State lawmakers this year referred a ballot question to voters that would eliminate property taxes for individuals or businesses that use government-owned property for a private benefit.
The effort would exempt a “possessory interest,” which is created when an individual or business uses government-owned land or equipment for private purposes.
Examples include ranchers who lease land from the government for cattle grazing or a rafting company that leases public land.
The benefit that a business or individual obtains from using that land or equipment is not tax-exempt.
The ballot question reads: “Shall there be an amendment to the Colorado Constitution concerning an exemption from property taxation for a possessory interest in real property if the actual value of the interest is less than or equal to six thousand dollars or such amount adjusted for inflation?”
Beginning in tax year 2018, the ballot question would eliminate property taxes worth $6,000 or less in market value. In tax year 2019, it would also adjust the $6,000 exemption threshold to account for inflation.
The proposal would exempt approximately 5,100 of the 7,000 possessory interests in the state. In total, the interests pay about $125,000 in property taxes annually, or about $24 each on average.
A “Yes” vote on the measure, Amendment U on the ballot, would create the exemption. A “No” vote would maintain property taxes on government-owned property being used for private benefit.
Proponents say collecting the tax is not worth it, as in many cases, it costs more to collect than it brings in to local governments. Many agricultural leases are charged less than $10 in property taxes.
Opponents, however, say the effort would tilt the field, creating an unfair tax break for businesses and individuals who use government-owned land.
While the measure would reduce property taxes for all local governments by up to $125,000 per year, it also would likely bring administrative cost savings to many local governments.