Ken-Caryl staff warn new state property-tax cap will limit 2026 revenue; DOLA guidance issued

Emily, a staff member, told the Ken-Caryl Metropolitan District Board on Sept. 9 that a new state property-tax revenue cap passed in 2024 will limit the district's allowable revenue for 2026 and that state guidance to implement the law only recently became available.

The new law creates a growth limit the board described as effectively 10.5% over each two-year reassessment cycle (commonly shortened in the meeting to a 5.25% annualized cap). Emily said local officials must calculate a district-specific base amount and any carryover amounts before determining what the district can legally certify for 2026.

Emily said the legislation was adopted after an interaction between a ballot initiative and the legislature and noted the resulting statute is complex. "This is so complex," she told the board, adding that the Colorado Department of Local Affairs (DOLA) published a technical guidance document last week to help local governments apply the new cap.

Why it matters: the cap affects how much property-tax revenue the district can lawfully receive and therefore directly affects the 2026 budget and the district's planned capital projects. Staff told the board that, if a district certifies a mill levy that results in revenue exceeding the cap, the district will be required to reduce future mill levies and effectively refund overcollections by reducing a subsequent year's levy.

During the presentation, staff said several key inputs to the formula are not yet settled or publicly available. Emily identified the growth-rate percentage (10.5% over two years) as known, but said the district must still determine its legally defined "base amount" of qualified property-tax revenue and whether any exemptions (for example, new construction) will be included or excluded in different parts of the formula. She also told the board that DOLA's guidance contains places where legal interpretation will be necessary and that DOLA explicitly framed its document as advisory.

Board members and staff also noted timing uncertainty: the statewide presidential assessment rate for 2025 (which affects assessed values) will not be finalized until Oct. 10, and the district must rely on an estimate until then. Staff recommended budgeting conservatively for 2026 while the industry develops a standardized calculator or other practice for applying the cap.

Emily urged the board to expect continued state-level guidance, potential court cases in the future if entities ignore the law, and a likely multi-year process to settle implementation. "At this point some information is better than no information," she said, while cautioning that local governments nationwide are still working to interpret the statute.

The board did not take any formal action on the tax-cap presentation; staff said they will return with calculations and recommendations as more information becomes available.

Ending: Staff recommended conservative budgeting for the district's 2026 budget and said the district will continue to monitor DOLA guidance, state rulemaking, and legal developments closely.