- Colorado’s property taxes surged after wealthy Americans opted to move during the pandemic
- Longtime residents say they have faced tax bill hikes of up to 40 percent as their property values soared
Longtime Colorado residents are being forced to sell their homes and drain their savings after a huge pandemic influx sent their property taxes soaring.
Retired X-ray technician Marleen Gamble, 84, told an investigation by the New York Times that she has been selling almost all of her possessions – including her prized jewelry – after suffering a 20 percent property tax spike.
‘Every knickknack I have, everything I don’t use, I’m selling,’ she said. ‘What I owe now is $962.62. I think I need to use two credit cards to do it. And I’m going to have to pay interest on those.’
Yet, the senior isn’t even among the worst afflicted Coloradoans, with some seeing their payments surge by up to 40 percent.
The new dynamic has been fueled by pandemic homebuyers, who sought the refuge of the Rocky Mountains to wait out lockdowns and enjoy the outdoors while working from home.
Colorado lawmakers have been searching for solutions to the crisis, however the reason for the surge makes the challenge even tougher.
Namely, because the population increased and many were affluent people with the ability to move easily in the pandemic, local and state governments have also struggled to keep up with expanding services, with property taxes a prime funding tool.
This has meant that offering relief to struggling homeowners has hardly been met.
‘This has been a phenomenon in Colorado, Montana, Utah, Arizona, the Western states,’ Colorado Governor Jared Polis told the Times.
‘If your home value went up 40 percent, that might be a wonderful thing on the equity front, but it doesn’t mean you have 40 percent more cash to pay taxes.
‘Your salary might have only gone up over two years 10 percent or 12 percent. That’s the challenge we face.’
In Colorado, property taxes are calculated by multiplying the property’s value by a statewide rate set by the state government, which is then multiplied by a town’s mill levy rate decided by the cost of services such as schools.
An increase in residents increases the cost of public services – and the amount of tax levied to pay for them.
Tax expert Adam Langley, associate director of tax policy at the Lincoln Institute of Land Policy, told the Times that the reason the tax bills have soared so considerably is due to several factors.
In particular, property values are assessed by the state every two years, so property taxes are being calculated based on mid-2022 prices when interest rates were low and home prices were at their height.
He also cited a failure from Colorado’s local governments to reduce their mill levy rates, and the 2020 repeal of the Gallagher Amendment that limited how much homeowners would have to pay in property taxes.
‘Colorado is mired in a property tax mess with no easy way out,’ added Billy Hamilton, the deputy chancellor and chief financial officer of the Texas A&M University System.
In Douglas County, between Denver and Colorado Springs, one in five homeowners are facing at least a 40 percent spike in property taxes, according to the Common Sense Institute.
Brittany Hailey, a property manager in the mountainous area of Carbondale, said areas like hers have been particularly affected as wealthy people preferred them when they made the move.
This has resulted in a lack of affordable housing, forcing less affluent families to move elsewhere.
‘The billionaires are pushing the millionaires down the valley,’ she said.
Pitkin County manager Jon Peacock, who oversees the rich skiing community of Aspen, added: ‘That could put some folks at risk of not being able to stay in the community.’
Notably, Colorado homeowners have still been paying less than much of the rest of the country. Before recent increases, the median annual property tax bill for primary residences in Colorado in 2021 was $2,259, or 19 percent below the national median of $2,795.
But for people like Hailey, who owns two homes in the area, her family have seen their property tax bill surge by over 36 percent.
And because she often rents out her home, a new bill could add even more to her bills, as it would classify homes rented out for more than 90 days a year as commercial properties – which pay four times higher rates.
‘The lawmakers think that this will maybe reduce the number of second homes, or punish people who have more than one home,’ she said. ‘They’re trying to find a scapegoat.’
This was agreed with by second homeowner Mike DeGuire, a retired school principal who said the entire tax structure should be re-written to fund the state’s underfunded schools.
‘Maybe we’re not thinking the way we should with property taxes,’ DeGuire said. ‘It’s almost a psychological thing — people are used to getting their refunds, and they’re used to their taxes not being so high, so we’re in a real bind.’
A state task force organized by Polis has proposed several recommendations to fix the crisis, including allowing the state to step in if property taxes cross a certain threshold.
They have also suggested separating school funding from other funding and reducing commercial housing rates, to help second homeowners renting out their homes.
