A ballot measure to redirect 0.1% of state income tax revenues toward a range of affordable housing efforts was being tightly contested in early results on Tuesday night.
Proposition 123, a citizens’ initiative, received 418,862 votes in favor and 410,729 against, which worked out to 50.55% in favor and 49.45% again. It seeks to generate $145 million in the 2022-23 state budget and $290 million in the following year to provide funding for downpayment assistance, homelessness prevention, and eviction defense as well as to support land purchases for affordable housing developments. Tenants in those taxpayer-funded projects would receive a share of the profits coming from the development.
Supporters, who included a coalition of more than 180 organizations, including Gary Community Venture and the Colorado Association of Realtors, argued that the lack of affordability and the instability that creates is a top issue in the state and necessitated providing a permanent funding source one that didn’t require a tax hike. Lower-income Coloradans needed to have affordable units within reach and maintain a presence in the community. The funding would also provide tenants with equity that could in turn help them build up savings needed to make down payments for homes of their own.
Opponents noted a state analysis that showed refunds under TABOR would be $86 lower per taxpayer in 2024 and there were concerns about how the measure would interact with another ballot measure, Proposition 121, to cut state income tax. If both passed, then there wouldn’t be much flexibility left in the general fund.
The programs also require the participation of local governments which isn’t necessarily guaranteed and funds would be set aside each year regardless of other funding priorities that might arise in a year with lower tax collections. Colorado is already seeing slower population gains and if construction catches up, that could result in a more market-based solution.