The senior homestead exemption for property taxes, amended into the state constitution by voters in 2000, has once again been put on hold through a bill signed into law by the governor last week. The move continues a succession of legislative flip-flops over whether to allow the exemption amid the state’s budgetary straits.

The exemption allows people over age 65 who have lived in their homes at least 10years to exempt 50 percent of the first $200,000 of actual home value from taxation.  The constitutional amendment allows the legislature to suspend or adjust the tax exemption in any given year.  This year, Senate Bill 190, signed into law by Gov. Bill Ritter,  suspends the exemption until 2012.

Since its inception in 2000, the exemption has been a part of budget negotiations in every year that there has been a shortfall in the state’s revenue, this year’s $3.4 billion shortfall being no exception. In 2003, the exemption was suspended by Republican-led majorities and a GOP governor.

This year’s legislation came courtesy of Democratic-led majorities and a governor of the same party–over the heated objections of almost all House and Senate Republicans.

One consistent vote throughout the years has been Rep. Jerry Frangas, of Denver, who was the sole Democratic vote in the House against suspending the exemption.  Frangas said he has always sided with his north Denver constituents, nearly half of whom are over 60 years of age.

“Property values in my district have skyrocketed, affecting people’s property taxes, and we have a large percentage of people who are older, and this really does have an impact on people on a fixed income,” said Frangas.

Citing examples of constituents priced out of their homes by tax increases, Frangas said he has to stick up for his district residents, who support the exemption by almost 100 percent in surveys of his north Denver neighborhood.

Kelli Fritts, of the American Association of Retired Persons (AARP) in Colorado, said that while the AARP did not take an official position on SB190 as it made its way through the legislature, its members are very concerned whenever the exemption is called into question and that the AARP would like to see a broader fiscal solution that would allow for the exemption.

“We do get calls from our members that are concerned about losing the exemption, but it’s a concern to everybody,” said Fritts.  The problem is how to fund it. If there’s no money in the general fund to reimburse those local municipalities there’s no money to fund the exemption. What we need is an increase in revenue to fund it (the exemption) to put it bluntly.”

The GOP’s Sen. Greg Brophy, of Wray, is one of the Republicans who supported the suspension in 2003 but voted against it this year. Brophy said that he doesn’t agree with how the Democratic majority handled the budget and sought revenue dollars during the most recent recession and couldn’t support SB 190 in light of the misguided decision making.

“It’s really about the way that the Democrats have prioritized budgeting in Colorado and the way that they have increased taxes and fees to an extent that I think overreached in many ways,” said Brophy.  “The suspension of the senior homestead property tax exemption came on the heels of the mill levy freeze tax, the car registration fee tax, and the hospital bed tax.”

Brophy agreed with Fritts that what is needed is a fiscal solution that allows for a more proactive approach to budgeting. He conceded that Republicans mishandled the exemption issue the last time they held power.  Brophy said he thinks Colorado needs a limitation on the growth of government during good times and a rainy-day fund to sustain the budget through the bad times.

“We did a bad job, but a much better job than the Democrats did,” said Brophy. “If we look at the suspension of an exemption, we should do it because its good policy–not like the Democrats did it, because they want the money.”