Interview: Gov. Jared Polis outlines his plan to cushion the blow ahead of huge property tax increases next year
Democratic Gov. Jared Polis Thursday outlined terms of a legislative package aimed at limiting what could otherwise be huge residential property tax increases next year.
The governor said property values are up about 20 percent statewide. Assessors say median increases run anywhere from 33 percent to 47 percent along the Front Range and are even higher in some mountain communities.
Lawmakers will introduce a bill in the next few days to cushion the blow for homeowners. Polis said it will increase the amount of a home’s value that is exempted from property taxes and provide a temporary rate reduction.
“Nobody should be priced out of where they live just because their property taxes have gone up, especially seniors on a fixed income,” he said.
In an interview with Colorado Matters, Polis also acknowledged that he won’t get his way on his biggest legislative priority this session – a landmark package of land-use reforms.
This transcript has been edited for clarity.
Ryan Warner: Governor, thanks for being with us.
Gov. Jared Polis: It's a pleasure to be here, Ryan.
Warner: Property taxes are based for starters on market value, a home's estimated worth. The new increases are huge. A jump of between 33 and 47 percent in metro Denver, even higher in some mountain communities. And so property taxes are set to go way up come January. I understand that you are working on ways to soften the blow. How?
Polis: We are working on a property tax cut package that we expect to roll out very soon. The reason it's this late is we had to wait for the actual assessment data that came in this week to kind of fill in the numbers. We've been working on this framework with legislators, with experts, for months. Now we have the initial assessment data from the counties this week. So we have people in the back with green lamps rapidly trying to fill in the numbers. We expect that next week we will do this.
I would say for homeowners, the relief will take two forms. One will be we have a threshold of the home value that's subject to no taxation. So we want to increase that threshold. So that one would be a larger tax break for the less expensive home. So somebody who owns a $500,000 home will get a significant break. Somebody who owns a $2 million home, will still get a break, but, but not as big because it's a threshold. The other one is temporarily reducing the overall assessment rate, just reducing the actual percentage. So we're working on a combination of those, as we did in the past.
We are figuring out the final pieces of it, including the duration of it. Is it for a year, two years, 10 years? And obviously if it winds up being for two years, it doesn't mean it's not going to happen again in two years, but it just means that we're able to reach agreement on the immediate needs. So I would expect that will be rolled out early next week with something where people will know how much they save and I think it'll reduce the increase by quite a bit.
Can I just do a brief, kind of a brief kind of description of why we're facing this? So our state had a way of containing property tax growth. It was called the Gallagher Amendment.
Warner: The Gallagher Amendment was repealed …
Polis: Right. And it did some things well and it did other things poorly. So we got rid of it, I supported getting rid of it. But it needs to be replaced with something that prevents property taxes from increasing rapidly. I mean, naturally, if your home value goes up, they're (taxes) going to go up a bit, but we don't want them to go up, you know, rapidly or 23 percent or anything like that. Nobody should be priced out of where they live just because their property tax has gone up, especially seniors on a fixed income. So this work that we're doing is really to figure out how to replace the Gallagher Amendment with a mechanism to prevent property values from escalating rapidly in the future and provide immediate relief now, whether that's for two years or 10 years or three years or whatever we can do with an ongoing commitment to work on this more down the road.
Warner: Because presumably this is a rolling problem.
Polis: Let me just add, it’s a problem; that's a word you use, but it's a result of higher home prices. And I know we're going to get into housing and we want to bring more lower cost housing online, but it's a function of higher home prices. I mean, the rates aren't going up. It's going up because a $400,000 home is now a $600,000 home. So as a percentage, we're trying to bring the percent down. We're trying to raise the threshold of what has zero tax. But the reason that we're facing this is directly a function of higher home prices,
Warner: Indeed. We’re going to talk about housing. So a picture there of taxes people pay on their homes. And let's move to the housing itself. The thing you’ve been, I think, most passionate about achieving this session, and that’s using the state’s power to declare that almost anywhere you build a single family home in Colorado, you ought to be able to build a duplex, or apartments, or condos. Because you Governor Polis argue that upzoning, density, is better for the climate, affordability, mobility, and that it is the antidote to sprawl. It appears you may not get that power after huge pushback from local governments. What did you miss in your calculation?
Polis: First to be clear, it's not the way you're framing it; I don't want this power. It's a power that homeowners would have. It's a right. Development by right. So if you own a home in Colorado, it should be a right to develop an ADU or in many areas, you know, duplexes, triplexes.
Warner: An ADU is an Accessory Dwelling Unit.
Polis: A grandmother flat, a mother-in-law flat, very compelling because it's the lowest-cost rental for the market. And by the way, it's also part of the solution if your home's going up and your taxes have gone up. So it would give a senior homeowner an option of taking on another income stream, having this built, and then getting another $1,400 a month or whatever they can get depending on where they live. So duplexes, triplexes, those are really exciting from the perspective that they're for purchase, for equity building, for wealth building, and they’re lower cost than a single family home, 30, 40 percent less. So it's a way to bring inventory, housing inventory, to the market in areas where people can afford to live.
This is one of my big goals and I would say, Ryan, as I talk about it, it's of course my goal for my second term. I mean, I ran on this, we're going to deliver on it. Just like my first term I ran on preschool and kindergarten. We had half-day kindergarten when I came in. I said, ‘We’re going to get full day.” Nobody thought we could do it. We did it and I said, ‘we're going to get universal preschool.’
Warner: I’m glad you brought this up because that happened.
Polis: It did. We didn't get universal preschool in my first year or my second year. It took us all four years. The vote was in my third year in office. Now here it goes live my fifth year in office. So we're committed on delivering on what I said and one of the biggest things we face in our state is a housing crisis.
I was in Colorado Springs last week meeting with a teacher who has 14 years seniority in the district and can still barely afford rent. The Colorado Springs market home price has gone up from $350,000 to over $450,000 just over the last five years and you know, even when you have good credit, a good job – they went to their banker, this teacher, and they said, ‘I could afford to buy something in the $250,000 range.’ Guess what? Nothing in the $250,000 range within 40 minutes of where they work. And so we've got to find a way as a state where people can afford to live in and near communities they work. Housing is a climate issue. Housing is an air quality issue, and most of all how most of us experience it in this state, it's an affordability issue and a quality of life issue.
Warner: A senate committee has indeed gutted the bill, taking out the statewide upzoning. So in these waning days of session, will you work to restore that part of the bill? Or is your eye now on a future session?
Polis: So we’re going to make progress every year, is what I can say, because I think we're at a real fork in the road here. We can see around the corner, because we see, even in our own state, the town that I live in, Boulder, the average home price is a million dollars. There are cities in California, major cities, where the average home price is above a million dollars. Without change, and changing our course, that’s where we’re going to be. We'll have high-cost housing that only the wealthy can afford, and we will have subsidized affordable housing. But what is not here in this scenario is working families, the middle class, forced further and further out because they earn too much to qualify for the subsidized housing, not nearly enough to buy market rate housing at a million dollars for a home. And what that means from a water perspective in our state, expanding in the exurban areas is unsustainable, in air quality, a traffic perspective, a livability perspective, and frankly, an economic perspective as well because we are already at that point in our state where we're beginning to hurt our competitiveness for companies that locate here because of our growing cost of housing.
Warner: Did you underestimate the pushback that would come from some local governments? And are those conversations that you need to have more deeply with these folks?
Polis: Well, look, I'm not governor to do the easy things. Nobody thought we could get preschool and kindergarten done. The easy things tend to get done on their own. And I have a saying that I like to say, ‘If it was easy, it would've been done already.’ So I knew there'd be opposition, and that's why we have, and are working with, a really historic coalition on making housing more affordable and creating more housing now in the state. And just the breadth of this coalition. It's labor unions and business together. It's environmentalists, conservationists and affordable housing advocates together. So it's really amazing to see kind of the broad breadth from firefighters to teachers to the Chamber of Commerce, really looking at this and saying, “We've got to figure out how to take the right path for Colorado and make sure Colorado doesn't become like California.”
Warner: That coalition does not include the bulk of metro mayors. And that's really important buy-in. Why aren't they on board?
Polis: Well, again, you know, I think what the people of our state want, I met a restaurant worker yesterday in Centennial who has seven roommates, eight of them live in a home to be able to share the rent, which is still a very large part of their income. It’s not so much about who solves it for them, it's about solving it. So this kind of squabble about, you know, should mayors solve it? Should a governor solve it? Should the legislature solve it? What I say is just empower the property owners themselves to solve it and the market and the property owners will do that. We’ll see more low cost units come into the market that people can afford to rent close to where jobs are.
Warner: I think it's dismissive to call it a squabble though. In other words, there are deep concerns about a particular city's ability to guide its destiny. There are concerns about neighborhood character. There are concerns that sure, if you take a million dollar home that's standing now, and then you build a duplex for instance, and each side sells for $900,000, you're not necessarily adding to affordable housing. So address some of the deeper concerns that you're hearing.
Polis: You know, I'm just a data driven person, as you know. So I look at the work of Pew, of Brookings, these are folks who've dug deep in this issue. The facts of the matter are that residential projects with by right approval are 28 percent faster, and that duplexes and housing are up to 43 percent less cost to purchase, 27 percent less to rent. So that's just the data from other cities and states that have implemented this. I mean, Colorado, first of all, the reason we have a housing crisis and costs have gone up is we're a great place to live. The bad news is the secret's out and we've got to figure out a way where we don't lose the ability for families to be able to afford and thrive in our state simply because we're a great place to live.
Warner: In short, you have more conversations to have. Do you think that's true?
Polis: We’ve had over 150 stakeholder meetings on this. I'm excited to have more. I obviously ran on this. You interviewed me during the campaign. What am I going to do? Obviously, one of our top things is we're going to make housing more affordable in our state. We've got to. I think that's really what we ran on. It's one of the main reasons I won by 19.6 points, but who's counting?
Warner: To mental health care, a big issue for the legislature and your administration over the last few years. In January of last year, you named Dr. Morgan Medlock as the state's first behavioral health commissioner, saying she was the right person to lead, quoting here, “a transformational change.” In a statement just last week, you announced Medlock had been replaced by an interim director and that a national search is underway for her replacement. Why are you replacing her just over a year after she took that job?
Polis: Well, I think Dr. Medlock did a great job getting us to this point and as that catalyst for, remember, that first year of the agency, it's a new agency. Obviously for my second term, while many members of my cabinet are staying on, I've made a few changes. We have a new director of Cabinet Affairs. We have a new director of our Office of Economic Development and International Trade. And we're excited to work on the next for the Behavioral Health administration.
Warner: Medlock told the Colorado Sun she was basically forced out after conflicts with your chief of staff and other cabinet officers. She said she faced, quoting here, “a lack of support at many levels” as she tried to build a brand new agency. She thinks this is premature.
Polis: I don't know if it's premature or not. Ultimately, that's kind of my call as governor. Again, I think the kind of leader we needed for that critical first year, I thank her for her work and getting us to that point. And I think we now need to move from that creation phase into a more sustainable phase. And that means collaboration across cabinet, with stakeholders. We always hold all members of our cabinets to the higher standards and the right fit on a Tuesday might not be the right fit, you know, six months later. We have ongoing kinds of changes in what we're asking our agencies to do and I'm excited to make sure that, as I said, as we finalize my cabinet for the second term that we're all, you know, rowing the same way and moving towards the best outcome for the people of Colorado.
Warner: When it comes to outcomes, let me quote, Democratic state Representative Judy Amabile. She's been critical of the agency's direction under Medlock. What she sees is a lack of progress for people with mental illness, that quote, “by 2024, we are supposed to have the safety net in place. And that means anybody who needs help gets help when they need it. And in the meantime, people are really struggling out there, especially the people with the most serious disease. And so far, I don't think there's been a lot of relief for those people.” What do you want to do differently under new leadership?
Polis: My job as the boss of whoever the commissioner is, is to ensure accountability and that we achieve those goals. And there are some areas like the rulemaking that are a little bit behind schedule. We're going to make sure we get it done. Remember, this is a new agency in our state. We consolidated. We had behavioral health spread out among, I think it was six or seven different agencies, meaning there was no single point of entry. We even had the Department of Ag involved, Department of Public Safety, Human Services. So we said, “you know what, this doesn't make any sense.” Because when an individual suffering from a mental health issue needs help, that's the least likely time they want to navigate a government bureaucracy. I mean, I don't think anybody ever wants to navigate a government bureaucracy, but when you need help, that's the least time you want to do it. So we consolidated, or I should say we're in the process of consolidating, much of it is moved over, but we're continuing this work around a behavioral health administration to truly put patients first. We welcome input from Representative Amabile, many others, to make sure we get it right. But it's a pretty, pretty important change for our state and I'm deeply committed to getting it right to serve the mental health needs of Coloradans.
Warner: What is the biggest change you'd like to see? When you looked at the mental health system in the state, you've described it as perhaps fractured even within state government. Is there an initial step you're excited about?
Polis: You know, if you ask me to kind of diagnose the problems in our state, I'd say it's access, it's quality, and access is a problem, both not just economically, culturally, of language issues, geographically, and then making sure it's the right data-driven care that works, measuring outcomes, rewarding what works, changing what doesn't work, is going to be critical to apply that data lens to how we do mental and behavioral healthcare in Colorado.
Warner: The legislature has approved a $38 billion budget and a school finance act that comes close to full funding for K through 12 schools, with a promise to bring them there solidly by the 2024-’25 school year. But the latest state revenue forecasts are cautious, envisioning slow growth, the possibility of a recession. When times get tough in Colorado, governor, historically, K-12 has gotten cut. So what's to say that this will be sustainable going forward?
Polis: 10.2 percent increase for school funding. That’s absolutely incredible. That's over $20,000 of new investment for a class of 22 kids. This is a transformative level. And just as importantly, Ryan, we're doing it in a way that's sustainable. Meaning that we have record reserves, the state education fund is in strong condition. And obviously nobody can say something is sustainable for 20 years or 40 years, but we are being very conservative and prudent and know that we're going to be able to maintain this over the next several years.
Warner: Denver and Colorado Springs both have mayoral elections soon. Runoffs. In Denver, it's the former head of the Metro Chamber of Commerce Kelly Brough against former state Senator Mike Johnston. In Colorado Springs, pastor and business owner, Yemi Mobolade, facing former Secretary of State Wayne Williams. A quick question. Do you have a pick in either of these races?
Polis: You know Ryan, I know all four well. I've had a great relationship with Mayor Suthers, with Mayor Hancock. I am very much looking forward to working with the next mayors of our two largest cities and to continue that strong relationship going forward.
Warner: Okay. You're not putting your thumb on the scale there.
Polis: It's really up to the voters of those cities. Right? Whoever's elected, I work with all the mayors. I mean, not just the mayors of our biggest cities and obviously the mayor of Denver, the mayor of Colorado Springs, still have a big role to play in helping work with me to chart Colorado's future on transit, on housing, on sustainability. And I have good relations and know all four of those folks that are there and I'm very confident that I can work with whoever the people choose very effectively for the people of our state.
Warner: On the subject of endorsements, President Biden announced this week he will run for reelection. Will you endorse him?
Polis: Well, of course, I support President Biden. I always have. I think he's been an effective president. I think that the alternative of Donald Trump or DeSantis is very scary to the people of our state of Colorado and to the nation. President Biden's done a great job defending freedom and democracy. I'm excited by the work product of the American Rescues Act, the Inflation Reduction Act, which is transforming energy independence in our state. And we're putting that to good use to make electric vehicles less expensive and support new technologies with hydrogen and other opportunities our state has.
Warner: Federal support for renewables. Some of the dollars tied to the Inflation Reduction Act may be in jeopardy given the debate right now going on in Congress with the budget.
Polis: I hope not. I certainly hope there's not clawbacks. I think we obviously need to have fiscal stability nationally, but we need to make sure we don't compromise our future by cutting some of these investments that'll help lead to future prosperity and energy independence in that process.
Warner: Does President Biden's age concern you?
Polis: No, I mean, as President Biden said, people should look at it and he should be able to demonstrate that he's doing a great job regardless of age. I think age is just a number. What matters is whether somebody's able to be an effective executive, effective legislator. When I first ran for Congress, Ryan, I was 32 and a lot of people said, “he's too young.” My successor, Joe Neguse, also quite young when he ran, I was the second youngest member of Congress in that term that I served back in 2008. And again, once people got to know me, maybe some people voted against me because I was too young. But I think by and large, they would say, “yeah, this guy has worked in business, he's worked in the state board of education, he's ready to serve.”
Warner: No one was concerned you were gonna die, though.
Polis: Well, I think the concern was again, at all ages, I think it's about what somebody brings to the job. And you remember Ronald Reagan, was it his ‘84 debate where he was debating Walter Mondale and the debate moderator brought in the age because Ronald Reagan was then the oldest-serving president and Ronald Reagan said, “I promise not to make age an issue. I won't take advantage of the youth and inexperience of my opponent.” So when, you know, when they go low, you go high. That's a Michelle Obama thing, and I agree with it.
Warner: Colorado's first female member of Congress, Pat Schroeder died last month. They're now holding her memorial service. I understand that you'd known Representative Schroeder since you were a child, and I thought perhaps you could reflect as we close on her legacy for a moment.
Polis: So Pat was a dear friend and, and we regularly exchanged emails and texts. She came in to campaign for me when I ran for Congress, ran for governor. I miss her already so much. I know that I just signed several pro-choice bills a couple weeks ago and that's the kind of thing where she would've emailed or texted me afterwards, usually making some witty comparison with her later home state of Florida going the wrong direction and us going the right direction in Colorado. But she was proud of Colorado, proud of the direction we're going, and had a remarkable wit. One of the most clever, intelligent people I knew with a biting wit that would've bested even you, Ryan, I hate to say. I don't know if you've had her on, but she would've bested you. She's amazing and I really miss her and my condolences in love to the family.
Warner: You can hear a conversation that I had with her from a few years back and indeed, how I was easily outwitted at CPR.org. Governor, thanks for being with us.
Polis: Thank you, Ryan. Always a pleasure.
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