Proposition HH Brief: Economic Impact of Taxes Increasing Above Historic Trend
This November Coloradans will vote on ballot issue Proposition HH, a measure promoted by advocates as the best solution to the enormous increases in property taxes citizens face. Proposition HH is complex, and despite reducing tax rates, property taxes will still increase far above historic trends.
Prop HH would make several changes to state property taxes and to state revenue limits, including: reducing property tax rates, creating two new subclasses of residential property effective in 2025, providing funds to local governments to make up for decreased property tax revenues (referred to as backfilling), creating limits on local government property tax revenue, increasing the cap on state revenue (Prop HH Cap) allowing the state to retain revenue up to the newly created cap, that would otherwise be required to refund to residents under the Colorado Taxpayer Bill of Rights (TABOR).
Economic Impacts of the 2023 Increase in Tax Revenue Under HH
From 2000 to 2022, total state revenue from property taxes has increased from $3.7B to $12.8B, growing at approximately 5.9% per year. As shown in the following table, total state property tax revenue under Proposition HH is forecast to be $15.3B next year under HH. If total state property tax revenue was allowed to increase at its long-run growth rate of 5.9% per year, total state property tax revenue would be $13.5B, a difference of $1.77B or $742 per household.
|Total State Property Tax Revenue in 2024 from 2023 Property Taxes|
|Under Prop. HH (No Change in Mills)||$15,293,515,000|
|Under 2000-2022 Long Run Growth in Total Tax Revenue||$13,522,640,790|
|Difference in Total Revenue from Property Taxes||$1,770,873,710|
Using REMI, a dynamic general equilibrium model of the Colorado economy, CSI estimates the impact of the $1.77B increase in total state property taxes collected by the Colorado Department of Revenue on employment, GDP, and personal income per household. The results are shown in the following table. The passage of Proposition HH results in 14,469 lost jobs, a $784 million reduction in GDP, and a $425 decrease in personal income per household.
|Economic Impact of Additional Property Taxes Under Prop. HH|
|Employment Loss||-14,469 jobs|
|GDP Reduction||-$784 Million|
|Personal Income Loss||-$1.103 Billion|
|Personal Income Loss per Household||$425|