Tax-reduction amendment has appeal for seniors

Tax-reduction amendment has appeal for seniors

Oct. 12, 2000

By Tom Vaughan
Mancos Times Editor

"Property-tax reduction for senior citizens" is the title of Referendum A on the Nov. 7 ballot. It is also a statement of the appeal of this measure.

This tax-relief proposal, like the other five referenda on the ballot, was initiated in the Colorado State Legislature and referred to the voters of the state for consideration as an amendment to the Colorado Constitution. Colorado law allows such amendments only through a vote of the people.

If a majority of people vote yes on Referendum A, Article X of the state’s constitution will be amended to establish a "homestead" property-tax exemption of up to 50 percent of the first $200,000 of value for homes owned by persons 65 years of age or older. They must have lived in their homes for the preceding 10 years.

If passed, the property tax cuts would be reflected in tax payments beginning in 2003. The table shows that a 65-year-old homeowner who had been living on the property since at least 1992 could save an average of $585 in 2003 property taxes if the home was valued at $150,000.

The relative benefits to the homeowner go down as the value of the property increases, with $780 being the maximum average tax reduction that could be gained for properties worth over $200,000.

The savings to qualifying individuals in the first year would aggregate to $44 million statewide, all coming from property taxes.

Because property taxes are used to fund special districts, the loss of tens of millions of dollars statewide would reduce the budgets of those districts and affect their services.

Referendum A provides for the loss of revenue to be backfilled from excess state revenues, which currently must be refunded to the taxpayers.

The measure includes language to exempt the state reimbursements from the state and local revenue and spending limits imposed by TABOR (the Taxpayer’s Bill of Rights), but the removal of an estimated $44 million from the excess would reduce the amount of the refund each taxpayer receives. That loss was estimated by the Legislative Council to be, in the first year, approximately $15 for an individual, $30 for a married couple.

The referendum was sponsored by state Rep. John Witwer (R-Jefferson County) and state Sen. John Evans (R- Arapahoe & adjacent counties). Packaged as HCR 00-1002, the measure passed the House 62-3 and it whizzed through the Senate 34-1.

No group has registered with the Department of State in opposition to Referendum A, according to Kruz Watkins, who is with the department’s Elections and Licensing Division.

Tim Summers with the American Association of Retired People’s Denver office said his office had not taken a position on the issue.

Summers did comment that "more and more seniors are having difficulty paying their property taxes," an observation that complements the Legislative Council’s report of a 1998 study revealing "roughly 38 percent of Colorado households with homeowners age 65 or older have annual incomes less than $25,000."

State representatives Kay Alexander (R-Montrose) and Mark Larson (R-Cortez) both voted in favor of putting the referendum on the ballot.

Her Libertarian opponent, W. Dale Murphy, said, "On the whole, I would support any tax reduction."

Alexander said, "I believe this will support senior citizens who have been paying property taxes for many years."

Larson said he would "let the voters decide that," but he expressed concern that a downturn in the state’s economy could make excess state revenues disappear, causing the state to have difficulty filling in the losses resulting from reductions in property-tax revenues.

Other arguments against the measure cited by the Legislative Council include:

The qualifications exclude seniors who rent or who have been homeowners for fewer than 10 years. It applies, however, to all other seniors, including the wealthy.
The benefit to the seniors is made up through reduced refunds to other taxpayers.
Tax relief for seniors is already available in the form of "up to $24,000 of pension and self-retirement income" deduction on state income tax, state grants to low-income seniors to offset property taxes and heating expenses, and a provision whereby seniors can defer all property taxes until the home is sold.
The lessened personal impact of property taxes on seniors might encourage them to vote for increases in mill levies that would affect others disproportionately.

This is exactly the concern of tax foe Douglas Bruce, quoted in the Oct. 2 Denver Post as saying the legislature is "trying to buy off the votes of seniors with other people’s tax refunds."