DENVER (KDVR) — Proposition HH is touted as a way to lower tax payments, but it would also have an effect on Colorado’s TABOR refunds.
Prop HH would do a few things under the premise of lowering property taxes for the next decade. It would, in part, increase the cap on state revenue — meaning some of the money refunded under the Taxpayer’s Bill of Rights would stay in government coffers. After 10 years, the law could be extended without voter approval.
So what does that mean for TABOR refunds? As laid out in the 2023 ballot information booklet, the refunds will be lower in the future, and it’s possible they could be eliminated.
TABOR refunds would change under Prop HH
Colorado’s TABOR law puts a cap on state revenue and requires the excess to be returned to taxpayers. Normally, the refunds are distributed based on income.
For the 2023 tax year, Prop HH would flatten TABOR refund amounts to an estimated $898 for single filers and double that for joint filers, regardless of income, according to the ballot booklet.
So at first, the 62% of Coloradans who earn under $99,000 a year will see a higher TABOR refund under Prop HH than under current law, while higher earners will see less.
Here’s how the ballot book breaks down the 2023 refund estimates without Prop HH:
|Adjusted Gross Income||Percent of Colorado Taxpayers||2023 TABOR Refund Under Current Law|
|Up to $50,000||35%||$628|
|$50,001 to $99,000||27%||$838|
|$99,001 to $157,000||18%||$964|
|$157,001 to $218,000||9%||$1,146|
|$218,001 to $278,000||4%||$1,233|
|$278,001 and up||7%||$1,984|
To get a better idea of how your TABOR refund could change for the 2023 and 2024 tax years, check out the Proposition HH calculation tool here.
How could Prop HH eliminate TABOR refunds?
Besides the one-time flat refund, TABOR refunds will be lower for everyone if Prop HH passes, according to the ballot book. And it could eliminate the TABOR refund altogether.
It’s because of how Prop HH would work.
Prop HH would lower the taxable portion of a property’s market value and allow a transferrable homestead exemption for older Coloradans. To do this, it would increase the state revenue cap, allowing the government to keep some of the excess revenue to help fund education and local governments, which rely on property taxes.
“The amount the state is allowed to retain grows each year and continues to grow if the measure is extended,” according to the ballot book.
But in years when state revenue exceeds the existing cap but is less than the Prop HH cap, TABOR refunds will be eliminated. It’s a scenario voters are told to expect: “The new cap grows faster than the current cap, meaning that over time this scenario becomes more likely,” according to the ballot book.
In turn, Colorado state revenue would grow by an estimated $2.2 billion per year by 2031.
Up to 20% of the retained revenue would be used for local governments and up to $20 million each year for rental assistance, according to the ballot book. The rest — up to $2.16 billion by 2031 — would go toward education.