 20 seconds.

- Sure I think we have to think of the human side of this the impact these high property taxes are having on people HH would not significantly lower those property taxes when in fact end TABOR refunds in the long run people should vote no and put pressure on the governor and the legislature to call a special session and fix this.

- Barb you get the last word.

- Thank you so property taxes are still going up if HH were to pass your property taxes will still increase so to me that's not meaningful property tax relief the reality is we are sitting on close to $5 billion in our state [indiscernible] of unrestricted reserves and contingency fund balances we don't need your TABOR refund, we could've done this and we don't need to go to proposition HH.

- All right, that was part two of our special part two series on proposition HH.

Make sure you watch part one and you can see all of the election programs on PBS 12 every Friday evening at 9 PM and on Sundays at 12 noon you also can view both of the proposition HH shows 24/7 on PBS12.org I would like to think my guess for joining me Cary Kennedy and Steve Fenberg, Michael Fields and Barbara Kirkmeyer and please do thank channel 12 for providing this nonpartisan public service, thanks for watching I will see you next time.

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