No state illustrates this 12 months's spate of property tax cut votes higher than Colorado, where the outcomes of two likely voter questions could lead on to cuts in funding for schools, roads, emergency services and other municipal services.
The ballot measures in Colorado are only two of nearly a dozen pending property tax issues in states across the country, including Arizona, Florida, Georgia, New Mexico, North Dakota, Virginia and Wyoming. While they vary in scope, the measures all aim to cut back taxes for some or all property owners.
One query in Colorado is already approved for the ballot, and one other appears to have many more signatures than are needed to get on the ballot. (A 3rd Colorado property tax query, less controversial than the others, that has been approved for the ballot would increase the quantity of tax exemption that disabled veterans can claim.)
“Property taxes are a deeply unpopular but fairly efficient tax,” said Jared Walczak, vice chairman of presidency projects on the Tax Foundation, a conservative tax evaluation group that advocates for lower, broader taxes. “So they've always pitted economists and policy experts against ordinary homeowners who are very frustrated with their property taxes.”
Property taxes are typically collected on the local level, and the revenue is used to fund schools, public safety, fire departments and roads. Ballot measures being considered across the country could have a big impact on the funds raised by these taxes — potentially resulting in service cuts or pressure on state legislators to make up the difference.
Local governments repeatedly assess the worth of real estate after which set tax rates based on those assessments. Nationwide, real estate market values have increased by about 50% since August 2019. in line with Zillowthe true estate data company.
“(Many homeowners) are paying dramatically more for the same property and don't feel like they're being treated any better by the government,” Walczak said. “That's the reason for the discontent that's reflected in votes and pressure on state lawmakers to remedy the situation.”
According to experts, property taxes are inclined to make a much bigger impression on taxpayers because they are sometimes paid in a bigger lump sum a couple of times a 12 months, unlike income or sales taxes, that are paid in small installments.
In Colorado, a ballot initiative would limit annual growth in state property tax revenues from residential and industrial real estate to 4%.
Another proposal, also expected to be voted on in November, would cut back property tax rates on residential and industrial properties. Since this reduction would herald less money, if this initiative passes, the state would should reimburse local governments for the lost revenue – an estimated $3 billion.
In May, the Colorado legislature passed a bill to cut back property tax rates in a hard-fought compromise price $1.3 billion. The latest law provides for short-term reductions in property tax rates and long-term structural changes to the property tax law, and prioritizes funding for schools over other government services. The law also caps revenue growth from property taxes at 5.5%.
But conservative groups wanted more and pushed for stricter property tax limits to be put to a vote in November.
“The bill that passed was a good start,” said Sean Duffy, spokesman for Advance Colorado, a conservative advocacy group and a key proponent of the initiatives.
“But a lot of Republicans and a lot of taxpayers and people across the state thought it would be really important to make a more significant and permanent cut,” Duffy said.
The other organization supporting the referendums is Colorado Concern, a conservative group founded by Larry Mizel, who founded and played a key role in one in every of the most important housing development firms within the country. Fundraiser for former President Donald Trump.
Duffy said voters still have concerns about property taxes despite the legislature's motion.
“Real estate prices in Colorado have shot up like a hockey stick,” Duffy said, a trend mirrored in lots of other states. “It's not like, 'I don't want to pay for my schools or my fire department,' it's just been a huge bucket of water in the face.”
But Colorado Democratic Rep. Chris deGruy Kennedy, who co-sponsored the bill that eventually became law, said the favored initiatives went too far.
He said the proposed 4% increase within the cap on property tax revenues wouldn’t take note of inflation or regional variations – or latest construction, which tends to cut back private property inside a jurisdiction.
DeGruy Kennedy, who’s term-limited, this summer became president of the Bell Policy Center, a left-leaning nonprofit research and advocacy organization that supports upward social mobility for middle- and low-income individuals.
Florida also has a ballot bill that might save homeowners money while reducing local tax revenues. The initiative would allow an annual inflation adjustment of the property tax exemption for people whose property is their primary residence. It is supported by a bunch of Republican lawmakers but opposed by the state's Association of Cities.
In Arizona, a vote on a property tax has more to do with the volatile problems with homelessness and vagrancy, says Ryan Byrne, senior editor of the Voting Project at Ballotpedia, a nonprofit that tracks every candidate and referendum across the country.
If passed, the measure would allow property owners to use for a property tax refund if the municipality fails to implement laws against illegal camping, loitering, panhandling, public urination, public consumption of alcohol and possession of illegal substances. The Legislature put the measure to a vote on a tie vote, with Republicans in favor and Democrats against. The League of Cities also opposes the measure.
In North Dakota, former Republican Rep. Rick Becker is leading a referendum to completely abolish property taxes.
“Do you really own your property if the government can take it away from you?” he asked, referring to cases wherein the homes of people that don't pay their taxes may very well be foreclosed on.
“In North Dakota, like many other states, people hate the property tax,” he said, arguing that lawmakers have loads of other pots of cash from which to exchange the revenue.
A nonpartisan research institute estimated that eliminating property taxes in North Dakota would cost the state $1.3 billion a 12 months.
The ballot proposal within the state of Georgia would allow municipalities to create a property tax exemption for homeowners whose property is their primary residence.
The measures in New Mexico and Virginia would offer veterans with more property tax relief.
Wyoming's ballot initiative proposes to create a brand new property class for taxation purposes by placing owner-occupied housing in a special category than rental properties.
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