Colorado Supreme Court issues affirmative ruling on HB21-1164, a bill to fix our K-12 property tax system
In March, Colorado legislators sent the Colorado Supreme Court a formal question, known as an interrogatory, seeking a constitutional ruling on a bill (HB21-1164) that would gradually equalize local school district property tax rates over the next two decades. Today, the Supreme Court issued its 6-1 opinion, agreeing that the General Assembly’s proposed correction plan is constitutional, and this morning the Senate granted final passage to HB-1164.
Colorado’s property tax system that is the first source of revenue for our public education system is inequitable and arbitrary, forcing property owners in school districts across the state to pay wildly different tax rates for no good reason. Today’s decision affirms the legislature’s ability to fix this problem. House Bill 1164 corrects a long-standing error in the implementation of the Taxpayer’s Bill of Rights (TABOR) that created this structural problem in the system and aligns our property tax system with original voter intent in “de-Brucing” elections, without requiring additional local elections.
The majority opinion states (pages 1-2):
“In the unique circumstances before it, the court concludes that the General Assembly may require the districts at issue to gradually eliminate temporary tax credits as provided in House Bill 21-1164 without again obtaining voter approval. Here, school district voters previously approved waivers of the applicable TABOR limits; per the erroneous advice of the Colorado Department of Education, the school districts did not implement those waivers; and, in House Bill 21-1164, the General Assembly seeks to eliminate the tax credits at issue simply to effectuate what the voters had previously authorized. In these circumstances, the court perceives nothing in TABOR requiring further voter approval.”
And further states (page 31):
“…the gradual elimination of the tax credits previously adopted in House Bill 20-1418 does not impose or effectuate a new tax, tax rate increase, mill levy above that for the prior year, or a tax policy change directly causing a net tax revenue gain to any district. Instead, this legislative action simply implements what voters in most Colorado school districts approved when they voted to authorize their school districts to retain and expend “all revenue” or “full revenue” from “any source,” notwithstanding TABOR’s revenue limitations.”
Upon news of the decision, the Senate passed HB-1164 on 3rd and final reading this morning. The bill has already passed the House, so the court’s decision set HB-1164 up for final passage. As implemented, the bill will correct over time Colorado’s patchwork of property tax rates and move us closer to a system where a student’s level of educational opportunity is not determined by their zip code and level of local property wealth. The change will also generate more than $90 million in new revenue for schools next year and almost $300 million per year when fully implemented.
We applaud the Supreme Court’s final decision and the General Assembly’s final passage of HB-1164, which is just the beginning of a necessary conversation about better ways to collect and distribute our public education funds. We look forward to working with our partners and legislative champions to build a modernized and more equitable school funding system that puts kids at the center and targets investments to students and communities facing the most barriers to opportunity.
Learn more about the Children’s Campaign’s efforts to draw attention to this important issue in previous KidsFlash posts and West Steps podcast episodes, and read Chalkbeat’s coverage of the bill and interrogatory to date. Read the Supreme Court’s decision here, and reach out to Vice President of Education Initiatives Leslie Colwell with any questions.