Budget cuts threaten Colorado’s property tax deferral program
Plus: Colorado is projected to save money by having Medicaid cover abortion. Initiative would make us a just-cause employment state.
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Just months removed from a two-year stretch in which property taxes dominated Colorado’s state politics, budget writers are now considering cutting funding from a key pillar of the legislature’s tax relief efforts.
The Joint Budget Committee this week took a preliminary vote to end the state’s contract with software provider CoreLogic, which powers Colorado’s property tax deferral program. But while some budget writers insist they don’t want to end the tax program entirely, state Treasurer Dave Young says that if the decision stands, it would jeopardize an initiative that has enjoyed wide bipartisan support within the legislature for years.
The tax deferral program allows homeowners to put off paying chunks of their property tax bills until they sell their home. Here’s a quick refresher on how it works:
Seniors and military veterans have long been allowed to defer paying their property tax bills. But starting in the 2023 tax year, all homeowners could apply to defer some of the growth in their taxes, if their bill rises by more than 4% from the previous two years. Last year, lawmakers expanded the program again to allow tax payment deferrals on any increases in a person’s bill, up to a maximum of $10,000.
The deferral amount gets converted to a lien on their home that the homeowner has to repay with interest when they sell their home or die. (This is different from the senior homestead exemption, which is a tax break that qualifying homeowners don’t have to repay.) In the meantime, the state treasury covers the cost to local governments.
When lawmakers expanded the program, they also gave the Treasurer’s Office money to build out an application website, market the program and digitize its administration, easing the workload on state employees who were tracking millions of dollars in property tax liens and accrued interest, largely through paper correspondence with county governments and taxpayers.
The trouble is, few people are using it. Only 1,600 homeowners applied to the program last year and of those, just 1,042 were ultimately awarded a deferral. That was about double the 540 deferrals processed in 2021, but still far from meeting the demand lawmakers expected when they expanded it. CoreLogic predicted around 35,000 households would apply based on participation rates of similar programs in other states.
As a result, JBC members said the program wasn’t helping enough people to justify the software’s $1.8 million annual cost — about $1,500 for each homeowner with an active tax deferral today. They didn’t mince words before voting unanimously Tuesday to end the contract.
“This is one of the worst return-on-investment proposals I’ve seen,” said Sen. Judy Amabile, a Boulder Democrat. “In some ways, I can’t even believe we’re entertaining this at all.”
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TREASURER PUSHES BACK
At a follow-up hearing Thursday, Young defended the program despite its underwhelming numbers, saying the JBC was overlooking the implications of ending it.
Some low-income seniors defer their taxes year after year after year in order to make ends meet. Without that option, he said, more Coloradans will be forced out of their homes due to the state’s rising cost of living, putting further strain on the state’s fraying safety net.
Moreover, ending the software contract won’t eliminate the need to manage all the tax deferrals already in the pipeline.
“Unwinding the program is not going to be a situation of just eliminating or drawing a line through that line of the budget,” Young said. “There’s significant costs and implications for doing so that will play out for many years in the future. We still have to service loans, and you’re doing it by hand, without technology.”
Lawmakers said they were sympathetic to those who have come to rely on the program. This week, they batted around ideas like having Treasurer’s Office employees use Google Sheets to track tax liens and deferred interest, or washing the state’s hands of it entirely, leaving it up to counties to administer.
It’s not clear how many local tax officials would even bother. Last year, only 30 of the state’s 64 counties had anyone enrolled in the program — and that was with the state’s help.
If the program continued to grow with more marketing from state and local officials, it could theoretically pay for itself, but far more households would have to use it. Over the past four years, Treasury officials said, it generated $668,000 in interest on 450 deferred tax liens that were paid off when a home was sold.
The JBC didn’t take another vote Thursday. But the six-member panel, a day after cutting therapeutic services for kids with developmental disabilities, seemed unmoved by Young’s pleas.
“The tool is too expensive,” said Rep. Rick Taggart, a Grand Junction Republican. “There is no mathematical equation that I can see at $1.8 million a year that yields a return on investment.”
NEW PURPLISH: Colorado lawmakers hit halftime at the state Capitol
WHAT TO WATCH IN THE WEEK AHEAD
THE NARRATIVE
Labor leaders want to make Colorado the nation’s second “just-cause employment” state
Colorado would become the second “just-cause employment” state in the U.S. should a measure proposed by state labor leaders make the 2026 ballot and pass.
Initiative 43 would prohibit companies with more than eight employees from firing or suspending a worker without just cause, which is defined in the measure as substandard performance, material neglect, repeated policy violation and gross insubordination. Conviction of a crime of “moral turpitude” and an employer’s financial instability would also constitute just cause under the initiative.
The proposal was filed by Dennis Dougherty, who leads the AFL-CIO in Colorado, and True Apodaca, political director at SEIU Local 105.
“Colorado workers should expect common-sense workplace protections that prevent them from being unfairly fired,” Dougherty said. “Bad-faith employers arbitrarily fire workers to undermine worker rights, derail union organizing and take in record profits.”
A spokesperson for the Denver Metro Chamber of Commerce declined to comment on the proposal, saying, “There are a lot of moving pieces that we’re currently working with for this measure.”
The proposed ballot measure comes as the Colorado labor movement is pushing the legislature to abolish a requirement in the Colorado Labor Peace Act that 75% of workers at a company sign off before a union can negotiate with an employer on union security. Union security is the term to describe when workers are forced to pay collective bargaining representation fees whether they are in a union or not.
Under Initiative 43, employees would have 180 days after their termination or suspension to file a lawsuit arguing that their employer didn’t have just cause. Employers who lose such lawsuits could be required to reinstate workers, pay them back pay, and cover the worker’s attorneys fees.
An employer could recover attorneys fees if they successfully fend off a lawsuit.
Colorado, like 48 other states, is currently an at-will employment state, meaning an employer can fire a worker at any time for any reason or no reason at all. The exception is for employees who are working under a contract. And an employer cannot fire a worker for their age, race, sex, a disability or their religion.
Initiative 43 is a long way from appearing on the 2026 ballot. Submitting a ballot initiative to Legislative Council Staff is the first step. Proposals then must be vetted by the state’s Title Board. Then, proponents must gather some 125,000 voter signatures to make the ballot.
Making the ballot typically costs about $2 million.
There are other labor measures being pursued for the 2026 ballot.
Jon Caldara, who leads the libertarian Independence Institute, is behind a proposal that would make Colorado a non-right-to-work state. The measure would amend the state constitution to prohibit employees from being forced to pay collective bargaining representation fees if they aren’t in a union. It’s a direct response to the Labor Peace Act repeal effort.
NEW INCOME TAX INITIATIVES
Conservative activist Michael Fields, who leads the political nonprofit Advance Colorado, has filed two new income-tax-cutting ballot measures for 2026.
Initiative 48 would drop Colorado’s income tax rate to 3.4% from 4.4% starting in 2027, while Initiative 47 would drop the rate to 4.39% starting in 2027.
POLIS REFUSES TO SAY IF HE WOULD SIGN SENATE BILL 5
Gov. Jared Polis on Thursday refused to say whether he would sign Senate Bill 5, which passed its first House committee Thursday, should it reach his desk as is.
“My yardstick will be: Does it bring business and labor together in support of a way of organizing that’s more stable?” he said. “Does it preserve the right of workers to be able to have a say on whether union (fees) are required to be deducted from their paychecks?”
Reading between the lines, Polis is suggesting he would veto the measure if it passes the legislature without changes.
Analysis: The governor’s office hasn’t been front and center, if involved at all, in negotiations around Senate Bill 5. The business community would be happy to see the measure go away altogether. The governor signaling that he may veto the bill may hamper negotiations because if the legislation is rejected at the end of the process, there’s no reason for them to offer a compromise.
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THE POLITICAL TICKER
PROPERTY TAXES
Colorado was tied with Nevada for the third lowest effective property tax rate in the nation in 2023, according to the Tax Foundation, at 0.49%.
Just Alabama (at 0.38%) and Hawaii (at 0.27%) had lower effective property tax rates in 2023. The highest effective rate was in New Jersey, at 2.23%.
The Colorado county with the lowest effective property tax rate in 2023 was Jackson, at 0.2052%. Broomfield had the highest effective property tax rate, at 0.6156%.
ELECTION 2026
Colorado Attorney General Phil Weiser’s campaign says it has raised more than $1.5 million since launching in early January. It also received a $157,000 infusion from Weiser’s attorney general campaign. Weiser said the money came from over 4,000 individual donors.
“Now more than ever we need leaders willing to stay on the front lines to protect us,” he said in a written statement. “That’s what I’ve done as AG and what I’ll continue to do as governor.”
8TH CONGRESSIONAL DISTRICT
State Rep. Manny Rutinel’s campaign in the 8th Congressional District says it has raised more than $1 million since launching Jan 27. The Democrat’s campaign says the money came from more than 23,000 individual donors with an average contribution of under $35.
Other Democrats eyeing a bid in the district had been waiting to see Rutinel’s fundraising numbers and planned to use the data point to make their decisions on whether to run. The toss-up district is currently represented by Republican U.S. Rep. Gabe Evans.
COLORADO DEMOCRATIC PARTY
Shad Murib was reelected last weekend to a second, two-year term as chair of the Colorado Democratic Party.
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ABORTION
Colorado is about to cover abortions for Medicaid recipients and state employees. Here’s how much it will cost.
Colorado is projected to save money by covering the cost of abortions for state employees and Medicaid and Child Health Plan Plus recipients, according to an analysis by nonpartisan legislative staff.
The coverage will be offered starting in 2026 as part of the November passage of Amendment 79 and once Democrats in the legislature sign off on Senate Bill 183.
Voters approved the ballot measure by a 24-point margin and Senate Bill 183 is cruising through the Democratic-controlled legislature.
Nonpartisan fiscal analysts estimate that about 5,500 Medicaid and Child Health Plan Plus recipients in Colorado will seek an abortion each year. Most of those would have gotten an abortion anyway, analysts say, but as many as 1,700 patients would have given birth if the procedure wasn’t covered.
Since the average reimbursement cost of labor and delivery — $3,850 — is more than the average reimbursement cost of an abortion — $1,300 for a procedural abortion and $800 for a medication abortion — the state will save upward of $550,000 a year by paying for abortion care.
“In the first full implementation year, costs for abortion services are estimated to be $5.9 million, while cost savings for averted births are estimated to be $6.4 million,” the fiscal note for Senate BIll 183 says.
The long-term savings could be even greater.
“Medicaid-covered births typically involve additional social safety net impacts for the child, whereas abortion care services represent a one-time expenditure,” the fiscal note says. “These impacts have not been addressed in this fiscal note.”
Sen. Lindsey Daugherty, an Arvada Democrat and one of the lead sponsors of Senate Bill 183, said the measure “ensures Colorado is a beacon for access to safe and affordable reproductive health care in every aspect — from our constitution to our state law to our budget.”
Nonpartisan staff believe covering abortion access for state employees will cost about $200,000 a year, raising premiums by about 0.041%, or 50 cents, per member per month.
That brings the total combined state savings from Amendment 79 and Senate Bill 183 to about $350,000 a year.
One caveat is that since federal law prohibits federal dollars from being used to pay for most abortions, the state will have to cover the full cost of abortion for Medicaid and Child Health Plan Plus recipients. The cost of those programs is split between the state and federal government.
The cost savings, however, means the federal dollars can be used to offset the state’s financial burden for Medicaid and Child Health Plan Plus elsewhere.
The fiscal estimates are based on what nonpartisan staff said was a “small study” in Louisiana in which researchers looked at how many pregnant women would have gotten abortions had the procedure been covered by Medicaid.
“For a substantial proportion of pregnant women in Louisiana, the lack of Medicaid funding remains an insurmountable barrier to obtaining an abortion,” according to the study published in BMW Women’s Health, a peer-reviewed journal.
THE BIGGER PICTURE
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