Property Tax Increases for 2023 / 2024 Will Be Limited by TABOR in Some Jurisdictions  

A couple weeks ago in this column, I warned homeowners that the current rise in home values means a proportionate increase in property valuations as of June 30, 2022, and therefore a likely rise in property taxes for 2023 and 2024.

I wrote that because of a typical 30% increase in what your home could have sold for on June 30, 2022, versus June 30, 2020, your property taxes could increase by 30%, but that didn’t take into account the effect of the Taxpayer Bill of Rights, or TABOR, which restricts how much revenue each tax jurisdiction can keep to population growth plus the increase in the cost of living.

Under TABOR, if a taxing jurisdiction collects more than that formula allows, it must refund the excess to the taxpayers.

However, many (but not all) jurisdictions obtained voter approval to keep any excess revenue. The term for this common ballot measure is “de-Brucing,” after Douglas Bruce, the author of TABOR.

All but two counties passed such ballot measures and won’t have to refund their excess revenues to taxpayers — or, more commonly, reduce their mill levies so they only collect the allowed amount of revenue. Jefferson County is one of those counties that has not de-Bruced, so Jeffco will likely reduce its mill levy for 2023 and 2024 to limit their property tax revenue despite the increase in valuations.

In any county, however, the biggest mill levy is that of the school district, and, again, most school districts, including Jeffco’s, have   de-Bruced and can enjoy the coming windfall in revenue by not reducing their mill levies.

Any given property’s mill levy is the sum of individual mill levies from multiple taxing jurisdictions. You can see all those mill levies by looking for your property on the country assessor’s website. For example, in Jeffco, you’d go to http://propertysearch.jeffco.us. In other counties, just Google the county’s name + “assessor.”

For any given address, you’re likely to find between 5 and 15 different jurisdictions with individual mill levies. In unincorporated areas of Jefferson County, for example, you’ll find separate mill levies for the county, for Jeffco schools, for the country sheriff (“law enforcement”), for your local water district, local park district, local fire district, RTD, storm water and flood control district, etc. 

As an aside, a lot of people think that “unincorporated” translates to lower property taxes, but the opposite is true. Consider the following: the West Metro Fire District, serving much of Lakewood, collects about 13.2 mills from property owners in its taxing district — and that’s just for fire protection. Meanwhile, the City of Golden’s current mill levy is less than that (12.34 mills) and includes all municipal services — fire, police, parks and recreation, and more. Golden may have higher real estate prices, but our real estate is taxed at a lower rate than in most other areas.

This Week Homeowners Received Updated Valuations From the County Assessor

Taxes in Colorado can’t be raised without a vote of the people, so why do your property taxes go up every other year? The answer is simple — while the rate of taxation (the “mill levy”) can’t be increased without a vote of the people, the valuation of your home does go up based on the market, thereby raising your property taxes.

Unlike many states (for example, California), Colorado’s constitution requires that property taxes be based on the full valuation of the property. It is not based on what you paid for your house, but on what it might have sold for on June 30 of every even numbered year based on the actual sales of comparable homes in your neighborhood, with “neighborhood” defined by type of home, not just locale. One example in Golden is “high end townhomes” and skips around a wide swath of north and south Golden proper.

While the full valuation of your home for next year’s tax bill may be based on what it would have sold for on June 30th of last year, that valuation is based on what your home was like on January 1st of this year. So, if you made a major improvement since last June that was completed by January 1st and that was permitted (the only way the assessor knows about it), your valuation would be based on what your improved home would have sold for last June!

Fortunately, since the valuation of your home is based on what it would have sold for on June 30th of last year, that valuation does not reflect the extreme bidding up of home prices we have seen since last June.

The mill levy for your home is not applied to that full valuation but to 7.15% of it. That’s called the “assessed valuation.” As a quick and easy example, if your home is worth $1,000,000, the assessed valuation is $71,500, and if your mill levy is 100 mills, your tax for 2021 and 2022 for that million dollar home would be $7,150. (“Mill” is from the Latin word for thousand, so the mill levy is applied to each thousand dollars of assessed valuation. Thus, 71.5 thousand dollars multiplied by 100 mills = $7,150.)

TABOR, Douglas Bruce’s 1996 “Taxpayer Bill of Rights,” limits how much money any taxing jurisdiction can retain based on population growth plus inflation. Unless a taxing jurisdiction has “de-Bruced,” that jurisdiction must refund the excess to its taxpayers. The preferred method, however, is to lower the mill levy so that less money is collected in the first place. In some cases, the yearly decline in mill levies due to increased property values has resulted in little or no increase in the property tax bill.

Overall, county assessors have determined that home valuations increased by ½ percent per month over the 24-month assessment cycle from July 2018 to June 2020, so if your home’s 2021 valuation has increased by a lot more than 12% over its 2019 valuation, and there have been no permitted improvements or additions to your property during that two-year period, then you may have a basis for appealing your new valuation.

In my own case, the valuation increase over that period was 34.2%, so I will be appealing my new valuation, since I have made no capital improvements to my home since 2018. I won my appeal two years ago, so my 2018 valuation is acceptable to me. If you didn’t appeal in 2019, or if your appeal wasn’t successful, you may want to appeal even if your 2020 valuation’s increase is close to that 12% average valuation increase.

Any appeal must cite qualified comparable sales which you’ll only find by clicking on the “Sales” tab on the assessor’s web page for your home. Any other comps will be rejected, so don’t ask me or your own agent to find any for you. Remember to “age” the sold prices by 1/2 percent for each month that a given comp’s sale occurred prior to June 2020.