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August 26, 2024 HB 24B-1006
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 24B-0022
Rep. DeGraaf
Date:
Bill Status:
Fiscal Analyst:
August 25, 2024
House Finance
Elizabeth Ramey | 303-866-3522
elizabeth.ramey@coleg.gov
Bill Topic: EXPAND PROPERTY TAX EXEMPTIONS
Summary of
Fiscal Impact:
☐ State Revenue
☐ State Expenditure
☐ State Transfer
☐ TABOR Refund
☒ Local Government
☐ Statutory Public Entity
The bill increases homestead exemptions for qualifying seniors, veterans with a
disability, and Gold Star surviving spouses starting in property tax year 2025. The bill
increases state expenditures to reimburse local governments for these exemptions. In
years when there is not sufficient TABOR surplus to fully fund the expanded
exemption, it will increase General Fund expenditures.
Appropriation
Summary:
No appropriation is required.
Fiscal Note
Status:
The fiscal note reflects the introduced bill. This analysis is preliminary and may be
updated following further review and any additional information received.
Table 1
State Fiscal Impacts Under HB 24-1006
Budget Year
FY 2025-26
Out Year
FY 2026-27
Revenue - -
Expenditures - -
Other Budget Impacts Homestead Exemptions $76.6 million $86.6 million
Other Refund Mechanisms -$76.6 million -$86.6 million
Net TABOR Refund Change $0 $0
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August 26, 2024 HB 24B-1006
Summary of Legislation
The bill changes the homestead exemption for qualifying seniors, veterans with a disability,
or Gold Star surviving spouses from 50 percent of the first $200,000 of actual value of an
owner-occupied primary residence to the lesser of 50 percent of the actual value or 25 percent
of the state median home value starting with property tax year 2025.
By March 15 annually beginning in 2025, Legislative Council Staff is required to provide to the
Property Tax Administrator an estimate of the statewide median home value for the property tax
years that begin during each property tax reassessment cycle. The median home value is
calculated based on the most recent available estimate of the statewide median home value in
the Census Bureau’s American Community Survey, adjusted for house price inflation through the
fourth quarter of the preceding calendar year. If the median home value declines, the estimated
statewide median home value for the previous reassessment cycle is used.
The bill also makes statutory changes to implement a future concurrent resolution amending the
Colorado Constitution to allow a senior who has previously qualified for the homestead property
tax exemption for 2016 or later years to claim the exemption for the current residence
regardless of how long the senior has owned and lived in that residence. The statutory changes
take effect if a concurrent resolution is passed by the General Assembly and approved by voters
at the 2026 General Election.
Background
The homestead exemption is available for owner-occupied primary residences of qualifying
seniors, veterans with a service-connected disability, surviving spouses of veterans with a
disability who previously qualified for the exemption, and Gold Star surviving spouses. Under
current law, the homestead exemption applies to taxes that would be assessed on 50 percent of
the first $200,000 of the home’s value. For example, a $150,000 residence is taxed as if it were
worth $75,000, and a $500,000 residence is taxed as if it were worth $400,000. The Colorado
Constitution allows the General Assembly to adjust the $200,000 amount to which the
exemption applies. The amount has previously been lowered to $0 following recessions, but has
not previously been increased to a level above $200,000.
Local government reimbursements. The state is required to reimburse local governments for
the revenue reduction attributable to these exemptions. These reimbursements are made as
expenditures from the state General Fund via the Department of the Treasury.
TABOR refund mechanisms. Reimbursements to local governments for the homestead
exemption are accounted as a TABOR refund mechanism under current law. A TABOR surplus
collected in one fiscal year is set aside to fund these reimbursements in the following fiscal year.
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August 26, 2024 HB 24B-1006
Assumptions
Senate Bill 24-233. In 2024, SB 24-233 was passed by the General Assembly in 2024 and signed
by the Governor. It sets assessment rates for 2024 and future property tax years. The bill
becomes law only if voters do not approve a measure at the 2024 general election that lowers
assessment rates. Fiscal impacts are presented relative to current law, which is assumed to
include SB 24- 233.
Homestead exemptions. The fiscal note uses Division of Property Taxation data on properties
that qualified for the homestead exemption in 2022. These data were adjusted for the
December 2023 Legislative Council Staff assessed values forecast for home price appreciation
and the property tax benefit as recalculated under the bill. Caseload and average exemption
amounts were grown to tax year 2025 by the June 2024 Legislative Council Staff forecast for
homestead exemptions. Adjustments assume current law and do not account for any conditional
impact from a future concurrent resolution as described above. For property tax year 2025, the
bill is expected to increase the value of the average homestead exemption from $551 to $794.
State Expenditures
Workload in the Division of Property Taxation (DPT) in the Department of Local Affairs will
increase to review and audit applications for expanded exemptions, to update informational
materials, and to respond to questions from taxpayers. Workload in the Legislative Council Staff
will increase to estimate the statewide median home value. These workload increases can be
accomplished within existing appropriations.
In addition, DPT will require increased staff as well as computer programming performed by the
Office of Information Technology to update the homestead exemption portal. These
modifications depend in part on the passage of a future concurrent resolution and the
associated costs have not been estimated.
Other Budget Impacts
TABOR refunds. The bill has no impact on the amount required to be refunded under TABOR
for FY 2025-26; however, it increases the amount refunded via homestead exemptions by
$76.6 million, from $174.0 million to $250.6 million. For FY 2026-27, it increases the amount
refunded via homestead exemptions by $86.6 million, from $183.3 million to $269.9 million.
Based on the size of the projected TABOR refunds paid in FY 2025-26 and FY 2026-27, this will in
turn decrease the amount required to be refunded by other TABOR refund mechanisms.
For future years when the state refunds a TABOR surplus, the bill increases the amount refunded
via the homestead exemption and decreases the amount refunded via other refund
mechanisms. For future years when the state does not refund a TABOR surplus, the bill increases
General Fund expenditures to reimburse local governments for exempted property taxes, and
reduces the amount otherwise available for the General Fund budget. Page 4
August 26, 2024 HB 24B-1006
Local Government
On net, the bill will not change net revenue to any local government. It decreases property tax
revenue to local governments, offset by increased state reimbursements to local governments
by the amount shown in Table 1. The bill may affect local government TABOR refunds if local
voters have exempted one of, but not both of, property tax revenue and revenue received from
the state government. In addition, workload for county assessors will increase to administer
larger exemptions.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming
no referendum petition is filed, except that if a future concurrent resolution is approved at the
2026 General Election, the bill’s changes to Section 39-3-203(1)(a) and (6)(a), C.R.S., take effect
upon proclamation of the Governor.
State and Local Government Contacts
Counties County Assessors LCS Economists
Local Affairs Property Tax Division - Local Affairs
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit the General Assembly website.