County leaders, residents worry about property taxes

Many wait for Polis’ plan

BY ELLIS ARNOLD EARNOLD@COLORADOCOMMUNITYMEDIA.COM

Some Colorado homeowners reaped the bene ts of skyrocketing home prices in recent years, selling homes for much more than they paid to buy them. But for those who stay put, there’s a drawback: When home prices rise, so do families’ property tax bills.

And this May, property owners in Douglas County could be in for a shock. Property values — as determined for tax purposes — could rise by around 40% to 50% on average, one of the county’s elected leaders says.

“If you had a tax bill last year that was $6,000, next year in 2024 you’ll pay $9,000 unless the legislature does something to control the increase,” said Douglas County Commissioner Lora omas.

Property taxes partly fund county governments, but they also fund school districts, re and library districts, and other local entities. Property taxes pay for Douglas County sheri ’s deputies, omas noted.

Even when tax rates themselves aren’t increasing, the amount that homeowners owe increases as the value of homes rises. e state legislature could intervene to cap the increase, but Colorado lawmakers face a delicate balancing act: A cap that’s too high could squeeze families’ nances in a tough economic time.

But a cap set too low could force local governments to make cuts to services.

Douglas County o cials want to be reasonable and not see citizens “overtaxed,” omas said.

But “I don’t want to have to lay people o because we can’t pay them,” she added.

State in the mix

Rising property values are a problem statewide, not just in the Denver metro area, said omas, who has heard input from other counties.

To address the issue, state Rep. Lisa Frizell, R-Castle Roack, pushed a bill in the legislature that initially proposed a 5% cap on increasing residential property values between 2022 and 2025. Frizell later amended that to a proposed 10% cap after hearing feedback from rural counties.

Her bill met defeat in a committee — before reaching a full vote in the state House — in early March.

One Democrat voted for her bill, which failed 6-5, Frizell said, but that doesn’t mean the conversation is over.

“Uno cially, I was told that (lawmakers) were discouraged by leadership to vote for it,” said Frizell, adding that Democrats are anticipating a plan from the governor’s o ce and “didn’t want the distraction.”

Local o cials as of late March were waiting to hear what Democrats may propose, and a percentage for a possible cap isn’t clear yet, according to omas and Frizell.

A cap as low as 3%, for example, would pose problems for Douglas County’s budget, county o cials said.

“Local government revenues need to keep up with, at minimum, in ation in order to keep the lights on,” Frizell noted.

Local action in Douglas

If the state doesn’t take action, Douglas County may reduce residents’ tax bills on its own.

If property values increase around 50%, “we will do a temporary mill levy credit like we have done ve of the last seven years that I’ve been a commissioner,” omas said.

e county has authorized such credits in 2017, 2020, 2021, 2022 and 2023, e ectively lowering county revenue by $30 million.

But omas hopes the state will step in. e budget that Douglas County o cials wrote for 2024 was based on expecting a 9% residential property value increase, she said.

“I would like to see us be able to in uence (a legislature) bill to cap that property tax increase 7% to 10%, somewhere in there,” omas said.

(For example, if a home was valued at $500,000, with a 10% increase, its value would rise to $550,000 for 2024 tax purposes.)

If Colorado lawmakers pass a cap lower than that, the county services that could be a ected aren’t yet clear.

omas and her fellow commissioners haven’t had a conversation about that, so “I can’t even begin to guess what we would do,” omas said.

How property value assessments work

It’s the job of county assessors’ o ces to establish accurate values of homes and other properties to determine how much property owners will owe government entities in taxes — a process meant to ensure that the amount of taxes people pay is fair and equitable.

( e assessor doesn’t set the tax rate but determines the value of the property that the tax rate then gets applied to.)

e law requires the assessor to value properties every two years in June, so the property valuation homeowners will soon receive is based on June 2022 data, near the recent peak in the real estate market, omas said. So even though home prices have declined since then, property values determined by the assessor’s o ce re ect last year’s exceptional highs.

Since the start of 2010 — when the median single-family home price in metro Denver was about $200,000 — the median price had roughly tripled, according to a report by the Colorado Association of Realtors based on data as of August. Statewide, it had tripled as well, according to the association.

Homeowners can see the breakdown of the property taxes they owe by typing in their address in a large search bar near the top of the Douglas County assessor’s webpage at douglas.co.us/assessor. at search function shows how the taxes are divided among each government entity based on the “mills” charged. Property tax rates are o cially called “mill levies.”

One “mill” is equal to one thousandth of a dollar. Generally, property taxes are calculated using a formula that involves mills — the tax rate — and the property value.

Living within a metropolitan district, such as Highlands Ranch, can make a big di erence in a home’s total property taxes, omas said. Metro districts are a type of government entity that can o er some government services.

A complex background

Part of why property taxes can rise so relatively high is that Colorado voters recently repealed the Gallagher Amendment, omas noted.

A state constitutional amendment, Gallagher prevented residential property tax bills from quickly rising by shifting the tax burden to commercial property owners through assessment rates, which help determine how much property owners pay in taxes, the Colorado Sun reported. But Gallagher collided with another constitutional amendment, the Taxpayer’s Bill of Rights, in a way that had hamstrung government entities that rely on property tax revenue, the Sun reported. See more on that at tinyurl.com/ SunGallagherExplain.

Nationally, Colorado has relatively low residential property taxes, according to an analysis by the conservative Tax Foundation. Colorado ranked 47th in property taxes paid as a percentage of owner-occupied housing value in 2020, according to the foundation.

And while businesses pay more, their taxes still appear to be lower than the national average, according to the Colorado Sun. Colorado had the 17th best “State Business Tax Climate” for 2020, according to the Tax Foundation. Colorado had the 14th best “property tax rank” for businesses in 2020, according to the foundation.