After a special session where Colorado lawmakers passed legislation aimed at blunting the rise in property taxes next year, Gov. Jared Polis is putting pressure on taxing entities across the state to help provide further relief for homeowners — though some say they’re not in a position to do so.

During an appearance at Colorado Mountain College in Breckenridge on Thursday, Nov. 30, Polis called on taxing entities across the state to lower their local tax rates amid what is certain to be a significant spike in property tax bills due in 2024. 

“Property owners are looking to their local elected officials for help, for reduction,” Polis said. “An increase (in taxes) next year would increase the cost of living, which is the opposite of what we want … I know our local districts will step up.” 

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Yet some special districts, which include fire safety and water providers, have interpreted the governor’s call to action as the state overstepping into local government decisions.

“I’m confident that special districts are more than capable of assessing their needs and governing their finances without encouragement from the governor,” said Ann Terry, the executive director of the Special District Association of Colorado, which represents about 2,600 special districts in the state.  

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During Thursday’s event in Breckenridge, Polis pointed to Colorado Mountain College as an example of a district lowering its tax rate, known as a mill levy. A mill is a $1 payment on every $1,000 of assessed value that is factored into property taxes and which generates revenue for entities such as county governments and schools, as well as water and fire districts. Mills can both be set by these entities or approved by voters for certain purposes. 

The request comes after Polis signed Senate Bill 1, a law passed during the legislature’s special session that will cut the statewide assessment rate for property taxes due next year from 6.765% to 6.7% and allow up to $55,000 of a home’s value to be exempt from taxation. The legislation closely models Proposition HH, the ballot proposal for tax relief that failed at the ballot box in early November, which prompted the special session. 

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Over the past two years, home values have increased 40% on average statewide, while in mountain resort communities increases have been as high as 92%, according to a Colorado Department of Local Affairs database.

The tax relief passed during the special session means that local districts will have less revenue in their budgets than expected from the surge in property values. Senate Bill 1 did require that the state use $200 million in general fund dollars to make school, fire, hospital and EMS districts’ budgets whole but many other districts won’t receive any funding. 

The bill also created a mechanism to backfill some slower-growing counties. Many Western Slope counties — like Summit, Eagle and Pitkin— won’t qualify to have any of that revenue replaced.

In an interview with the Summit Daily News, Polis said despite the relief provided through the November special session, local districts will still be taking in significantly more revenue because of the huge surge in valuations.

“I totally understand that many special districts may say, ‘Well our costs went up 18%, maybe even 20%.’ But you start with what inflation was, you look at how your costs went up and how you can defend that to voters and then reach a conclusion about what level of relief you can provide,” he said.

‘Every local government has a different operating reality’

Legislation passed earlier this year by state lawmakers grants special districts and other taxing entities the ability to temporarily lower their mill before restoring it without voter approval, something Polis said allows districts “to secure their future” whilst “providing relief now.” 

Colorado Mountain College’s board of trustees said it plans to reduce its mill levy next year to a rate that will secure revenue at a 2022 level in addition to the rate of inflation. The college has a mill of 4.017 across all eight counties where it operates. 

According to Brian Barker, director of marketing and media relations, the college does not yet know how much of a mill reduction that will equal. He stated in an email it is likely to mean that the taxes home and commercial properties pay to the college will be about 25% less than what it would have been without a mill adjustment.  

The college “has the good fortune to operate in communities that have been very supportive of our mission, which has allowed the college to be ready for normal economic ups and downs,” Baker said in a statement. 

He continued: “Every local government has a different operating reality. We believe it’s best for the leaders of those entities to make decisions in the best interest of their missions and taxpayers.” 

Aspen Fire Protection District also plans to decrease its mills to return a total of $1 million to homeowners in its district, said Jake Andersen, deputy chief of operations for the district.

Eagle County is leaning toward temporarily lowering its mill levy to match the increase in inflation level over the past two years, said Commissioner Matt Scherr. 

“That does seem to be the budget we’re favoring so I think that’s likely but it hasn’t been determined yet,” he said. 

That decrease on its own, like many of the other districts’ mill levy cuts, won’t make a significant difference to homeowner’s property taxes. Many homes are subject to several different taxing entities. 

Other entities are undecided 

Other districts, like the Steamboat Springs School District and Grand County, are waiting until early January to decide if they will reduce their mills. 

Pitkin County’s mill levy increase is already limited by the Taxpayer’s Bill of Rights, a constitutional amendment in Colorado that limits government spending. Other counties have “debruced,” allowing them to keep revenue above that limit.

The Summit County government has considered an average reduction of 4.4% across all its mills, which total 19.809, in its 2024 budget. By county officials estimates, this could create an additional $22 in property tax relief for a $1.1 million home. By comparison, the relief offered by the legislature’s new tax law could mean over $200 in savings for that same Summit County home. 

It prompted Summit County commissioners, during a Nov. 21 budget discussion, to rethink their mill levy reduction proposal, citing a need to retain revenue amid heightened costs due to inflation. The cost of asphalt, for example, has roughly doubled since the COVID-19 pandemic while funding for behavioral health programs were recently projected to be half of what care providers requested from the county for next year. 

“If that $22 is that important to residents, then I’m willing to give them that,” Commissioner Nina Waters told the Summit Daily on Thursday. “But that means that there’s a large portion of our lower-income residents who are going to be suffering that loss,” because of potential cuts to services.

Waters said she is undecided on whether to support a mill levy reduction in the county’s proposed 2024 budget, which must be adopted by Jan. 10. Summit’s commissioners have also signaled that even if the county did reduce its mill levies, without buy-in from other entities, little relief would trickle down to homeowners. 

That’s because only one-third of the total mill levy revenue collected by property owners in Summit goes to the county government. Another third goes to the Summit School District while the rest is dispersed between dozens of special districts, including Colorado Mountain College. 

Some groups say they need the additional revenue 

In Summit County, other districts have signaled they’re all but certain they won’t lower their mill levies. 

Summit Fire & EMS spokesperson Steve Lipsher said the district, which receives 87% of its funding through property taxes, is not planning to lower its mill. Part of that is to pay for capital improvements to existing facilities as well as the construction of a new fire station in Silverthorne, the bulk of which is expected to be completed in 2024 and which Lipsher called “a substantial financial commitment.” 

Rather than address property relief at the local level, Lispher said he was interested to see how lawmakers look for more long-term solutions through state policy. 

“Let’s see what happens when they take a longer, more deliberative approach with coming up with some sort of a permanent fix,” he said. 

At the Red, White and Blue Fire District in Breckenridge, “We have steadily been approaching expenditures outpacing revenue,” according to co-interim fire chief Drew Hoehn, who added that the seemingly ever-changing landscape of tax policy in Colorado “compels us to save for the constant ebb and flow of legislative-driven hardship.”

Summit School District Chief Financial Officer Kara Drake stated in October that even though the district is expected to see major gains in revenue from property taxes next year, much of that will be offset by a cut in state funding, which can happen when property taxes rise. 

The district is estimating a property tax increase of $45.1 million in its general fund this school year, up from just over $33 million the year before. At the same time, state revenue for the fund will have decreased from $10.6 million to $2.8 million. 

Polis, in response to questions from the Summit Daily, said his push for mill levy reductions is mostly targeted at high-cost communities such as Summit, Eagle and Pitkin counties, where home values have risen between 63% and 92% on average. 

Polis called Senate Bill 1 “a baseline of relief for everybody” but said he hopes taxiing entities will build on that relief by “doing something, even if it’s small.”