What would happen to Colorado’s budget if the conservative property tax cut passes

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The Unaffiliated — All politics, no agenda.

A sale sign stands outside a duplex on the market May 24 in downtown Denver. (AP Photo/David Zalubowski)

If Colorado voters approve a November ballot measure cutting property taxes by $3 billion, the governor’s budget director says the legislature would have to make draconian cuts to balance the state’s finances.

Colorado could see the return of the budget stabilization factor in K-12, $800 million in cuts to higher education, a $450 million cut to local highway funding and layoffs in the state judiciary. Medicaid providers — far from getting the pay bumps needed to keep clinics open — would be at risk of closures and further consolidation, particularly in rural areas.

And even that wouldn’t be enough to cover a projected $3 billion hole, Mark Ferrandino, the director of the Governor’s Office of State Planning and Budgeting, told the bipartisan Property Tax Commission on Friday.

“None of these are good decisions,” Ferrandino said. “These are all bad decisions. We will have to make ones like this if (Initiative) 108 were to pass.”

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Initiative 108, being pursued by the conservative groups Advance Colorado and Colorado Concern, would reset residential tax assessments to the equivalent of 2022 levels, reducing local government and school revenue by a projected $3 billion. The measure, which hasn’t qualified for the ballot yet, would be effective in 2025 for taxes owed in 2026.

But it doesn’t just affect the state budget by cutting property taxes, which impacts K-12 school funding. It also requires the state to reimburse local governments for lost tax revenue.

Under one legal interpretation of the measure, the state would have to provide $2.25 billion in reimbursements, the equivalent of 13% of the state’s general fund spending. Under another, the state would owe $3 billion. That would require an 18% cut to the general fund.

If Ferrandino’s proposals sound like the sort of drastic measures Colorado would only contemplate during a recession, well, there’s a reason for that. The state budgetary demands of Initiative 108 are remarkably similar to what Colorado faced each of the last three economic downturns.

Following the 2001 recession, state revenue dropped 16.7% from its peak, according to a Joint Budget Committee staff analysis. In the wake of the Great Recession, revenue dropped 16.6%.

In the pandemic recession, revenue didn’t ultimately fall by as much as expected. But economic forecasters assumed they would, projecting a 16.3% drop in state revenue.

Keep in mind: The state budget was already headed toward leaner times. This spring, lawmakers relied heavily on unsustainable maneuvers like pulling money out of cash funds to balance the 2024-25 fiscal year budget. And early JBC projections show the state facing a $380 million deficit in the 2025-26 budget year if current trends continue.

The presentation Friday provided an early look at how supporters and opponents of Initiative 108 (and Initiative 50, another conservative ballot measure establishing a cap on property tax growth that’s already qualified for the ballot) will make their case to voters in November.

Expect opponents to focus on the impact to schools and state services, and supporters to largely dismiss the state budget concerns.

“Over at the bipartisan property tax commission, it’s truly stunning to hear about the financial and administrative havoc Initiatives 50 and 108 will mean for Colorado,” Scott Wasserman, the outgoing president of the liberal Bell Policy Center, wrote on social media.

“Over in the rest of Colorado, it’s truly stunning to hear about the financial havoc that 30%+ property tax hikes are having on seniors, people on fixed income and Colorado families,” replied Michael Fields, who leads Advance Colorado, a conservative political nonprofit.

Nearly 60% of super PAC spending reported so far this year in Colorado congressional contests has happened in the 5th Congressional District Republican primary. Click on the graphic to see an interactive view. (Sandra Fish, Special to The Colorado Sun)

Nearly 60% of the $4 million in super PAC spending in Colorado congressional contests reported so far this year has been focused on the Republican primary in the 5th Congressional District.

That $2.4 million has been spent to help conservative commentator and activist Jeff Crank beat Colorado GOP Chairman Dave Williams. Two national and two Colorado super PACs account for that cash, which has been spent sending text messages and mailers and swamping the TV airwaves with ads.

America Leads Action, a conservative super PAC funded by Walmart heir and Denver Broncos co-owner Rob Walton and conservative entrepreneur Jay Faison, has spent roughly $1.3 million on the race. Americans for Prosperity Action, the federal super PAC affiliated with the national conservative political nonprofit of the same name, has spent nearly $476,000 since mid-March to help Crank. Crank is a regional vice president for AFP.

Gun Owners of America’s super PAC has spent $6,200 on a mailer helping Williams — the only super PAC money spent to aid him. The Colorado GOP has also paid for mailers supporting Williams.

The party’s next filing with the Federal Election Commission is due Thursday. The report should shed light on how much self-serving spending Williams has done.

State Rep. Elisabeth Epps, D-Denver, speaks during a news conference announcing bills related to abortion and gender-affirming care March 9, 2023, at the Colorado Capitol. (Elliott Wenzler, The Colorado Sun)

State Rep. Elisabeth Epps, a Denver Democrat facing a tough primary challenge in House District 6, answered questions from The Colorado Sun about her first term in office and her priorities should she be reelected.

Epps declined an interview request from The Sun, but agreed to respond to questions over email. Here are some highlights from what she said:

(You can find our Unaffiliated item on our in-person interview with Epps’ primary opponent, Denver attorney Sean Camacho, here.)

In terms of housing, Epps said she wants to repeal the statewide prohibition on rent control. (A bill doing just that failed in 2022.) She also criticized Camacho for accepting campaign donations from what she called “the landlord lobby.”

Camacho received $6,200 each, the maximum amount allowed, earlier this month from the Colorado Apartment Association Small Donor Committee and Realtor Small Donor Committee.

“A candidate who accepts donations from the landlord lobby and gets the governor’s endorsement is not going to stand up to landlords and the governor on housing,” she said. “I can be trusted to do so, because it’s what I’ve already been doing.”

Fighting For A Stronger Colorado, a state-level super PAC, continues spending money to beat Epps in the primary.

The group spent about $38,000 on mailers last week highlighting Epps’ “votes and conduct,” according to state campaign finance reports. The same super PAC also spent more than $30,000 last week on mailers aimed at beating Rep. Tim Hernández, D-Denver, in his Democratic primary with former federal immigration judge Cecelia Espenoza.

Most of its donations have come from hidden sources.

Want to reach Colorado political influencers and support quality local journalism? The Sun can help get your message attention through a sponsorship of The Unaffiliated, the must-read politics and policy newsletter in Colorado. Contact Sylvia Harmon at underwriting@coloradosun.com for more information.

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Trent Leisy waits to take part in the first Republican primary debate for the 4th Congressional District seat being vacated by Ken Buck on Jan. 25, in Fort Lupton. Leisy has since dropped out of the congressional race and is running to represent state House District 65 in northern Colorado. (AP Photo/David Zalubowski)

A Republican candidate for a state House district in northern Colorado owes the state nearly $29,000 in back taxes, and one of his four properties is in foreclosure.

Trent Leisy, who is running in House District 65, has also been questioned in a letter from the Federal Election Commission about a campaign finance filing he submitted as part of his short-lived bid earlier this year in the 4th Congressional District.

Leisy faces former teacher and school administrator Lori Garcia Sander in a June 25 Republican primary in House District 65, which leans heavily in the GOP’s favor. The district is currently represented by Rep. Mike Lynch, R-Wellington, who is stepping down from the legislature as he runs for Congress.

Leisy also owes a $150 fine to the Secretary of State’s Office for failing to file personal financial disclosure for his legislative bid on time. His state and federal campaign finance filings thus far haven’t disclosed any contributions, even though WinRed reported sending him $548 earlier this year for his congressional bid and his campaign website includes a button to donate.

“Any discrepancies that may have come about with the FEC regarding my reporting have been cleared up and a phone call into the FEC has been made to make sure the campaign is closed,” Leisy wrote in an email to The Colorado Sun. But he hasn’t replied to the FEC letter or filed an amended report. Leisy has until June 30 to pay the state fine.

Leisy’s personal financial disclosure, filed with the state three days late, lists debts of $1.7 million, though it doesn’t include the back taxes. “I have not paid my 2022 taxes because after the state decided to give illegals millions of dollars I said I am done,” he wrote to The Sun.

Leisy lists four properties and five companies that he owns. The disclosure listed annual income from his business, Northern Colorado Seeds LLC, of between $400,000 to $650,000.

One of Leisy’s businesses, FyreFox Media, sells “Sexy Trump” merchandise that features former Republican President Donald Trump. But Leisy didn’t report any income from the business.

One of those Weld County properties — a house in Severance — is being foreclosed on, with Leisy owing $487,000 on the loan.

Leisy’s financial issues aren’t his only problems.

State-level super PACs — including one belonging to Rocky Mountain Gun Owners — have sent at least four mailiers criticizing Leisy at a cost of about $26,000. Some bring up his past criminal conviction for harassment. They’ve also spent about $26,000 on mailers and TV ads supporting Sander, who is supported by the National Rifle Association Victory Fund.

Leisy isn’t the only Republican primary candidate running this year who owes the state of Colorado back taxes.

Russ Andrews, one of six Republicans running in the 3rd Congressional District, owes more than $101,000 in back taxes, according to a Colorado Department of Revenue database. He listed the debt on his federal financial disclosure.

And Tim Arvidson, an information technologist who faces state Rep. Lisa Frizell in the state Senate District 2 primary in Douglas County, owes the state more than $3,600, according to Colorado Department of Revenue records. Arvidson didn’t list the debt on his state financial disclosure.

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Notice something wrong? The Colorado Sun has an ethical responsibility to fix all factual errors. Request a correction by emailing corrections@coloradosun.com.

Type of Story: News

Based on facts, either observed and verified directly by the reporter, or reported and verified from knowledgeable sources.

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