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This article was originally posted on Complete Colorado.

A recent poll of registered voters shows majority support for Proposition HH, the property tax proposal that will appear on the ballot in Colorado this November. The same poll reveals that support disappears when voters learn what the measure actually does.

Proposition HH will not reduce local property taxes. Instead, it will increase state taxes, likely ending taxpayer refunds. But only if voters approve it.

Don’t be fooled

With Senate Bill 23-303, lawmakers referred Proposition HH to voters and dictated the precise wording of the ballot question. The verbiage they chose paints a different picture from what the measure would do.

It begins, “Shall the state reduce property taxes for homes and businesses, including expanding property tax relief for seniors …?”

It’s easy to understand why the Coloradans polled would support the proposal after reading this. The week before Gov. Polis and the Democrat-controlled legislature released their plan, property owners received notices of valuation showing projected property tax increases of 60% or more in some counties. It appears the state is responding by offering to reduce property taxes. Not so.

Proposition HH would not “reduce property taxes,” as the ballot question says.

The measure would reduce the residential assessment rate by 0.065% and exempt $40,000 from a home’s value for tax purposes, but those changes will not reduce property taxes. In fact, regardless of whether the measure passes or fails, property owners will see the largest property tax increase in Colorado history this year.

If HH wins at the ballot, property taxes for a median home will go up about 25%. If it loses, about 32%. In other words, the measure would slightly lower the increase in property taxes. In this sense, one could argue that it provides a modicum of property tax relief, but no amount of mental gymnastics can justify calling it a tax reduction.

But this relief — if you can call it that — will come at the cost of your Taxpayer’s Bill of Rights (TABOR) refund.

The ballot question continues, “Shall the state … backfill counties, water districts, fire districts, ambulance and hospital districts, and other local governments and school districts by using a portion of the state surplus up to the Proposition HH cap as defined in this measure?”

At first blush, that sounds good, or at least benign. If the state has surplus money lying around, why not let them use it to fund fire rescue and schools?

The ballot question, however, does not tell you the “surplus” comes from an overcollection of revenue from Colorado taxpayers. It does not tell you the surplus is the refund you’re entitled to under Colorado law. It does not tell you the state needs your permission to keep that money and spend it elsewhere. And it does not tell you that to vote in favor of Proposition HH is to give that consent.

Some years, Colorado overcollects taxes. When that happens, the constitution requires the state to send the surplus back to taxpayers as a refund. That’s why everyone got a $750 check in the mail last summer — or $1,500 for joint filers. State economists project these refunds will continue for the foreseeable future.

Hidden agenda

The primary purpose of Proposition HH is to allow the state to keep your refund money, effectively increasing your taxes.

The measure is on the ballot for one reason and one reason only. The state needs your approval to keep your money. Nothing else in the measure requires voter approval.

The legislature can provide property tax relief without voter approval. It can send money to schools and fire districts without voter approval. It can fund rental assistance without voter approval.

But the state cannot keep your TABOR refund or raise your taxes without your approval.

The media have called out the Polis administration on the bait and switch in HH. 9News anchor Kyle Clark explained, “The governor proposed reducing property tax increases by using our own TABOR refunds.”

He’s right, but it’s worse than he described.

Over the long term, Polis’ plan will take far more from our TABOR refunds than it saves us in property taxes. It exponentially increases the amount of taxes the state can take and keep each year.

If voters adopt Proposition HH, state taxes will increase by up to $200 billion — give or take — over the next three decades by taking away taxpayer refund dollars.

Proponents of the measure will say it expires after 10 years. But if voters approve HH, they are giving the legislature the authority to extend it indefinitely without additional voter approval after the initial 10-year period.

One thing in the ballot question is true. “A portion of the state surplus” will fund certain local services. But the rest will go into the “Proposition HH General Fund Exempt Account”— essentially a slush fund for all the extra tax money the state will be taking from you.

Local governments lose

The ballot question leads voters to believe counties, water districts, fire districts, ambulance, and hospital districts all benefit from this tax increase. But ask yourself, why have the Colorado State Fire Chiefs not endorsed the measure? Why did over a dozen Colorado counties sue the state, arguing Proposition HH is unconstitutional?

At best, Proposition HH throws your local governments under the bus by taking away some of their anticipated revenue increase while stuffing state coffers with your tax refunds.

In addition to increasing taxes and failing to provide real property tax relief, it transfers more money and power from your local governments to the state.

When voters learn all of this, support for the measure drops from 54% to 43%, according to the recent poll.

Voters like what the legislature tells them Proposition HH does, but they don’t like what it actually does. The poll, conducted by Magellan Strategies, however, stops short of informing respondents of the full impact of HH.

For example, in the section of the poll educating respondents on various effects, the pollster repeats the statement seen in the ballot question that HH expands property tax relief for seniors. Respondents are more likely to support the measure after the pollster explains this.

But this characterization of the policy impact isn’t entirely accurate.

The alleged expansion of the senior homestead exemption is the same $40,000 exemption granted to all homeowners under the measure. And it comes nowhere close to offsetting the tax increase homeowners will experience this year.

The pollsters also told respondents, “If Prop HH is approved, annual property tax payments may still rise, but by smaller amounts and not as quickly.”

This would be new information to someone who only read the ballot question, which indicates HH will reduce property taxes. When the pollster explains that the measure will not reduce property tax payments, support for the measure falls.

But even this understates how unhelpful the measure is to homeowners.

A fake property tax fix

Not only does the measure fail to reduce property taxes — or even keep them stable — but it also does nothing to prevent large property tax increases in the future.

After an initial reduction in the increase in taxes, HH allows property tax bills to grow just as quickly as they would without the measure. Taxes will continue to rise with property values, just as they do now.

To prevent this, the state would need to create a mechanism that pushes property tax rates down as home values rise. Proposition HH guarantees no such protection.

Supporters of the measure might point out that the measure includes a provision to cap property tax revenue increases at the local level. But it also gives each local government the authority to eliminate that cap unilaterally, without additional voter approval.

The state constitution contained a mechanism to keep property taxes in check until voters repealed it in 2020 with Amendment B. As with Proposition HH, the legislature crafted the (extremely misleading) ballot language for Amendment B, which voters then approved.

Repealing that constitutional mechanism led to the current property tax crisis. The same politicians who created that crisis are now using it as a pretext to come after our refunds. Don’t let them get away with it, vote no on Proposition HH.

Ben Murrey is director of the Fiscal Policy Center at the Independence Institute, a free market think tank in Denver.

Originally published by The Denver Gazette

It is unfortunate that the governor and legislative Democrats failed to fully engage in any conversations about the potential solutions to the property tax issue facing hard-working Colorado families who are struggling to make ends meet. The ballot measure, Proposition HH, that Coloradans are being asked to vote on in November 2023 was rushed, with very limited discussion of its true impacts.

The state Legislature could have simply lowered the state assessment rate, and you could be paying less than you did last year in property taxes. The governor and the Democrats chose not to do that. Instead, they gave you Proposition HH, which will lower your assessment rates by .095%. Yes, take that in. .095%. Not even close to enough for most Colorado families to buy school supplies. (According to the National Retail Federation, the average to be spent on school supplies including clothes, is $890.07 per child.)

In return for their dishonest scheme, it is estimated in a study by the Common Sense Institute that taxpayers will give up over $5,000 of their Taxpayers’ Bill of Rights (TABOR) refunds over the next 10 years alone. Remember the check you received in the mail last year, right before the election, signed by the governor? Yes, that check. Gone. Forever. With just one vote.

The legislature could have given you property tax relief without you forfeiting your TABOR refund – just as we have been doing for the past two years. Instead, with nearly $5 billion just sitting there in state coffers, above what’s required by law, the legislature and the governor want to take your TABOR refund check and continue their spending spree.

You will hear that Proposition HH will help lower rent for renters. Not true – mostly because property taxes are still increasing substantially and any increase in property taxes will likely be passed on to renters. And by the way, there is no correlation between lower property taxes and lower rent. Don’t be fooled. Don’t give up your TABOR refund check. Renters are the biggest losers here.

You will hear that Proposition HH will help seniors. Again, property taxes are still increasing. Yes, for seniors too. When we hear about the housing crisis, there is much discussion around the senior property tax exemption and making it portable so seniors can downsize to reduce their property taxes. Republicans had bills to do just that. However, not surprisingly, those bills never made it to the floor for discussion. Our Colorado seniors are on fixed incomes and are suffering under the weight of increased costs and inflation. The Democrats in the state Legislature could have made their lives easier, but they chose not to do so. Instead, they gave them the fallacies of Proposition HH supposedly lowering property taxes for seniors. Our seniors deserve better. We can and should do better.

If you want to learn more about how Proposition HH will affect you, please visit: VoteNoOnHH.com and do the math for yourself.

We insist our colleagues in the state Legislature get back to work on a long-term, sustainable solution to real property tax relief. People throughout Colorado deserve true property tax reform, not a scam to steal their TABOR refunds. Keep your check — please Vote No on Proposition HH.

Barbara Kirkmeyer, a Republican from Brighton, represents District 23 in the Colorado Senate and serves on the Joint Budget Committee. Rose Pugliese, a Republican from Colorado Springs, represents District 14 in the Colorado House, where she serves as assistant minority leader.

Originally published at The Denver Gazette

It’s no surprise Colorado’s small businesses aren’t buying Proposition HH, the bait-and-shaft tax measure on this fall’s statewide ballot. After all, the resilient mom ’n’ pop shops, upstart entrepreneurs and other small-scale employers who create so many of our jobs and bring us so many of our goods and services — are used to scrutinizing the bottom line. They have to just to stay afloat. So, they aren’t about to let someone sell them a bucket of red ink.

Which is, more or less, what Prop. HH would do. It dangles a token, temporary property tax cuts, in exchange for letting the state keep billions of dollars in surplus tax revenue that otherwise would have to be returned to voters.

Hence, survey results released not long ago by the National Federation of Independent Business-Colorado — the voice of the state’s small-business community — showing Prop. HH is about as popular as COVID-19 as far as small-biz proprietors are concerned. NFIB asked its members last month, “Should Colorado reduce TABOR (Taxpayer Bill of Rights) tax refunds and use the retained funds to lower property taxes and increase education and local government funding?” Fully 90% were opposed; 9% supported it, and 1% were undecided.

Small-business owners are by and large a savvy lot, offering a good gauge as to whether a proposal passes the smell test. They so adamantly oppose this ballot measure — hatched by the Legislature last spring and placed on the upcoming ballot with the blessing of Gov. Jared Polis — that NFIB-Colorado launched an official campaign this week in opposition.

The campaign features radio ads, digital ads, and a web page (for more information, go to: https://www.nfib.com/refund-colorado/).

“We’re calling out Proposition HH for what it really is, a bait-and-switch, offering a temporary property tax cut but undoing TABOR refunds,” NFIB state director Tony Gagliardi said in a news statement released Monday. “Colorado’s small business owners have trusted the Taxpayer Bill of Rights for 30 years to return some of their hard-earned money.”

Gagliardi is of course referring to the policy Colorado voters amended into our state constitution in 1992. The amendment limits year-to-year increases in government spending to the rates of inflation plus population growth. Revenue collected over that amount has to be returned to taxpayers.

And Gagliardi is right; the property-tax relief promised by Prop. HH is a con. Not only does it pale in size compared with the amount of TABOR refunds voters are being asked to give up — but it also would make them pay for even that paltry “relief” out of their own pockets, using some of their relinquished refunds. The rest would be used to grow government.

Make no mistake, Prop. HH is a windfall for the state government. The state would haul in an additional $9 billion that otherwise would go back to taxpayers over the coming decade. For taxpayers, on the other hand, Prop. HH is a raw deal. They would lose far more over time by giving up their refunds — Common Sense Institute pegs it at over $5,000 per joint-filing household over 10 years — than they’ll gain in modest property tax relief.

As a business owner might say, HH would leave taxpayers deeply in the red. No wonder small businesses give it a thumbs-down.

Originally published at The Denver Gazette

It’s a deal only a government could love: If proposition HH passes, the owner of a $500,000 house might enjoy a $185 reduction in property taxes next year. In return, he would give up over $5,000 in taxpayer refunds over the next decade. And even then, property tax bills will remain at historic levels.

Property taxes are high in Colorado because voters believed claims that repealing the Gallagher Amendment in 2020 would make them fairer. That didn’t happen. Now, Proposition HH on this fall’s statewide ballot would keep property taxes elevated for the long term because it doesn’t include checks on rising property taxes like those that were in the now-repealed Gallagher Amendment.

Gallagher required business and residential properties to bear roughly equal portions of the state property tax burden. When residential property values inflated faster than the business share, residential assessments — the amount of a home’s value that could be taxed — were reduced. Falling assessment rates kept residential property taxes in line and limited the damage to homeowners’ budgets.

Because neither homeowners nor commercial property owners could make the other group pay a higher fraction of taxes, Gallagher gave both groups an incentive to resist tax increases. Gallagher also required uniform property tax assessment rates.

As opponents predicted, steep increases in residential property tax bills followed the Gallagher repeal. Ending the constitutionally protected uniform assessment rates also opened the door to favoritism in property tax treatment, an invitation to corruption Colorado elected officials have begun to make use of.

Like the Gallagher campaign, the HH campaign is riddled with half-truths. Some HH proponents say that taxpayers are only giving up their TABOR refunds for 10 years. While technically true, the problem is that the HH language gives the Legislature the sole power to determine whether taxpayers lose their TABOR refunds permanently after the 10 years is up.

When has a Colorado Legislature voluntarily opted to reduce its spending? If HH passes, voters will have no say, and TABOR refunds are probably gone forever.

If the Legislature chooses to retain TABOR refunds after the first 10 years, state revenues would increase by up to $65 billion over the two decade and nearly $200 billion over the next three decades. This, of course, means higher taxes for Coloradans, but it doesn’t necessarily mean better government.

People dependent on government programs often assume that if government gets more money, they will benefit from the increased spending. Unfortunately, larger governments with bigger revenues create more — and more powerful — interest groups.

Those interest groups seek to enrich their members, often without regard for the harm they do to important programs. When interest groups become too powerful, people dependent on government services may be better off if the money stays in private hands. Private charities and schools funded by private funds, often provide better targeted, more responsive, support and services.

Spending, squandering

This year’s Colorado Medicaid figure setting includes an example of new spending that primarily benefits a specific interest group. At a time when state government’s proposed average increase in the reimbursement paid for providing medical care to Medicaid beneficiaries will generate losses for providers because it is below the FY 2022-23 inflation rate, state officials plan to divert Medicaid money to doulas.

Doulas provide emotional support for women in labor. Anyone can be a doula, no training required. After decades of research, a 2017 Cochrane Review states that the claims of improved birth outcomes generated by doulas still rest on “low quality evidence.”

State officials propose spending $1,500 per Medicaid client for 6-12 doula visits. Initial spending will be limited to $2.2 million in FY 2025-26. Citing a doula shortage, the Joint Budget Committee recommends spending $10,000 more on a doula training and scholarship program. At $500 a person for a virtual or in-person weekend training course, this is enough to create an interest group of 20,000 certified doulas. Every last one of them will attest that they provide an essential service deserving of a secure place on the Medicaid payroll.

This is just one of many examples of why Coloradans are better off keeping their TABOR refunds rather than handing the money over the politicians to spend for them. If taxpayers keep their refunds, those who want to hire doulas can do so, but the majority of Coloradans who would prefer to use that money elsewhere are not forced to pay for doulas for a select few.

Combine the doula spending with spending with other projects like building affordable housing that has deed restrictions that limit the rewards of home ownership while making it riskier; spending on large scale composting projects; creating a new position for a state employee to translate the no doubt widely read State Board of Education proceedings into an unspecified language at a cost of $155,000 a year, and giving free books to kids under 5 who don’t read, and it is easy to understand how easy it is for the state to blow those TABOR refunds Proposition HH would take from you.

Let TABOR work

Without HH, Coloradans can keep their TABOR refunds and Colorado homeowners might still be able to get some property tax relief. The Colorado Property Tax Deferral program exists. It lets homeowners defer property tax payments in years when their property tax liability grows by more than 4% from the average of the last two years. The state pays local government now, and the property owner pays the state when the property is sold, up to a limit of $10,000.

The benefits of applying spending limits to make government focus on its core responsibilities, and limit spending on frivolous causes or interest group priorities, cannot be overemphasized. In states like New York, California, and Illinois, state governments have become inefficient, invasive, and unfocused. They gobble up 13.5, 12.0, and 11.1% of state personal income. Productive people leave these states because their obese governments make it too hard to live there and get things done.

In 1977, Colorado state and local governments were overweight. They collected almost 11% of personal income. After TABOR refunds passed in 1992, the share of personal income dropped to less than 9 percent and stayed there for two decades. The revenue limit focused state government on providing core services. The Colorado economy boomed as a result of TABOR’s limitations on taxation on government spending.

Since 1992, a great deal of effort has gone into devising methods for evading TABOR restrictions on spending and into circumventing state constitutional limits on debt. State courts have agreed fees are not taxes even when they operate exactly like taxes.

Obligations like Certificates of Participation, debt issued by off-budget enterprises, and tax or revenue anticipation notes issued by state authorities are not considered constitutionally prohibited debt. The state’s net pension liabilities continue to grow and its overall debt is large enough that severe spending cuts could be required during a significant recession. In 2019, Merrifield and Poulson estimated that even with reasonable fiscal restraints, it would be two decades before Colorado’s state debt reached sustainable levels.

Keep government in check

The problem for voters is that there will never be enough money to satisfy the 4,953 active governments in Colorado. There was never enough money for the government of the Soviet Union, and it owned all the property and controlled all of the wealth produced in a country with a surface area almost twice as big as the entire U.S.

Despite steadily growing revenue inflows, the fraction of personal income collected by Colorado state and local governments has been inching up since 2014. State officials want more.

They have proposed HH — which gives government your TABOR refunds and guts limitations on government growth — and disguised it as a property tax reduction measure. Because they lack the money to fund their ambitions, state and local officials want more of yours.

For their own good, Colorado governments need to be kept in check. It is up to voters to do it.

If proposition HH fails, TABOR refunds going forward will exceed HH’s estimated property tax reductions. Limits on state government spending will remain, and maybe state officials will instead devote their attention to repairing the property tax protections the Gallagher repeal destroyed.

That’s a deal almost everyone can love.

Linda Gorman is an economist with the Independence Institute in Denver.

Originally published on Complete Colorado Page Two

Property owners, tenants, business organizations, and government district associations were not included in the Propostion HH (Senate Bill 23-303) negotiations as it was rushed through the Colorado legislature in the waning days of the session.  In addition, legislative debate over the measure was cut off, which led to the House Republicans walking off the floor on the last day of the session.

One of the Prop HH sponsors, State Representative Chris deGruy Kennedy pointed his finger at Governor Polis, “I’m also frustrated by the Gov’s lack of stakeholding,” he wrote in a text message with a lobbyist, acquired under the Colorado Open Records Act (CORA).

Now that the nearly 50 pages worth of Proposition HH financial impacts are being dissected, opposition to the measure is steadily growing.

• The National Federation of Independent Businesses (NFIB) polled their members in August. Nine of out of ten members oppose Prop HH.
• The Colorado Municipal League (CML) board of directors voted to oppose Prop HH and issued a press release September 1.
• The Colorado Special Districts Association (SDA) vehemently opposed the measure during the legislative hearings.  The SDA board formally opposed Prop HH on August 7, and is offering an opposing resolution template for members at their website.
• Club 20, representing Western Slope individuals, businesses, town, and county governments resolved to oppose, per State Senator Barbara Kirkmeyer, who attended the forum speaking against Prop HH.

Legal Challenge

At least 17 counties joined the lawsuit to halt Proposition HH from appearing on the ballot. The lawsuit was dismissed when Judge David Goldberg ruled that the court didn’t have jurisdiction to interfere with an ongoing legislative process. The lawsuit was based upon several legal issues, including violation of the single-subject constitutional clause.

Proponents

One single issue committee Property Tax Relief Now is supporting Prop HH, described by a Colorado Politics reporter as being funded by “wealthy Democrats and Democratic organizations.”  Funders of the pro-HH effort include large out-of-state special interests such as the Washington, DC-based Sixteen Thirty Fund, a left-wing dark-money funding group ($60,000) and the National Education Association (100,000), also based in Washington, DC.

Opponents

Five ballot issue committees oppose Prop HH:

• RejectHH.com (TABOR Coalition)
• VoteNoOnHH.com (No on HH – Advance Colorado Action)
• HHsucks.com (Taxpayers for a Better Deal – Independence Institute)
• HH-No.com (Douglas Bruce)
• Americans for Prosperity Colorado Issue Committee

As we get closer to the November election, expect the opposition to Proposition HH to only get bigger.

Natalie Menten has been an activist in Jefferson County for over 20 years focusing on state and local public policy.  She is a former elected RTD board member and sits on the board of directors for the Taxpayer’s Bill of Rights Foundation. Contact Natalie at Coloradoengaged@gmail.com.