Reepos Win Property Tax Ballot Victory In Colorado - And WSJ Editors Gloat

                       

Residential homes near us which will see property taxes soar next year.

The sheer degraded cackling of The Wall Street Journal editors could be fairly well heard almost in yesterday's lead editorial (p. A16, 'Coloradans Turn Down a Tax Grab') blabbering:

 

"Voters delivered a clear verdict on Proposition HH, a ballot measure that would have raised the caps on what the statehouse can tax and spend. Gov. Polis and Democratic legislators put their weight behind the measure, hoping to haul in an additional $42 billion by 2040. Voters shot it down 60% to 40%.

The result preserves the full powers of Colorado’s Taxpayer Bill of Rights, which voters approved in 1992. The amendment limits state government revenue growth, and it mandates refunds if there’s a surplus—$750 for each taxpayer in 2022. The failed referendum would have given larger checks to the lowest earners but major cuts to the refunds for the middle and top.

Voters rejected Proposition HH despite the misleading label that Democrats slapped on it. They concealed their massive Tabor reform by attaching a modest property tax cut, not mentioning that the pair of changes would leave taxpayers about $21 billion in the red by 2040, according to the Common Sense Institute."

 In fact, contrary to the WSJ editors' spin, Proposition HH was intended to use part of TABOR funds to help alleviate the property tax burden on low and middle income residents, including seniors. Had it passed Proposition HH would have capped property tax growth using a portion of the Tabor refunds - and about 1% yearly after that going to Homestead exemptions for seniors- while also protecting public services.  Democrats and allies, particularly in education, supported Prop. HH as a way of blunting the worst of the property tax increases that are expected next year due to massive spikes in valuations across the state. They aimed both to reduce the scale of those increases and to compensate local governments for lost revenue, all while raising money for education, which long has been short-changed by state government.

But right wingers – using out of state dark money for ad blitzes - fought Prop. HH, portraying it as an end-run around the state’s TABOR amendment -  since the measure would allow the state to use a fraction of TABOR refunds to pay for its components.  Unspoken or referenced by the WSJ editorial hacks is the only option left is the right winger's "Initiative 50".  Which - if it passes on Nov. 5th  next year  - will permanently reduce funding for schools, fire districts, and libraries.

Why is the TABOR law so bad? Well, because TABOR inherently limits state spending (even during large population growth) based on an insane formula that - if more citizens had math backgrounds - would never have seen the light of day back in 1992. TABOR dictated spending limits are fixed by the general condition that the rate of increase in state budget spending cannot exceed the rate of population growth (dp/dt) and the rate of inflation (di/dt) for any given year. Thus, in general:

dS/dt < dp/dt + di/dt

In addition, TABOR fixes a "baseline" for spending growth each succeeding year by tailoring it to the rate of growth in the prior year. Thus, say if the rate of growth dG/dt was -2% (as it was in 2001-2002) with the recession following 9-11, then the total rate of spending growth for the next fiscal year cannot exceed:

dG/dt + dp/dt + di/dt

To give an example, say the state spending budget on education was $800 million in 2020-21. And the prior fiscal year (2019-20) it was $700 million. The real rate of increase in spending was therefore:

(100/ 700) x 100% = 14%

Now, if the TABOR baseline for that particular fiscal (net) population growth (those entering the state - those exiting) was 3%. Then:

(dG/dt + dp/dt + di/dt) = [-2% + 3% + 3%] = 4%


This means that a difference of: 14% - 4% = 10% of the state budget spending increase must be returned as refund to the taxpayers. In other words, six-tenths or 60% of the 14%  - which the state "over-spent" -  must be returned. That is:

0.6 x ($100 million) = $60 million

is given back to Colo. residents as TABOR refunds. (E.g. the state loses that amount, it must allocate the NEXT year's budget spending total minus that decrement).

The inherent problem as to why refunds are usually generated and not avoided is simply that state budgets must be planned and spending allocated in advance of the new fiscal year, while TABOR's oversight on them only occurs ex post facto (e.g. when the spending year has already passed). 

Thus, the inevitable delay means that taxpayers will always collect since the state will always typically tend to spend MORE (based on increasing cost of basic needs- health care, construction materials etc.) than not. The obvious problem is that a losing wicket is perpetuated, and the people of the state must see their schools, roads, parks etc. deteriorate because the money simply isn't there even for the most menial upkeep.  And, as more and more outsiders pile into our state more schools, parks, roads etc. will deteriorate. Well. because they can't be kept up, maintained. There isn't the money to do so.  

But with the failure of Prop. HH the situation is even worse. Because not only will the civil services degrade but residents property taxes - because of higher property valuations - will spike. A senior in Denver who pays perhaps $1400 a year now for his small  ($325k-valued) bungalow, will pay $2800 by the end of next year. Had Prop. HH passed, about $800 of that would have been cut while preserving city services, libraries, fire dept. etc. But no more.

The good thing – if there is one – is that thirty-six hours after Colorado voters rejected his marquee property tax relief ballot proposal, Gov. Jared Polis on Thursday called the state legislature back into session late next week to come up with a replacement plan. The special session will begin at 9 a.m. on Nov. 17, going into next weekend, Polis announced during a morning news conference at the Governor’s Residence in Denver.  He stated clearly and for the record:

“If we do nothing, Colorado homeowners are facing a record property tax increase. The crisis is not urban or rural, Denver or the state. It is universal across our state — truly a Colorado crisis.”   

He's correct, and we expect our own property taxes by the end of next year to double. As a follow up Denver Post editorial noted, while not perfect Proposition HH would have equitably balanced the needs of lower and middle income residents facing a property tax shock with the supporting ancillary civil needs of their communities. Now that has all gone up in smoke, thanks to a concentrated dark money misinformation campaign that fucked up too many voters' minds to a far thee well. 

 See Also:

How Colorado’s Proposition HH, a complex property tax fix, became ballot box poison

"How does a measure aimed at tax relief, albeit while attempting so much more, fall hard before an electorate facing historic increases in their next property tax bills?"

And:

• Too Many Coming To Colorado Are Ruining The State