Proposition HH — the Democratic proposal to reduce property tax rates while also shrinking TABOR refunds — remains on track to reach the ballot this November.
A conservative coalition has sued to try to block it, arguing that the proposal is so broad that it’s unconstitutional. But a Denver judge on Friday denied their requests, allowing the ballot initiative a place on the ballot — at least for now.
The lawsuit was filed by the conservative group Advance Colorado and joined by a host of other conservative leaders and a dozen county governments. Despite the early defeat, the group plans to appeal to the Colorado Supreme Court.
“Coloradans need real property tax relief — and we renew our call for the Governor to call a special session to immediately address this problem,” said Michael Fields, of Advance Colorado, in a written statement. The group has also been sending out mailers to voters with that message.
Advance Colorado is in the process of potentially putting a competing property tax reduction on the fall ballot.
The ballot referendum will ask voters to approve a ten-year plan to alter state finances by billions of dollars. If it passes, it would reduce property tax rates. At the same time, it would shrink the amounts that Colorado taxpayers receive in TABOR refunds.
The diverted refund money will be used, in part, to “backfill” school districts, local governments and others that stand to lose out on potential property tax revenues. The proposal could also result in schools funding growing at a faster rate overall. And a small portion of the money will be used for a rent relief program for tenants in need.
The plaintiffs in the lawsuit argue that tying all that together violates Colorado’s “single subject” requirements for legislation and ballot measures. The lawsuit also argued that the ballot language should be much more specific about the proposal’s effects.
Judge David Goldberg on Friday ruled that he did not have jurisdiction to consider the case, citing, in part, a precedent that “requires that courts refrain from interfering with the ongoing legislative process except in extraordinary circumstances.”
However, Goldberg also ruled against the plaintiffs on the merits of their arguments. He disagreed with the idea that the proposal’s various elements — diverting refund money, funding a program for renters and reducing property tax rates — were unrelated to one another.
“One could fairly argue that reducing taxes and shoring up the [resulting] financial shortfall are two separate subjects, but the Court does not believe that they are so ‘disconnected and incongruous’ as to be constitutionally impermissible; they are both part of the financial balance attempting to be adjusted by the legislation,” he said.
The plaintiffs say that Prop. HH isn’t just about balancing the books. They argue that the potential refund reductions are so great that they will go beyond simply backfilling lost revenues, and draw in new tax dollars to grow state schools funding. Indeed, state projections show that in some years the loss of refund money could significantly exceed the amount of property tax relief — though it will depend on how the economy is doing.
Goldberg wrote that increasing schools funding didn’t seem to be the point of the proposal. Instead, he wrote, the excess revenues were a way to insure schools funding stays stable, despite the reduced property tax revenues, if the economy hits a down year.
The judge wrote that “setting aside a little extra money … is simply a practice incident to sound finance.”
Goldberg went on to dismiss the argument that voters would be misled by the ballot language, writing: “The title is not so vague or obscure as to force the reader to delve into the body of the proposed legislation to determine the general object, nor does interpretation of the title require any sort of superior intellect or rhetoric to divine the nature of the proposition.”
Senate President Steve Fenberg, a Democrat, celebrated the initial victory.
“It’s remarkable that a right-wing fringe group was hellbent on preventing Coloradans from lowering their property taxes in the first place,” he said in a written statement.
The ballot issue, as written by the legislature, states:
“Shall the state reduce property taxes for homes and businesses, including expanding property tax relief for seniors, and backfill counties, water districts, fire districts, ambulance and hospital districts, and other local governments and fund school districts by using a portion of the state surplus up to the Proposition HH cap as defined in this measure?”
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