On Wednesday, Gov. Jared Polis signed yet another property tax bill designed to provide relief to home- and business owners facing the “slow-motion crisis” of skyrocketing property values.

The bipartisan House Bill 1001 came out of a special session the governor called to address the threat of two property tax measures set to be on the November ballot that could have made drastic cuts to special taxing districts and taken an estimated $2.3 billion out of the state budget to cover shortfalls at school districts.

The bill was part of a negotiation with a coalition of business and conservative leaders who, with the bill’s passage, have agreed to withdraw the measures from the ballot and promised not to run any more property tax measures for six years.

In Gov. Polis’ words, his signature put an end to “the property tax wars.”

House Bill 1001 is not perfect, but it does address some of the glaring issues with Colorado’s property tax system, including what was arguably the thing we needed most, capping the annual increase in property taxes.

What HB-1001 does not do is drastically cut rates for upcoming tax years. For homeowners looking for immediate relief on next year’s property taxes, the bill might seem underwhelming. According to calculations by CPR, the bill will slash about $300 from the 2025 tax bill of a home worth $650,000 (compared to if legislators hadn’t acted).

That is no small sum, but the rub is that taxes for 2025 (which are paid in 2026) will still go up by $300 over 2024.

This disparity is the result of an earlier — and temporary — relief effort that lowered rates for 2024.

All in all, the owner of a home worth $650,000 should expect to pay about $3,300 for 2024 and $3,600 for 2025. This increase is still a decrease from what would have been had this special session not gotten this bill through, but it might not be exactly what homeowners were hoping for.

Business owners, who face an assessment rate of 29% compared to a residential assessment rate of 6.8%, will see more generous relief. For the owner of a nonresidential property worth $1 million, the bill is expected to cut about $1,600 from their property taxes for 2025, about 14%. That is significant and necessary to help keep our local businesses thriving.

But more than limiting an immediate increase in tax bills, the deal negotiated will — vitally — put limits on tax revenue increases taken in by taxing districts. Even if we see another 30% increase in property values, as we did during the pandemic, school districts will have to cap their tax revenue increase to 6% per year (with some exceptions related to inflation and enrollment) and other local districts will have to cap their increase at 5.25%.

An increase in the 6% range is likely to mean a tax bill that is a few hundred dollars more instead of a few thousand more.

It is this, the cap on tax revenue increases for special districts, that we really needed. Providing relief from upcoming property tax bills is necessary, but it is only necessary because our taxing system is fundamentally flawed.

When a prolonged housing crisis caused valuations to soar, our property tax was shown to lack the flexibility to prevent huge increases in tax bills. It was absurd. And it is absurd that it took us this long to reach something of a solution, but at least we are here and at least the solution is a compromise that seems to benefit everyone.

Like any good compromise, House Bill 1001 offers everybody a little bit of what they need without anyone bulldozing everyone else to get everything they want.

This is important because this is an issue that requires balance. Nobody wants crushingly high property taxes, but we do all need the services that are provided by special taxing districts — meaning we don’t want their funding to be gutted.

That is why getting initiatives 108 and 50 off the November ballot was a must.

If those two measures had passed, Colorado’s property tax collections could have taken a $3 billion hit. (For comparison, the measures passed in the Legislature this year will reduce collections by about $690 million.)

Considering where this money goes, that could have been devastating. Our property taxes fund some of our most vital services: water districts, fire districts, ambulance and hospital districts, school districts, counties and other local governments.

These are things we believe in. We can say this with certainty because we’ve voted to tax ourselves to fund them. This is exactly what makes Colorado’s broken property tax system so frustrating.

We voters have said yes to funding our schools and our libraries and our local governments through these mill levies with an idea of how much doing so would cost us. We knew what our houses were worth. We knew what our property tax bills were. The majority of us were OK with a reasonable increase. Then property valuations exploded and our bills shot up. But sensible and reasonable solutions were made difficult by our convoluted system.

In other words, Colorado’s property tax system has long been outmoded. The housing crisis just further exposed the limits of flexibility in the methodology.

Hopefully, House Bill 1001 is the sensible and reasonable solution we need. Putting an end to our “property tax wars” was a must. So too was preventing property owners from facing stiff increases, while simultaneously keeping all the services funded by our property tax dollars functioning.

And hopefully, lawmakers will be open to continuing to work on our property tax system. Because as it stands, some fire districts are concerned about the scale of the cuts even in this compromise bill. Considering how important our fire districts are here in Colorado, this issue, and any others that appear along the road to implementation of HB-1001, must be addressed.

Finally, it is vital that we continue striving to address the root of our increasing valuations: the housing crisis. We must not forget the role that it is playing in all of this. Scarcity of stock lays the groundwork for demand to drive prices ever higher — dragging property taxes up with it. Continuing to address our dire need for housing will have positive ripple effects around our state.

— Gary Garrison for the Editorial Board