Property Taxes Rising Too Fast? A New Bill Aims to Cap Local Revenue Growth at 4%

What This Bill Actually Does

Under current Colorado law, there is a limit on how much extra cash a local government or special district can collect from property taxes each year without asking voters for permission. Usually, this statutory cap is set at the previous year's revenue plus 5.5% (with some exceptions built in for new construction or land annexations). For school districts and jurisdictions where voters have "waived" certain limits, the math is slightly different, allowing revenue growth anywhere from 5.25% to 6% per year during a reassessment cycle.

If property values skyrocket and tax revenue would naturally exceed those caps, the taxing entity has to lower its tax rate—known as the mill levy—so they do not over-collect. It is an automatic safety valve designed to protect property owners from sudden, massive tax hikes.

House Bill 26-1209 hits the brakes on that revenue growth. It temporarily drops all three of those statutory limits down to a flat 4%. This means that starting in 2027, local governments, special districts, and school districts will hit their revenue ceilings much faster. When they hit that new, lower 4% ceiling, they are legally required to reduce their mill levies, which translates directly to tax relief for property owners.

Here is the critical catch: this is a temporary measure. The 4% cap would apply to property tax years beginning January 1, 2027, and it automatically expires before January 1, 2033 (reverting to the old rules). Also, the bill clarifies that if local voters have previously approved a ballot measure to completely bypass these limits—a move often called "de-Brucing"—that voter approval still stands. However, for the many jurisdictions still operating under the state's growth formulas, this represents a significant tightening of the belt over a six-year window.

What It Means for You

If you own a home in Colorado, you already know the sticker shock of recent property reassessments. When your home's assessed value shoots up by 30% or 40%, your tax bill often follows closely behind. This bill is designed to act as a shock absorber for your wallet. By capping local government revenue growth at 4% instead of the usual 5.5% or 6%, local taxing authorities—like your fire district, library district, or school district—will be forced to lower their tax rates if property values spike. Ultimately, this means a slower-growing property tax bill for you from 2027 through 2032.

However, there is always a flip side to tax relief. The money your local government is not collecting is money that does not go to your kid's public school, the local fire department's operating budget, or neighborhood pothole repairs. If you live in an area with rapidly growing infrastructure needs, local leaders might argue this 4% cap starves them of the funds necessary to keep up with inflation and population growth. It is a genuine trade-off between keeping cash in your bank account and funding civic services. It is also worth noting that if you live in a home rule municipality, or a district that has entirely waived these limits via a past ballot measure, you might not see any change to your specific bill.

Here is what you should do right now:

• Check your local taxing districts: Pull up your last property tax statement. You can see exactly which local entities take a slice of your taxes. Research whether they are subject to state revenue caps or if they have previously waived them.
• Make your voice heard: This bill is currently sitting in the Transportation, Housing & Local Government Committee. If you feel strongly about capping property taxes—or if you are worried about protecting school funding—email the committee members before it gets scheduled for a public hearing.

What It Means for Your Business

For Colorado business owners, commercial property taxes are notoriously heavy because the assessment rate for commercial real estate is significantly higher than for residential property. If you own your storefront, warehouse, or office building, HB26-1209 offers a predictable, tighter lid on how fast your property tax burden can escalate over the next half-decade. When local governments are capped at 4% revenue growth, they have to adjust the mill levies downward during boom years, providing a direct boost to your bottom line starting in 2027.

If you lease your space under a Triple Net (NNN) lease, you will also benefit from this legislation. Since property taxes are passed directly through to the tenant in a NNN lease, a lower growth rate on the building's tax bill means your monthly overhead won't spiral as aggressively. On the other hand, if your business relies on local government contracts—say, you are a general contractor building municipal facilities, an IT firm servicing local school districts, or a fleet supplier for county governments—be aware that this bill restricts their future buying power. A tighter budget for them could mean fewer public contracts and delayed capital projects for you.

Here is what business owners should do this week:

• Project your overhead: If you are negotiating a long-term commercial lease that extends past 2027, factor in this potential stabilization of property tax pass-throughs. It could change how you model your future operating expenses.
• Assess your client base: If local government agencies make up a significant chunk of your revenue, start preparing for them to have tighter operating budgets between 2027 and 2032. It might be time to diversify your pipeline now before their budgets get squeezed.

Follow the Money

Because this bill restricts local property tax revenues, the direct financial impact falls squarely on local governments, special districts, and school districts, rather than the state's general fund. By reducing the growth cap from 5.5% (or 6%) down to 4%, local entities will collectively "lose out" on millions of dollars in potential revenue during years when property values surge. It essentially acts as an automatic check, leaving that money in the pockets of taxpayers instead of transferring it to local government coffers.

However, there is a massive hidden cost to the State of Colorado. Under the state's school finance formula, the state is legally required to backfill school district budgets to meet a certain per-pupil funding threshold. If local school districts are collecting less property tax revenue because of this new 4% cap, the state government will have to dig deeper into its own budget to make up the difference. We will not know the exact multi-million-dollar figure until the official Legislative Council Fiscal Note is published, but you can expect the state's obligation for K-12 education funding to increase significantly starting in 2027. This could put serious strain on the state budget, potentially pulling funds away from other state-level priorities.

Where This Bill Stands

HB26-1209 was officially introduced in the House on February 12, 2026, by Representative Larry Don Suckla. It has been assigned to the House Transportation, Housing & Local Government Committee. Right now, it is in the very first stage of the legislative process and is waiting to be scheduled for its initial public hearing.

This bill is going to be heavily watched. You can expect strong support from business coalitions and taxpayer advocacy groups looking for relief, and equally strong opposition from local government associations, school boards, and special districts concerned about impending budget shortfalls. Because it touches the notoriously complicated web of property taxes and school finance, it will likely face rigorous debate and potential amendments before it even gets to a full House vote. Keep an eye out for the committee hearing date—that is your first window to provide public testimony and shape the outcome.