Taxes & Bipartisanship

Taxes & Bipartisanship

Another legislative session has come to a close.

This was my eighth and final session, and the end of a long journey that started in spring of 2009 when I parted ways with my engineering career and started a new career in public service.

It’s been an unforgettable experience that has been rewarding and joyful, but also frustrating and stressful. I imagine I’ll find time to write more about it when I’ve had a chance to rest a bit more, but for now, I want to just share some of the work that consumed the bulk of my time this session.

The Family Affordability Tax Credit (HB24-1311)
I think this may be the most impactful legislation of my career.

The policy itself is simple. It’s a refundable tax credit for low-to-middle income families to help with the high costs of raising children. It’s structured like the child tax credit, but layers on top of the existing state and federal credits in a way that will cut child poverty in half in Colorado. Click here for some more details.

What was less simple was negotiating the deal with Governor Polis. While he supported what we were trying to do with the FATC, he also saw an opportunity to achieve one of his goals — a reduction in the income tax rate.

I have strenuously objected to a reduction of the income tax rate in the past because it does so little for lower income families and so much for the wealthiest Coloradans. Plus, after voters passed Proposition 116 in 2020 and Proposition 121 in 2022, Colorado’s income tax rate is at it’s lowest rate since the graduated income tax was replaced with a flat tax in 1986. I truly believe we should return to a graduated income tax so that the wealthiest Coloradans pay their fair share to support our schools and other public priorities. 

But this year, after consulting with many of my fellow legislators and key partner organizations, we cut a deal. We agreed to re-incorporate a temporary income tax rate reduction into the formula for TABOR refunds in exchange for the Governor’s commitment to supporting the tax credit for child poverty. The refunds bill, SB24-228, sets a formula for the distribution of TABOR refunds after we’ve meaningfully funded the FATC and EITC. The formula scales up the size of the income tax rate reduction alongside the growth of the existing sales tax refund mechanism (which is more equitable). The Senate Bill earned bipartisan sponsorship and support in both House and Senate.

I’ll admit that I would have done things differently if I had a magic wand, but this was what it took to achieve my top priority of the session. And I’m incredibly proud that we got it done.

Property Taxes (SB24-233)
For a second year in a row, the property tax conversation monopolized my time and energy. But this year, the result was very different.

Allow me to set the table a bit. All property taxes are local. While the local share of property taxes for schools complements the state’s K-12 education funding, the rest are purely for counties, cities, fire districts, and other special districts. 

Colorado has some of the lowest residential property taxes in the country, but when home values spiked in 2023, property taxes rose between 20-40% in different parts of the state. Business property taxes didn’t rise as quickly, but they were already somewhat high comparatively because of 40 years of the Gallagher amendment.

So regardless of how Colorado compares to other states, the cost pressures on Colorado families and businesses are real. Balancing these cost pressures against the long-standing underfunding of K-12 and other priorities was no easy task.

We bent over backwards for bipartisanship on this effort because we knew that only a bipartisan bill would be enough to prevent the passage of the incredibly reckless ballot measure being proposed by right-wing groups for this November’s ballot. And I’m proud to say we got the job done. There were many tough choices and compromises, but I believe we found a meaningful and responsible long-term alternative to the ballot measures.

I’ll let you read more about it in this Denver Post editorial.

These were difficult challenges, but I feel that I put everything I had into them this year. And I’m ending my final year in the legislature with a sense of accomplishment and relief.

And now I need a few more full nights of sleep 🙂

Chris deGruy Kennedy

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