Proposition NN is on the Colorado ballot for voting on November 3. On the surface, it discusses K-12 education funding, but if you read the bill closely, it also addresses senior property tax exemptions.

If you currently receive or are about to receive a senior homestead exemption, this is something you need to consider. To put it simply, the exemption itself is not up for a vote. What's at stake is where the funding for that exemption will come from.

Let's start with the basics. The Colorado senior homestead exemption allows homeowners to deduct 50% of the first $200,000 of their home's actual value from taxable income.

This means up to $100,000 in value is excluded from property tax calculations. To qualify, you must be 65 years or older as of January 1, and have owned the home for at least 10 years as your primary residence.

Many people overlook an important point here. The reduction in taxes comes from local government revenue, such as counties and school districts, not from state government tax revenue.

Therefore, the state government must reimburse local governments for that loss. This is the reimbursement obligation.

Under current law, this reimbursement is categorized as one of the TABOR refund mechanisms. If excess tax revenue exceeds the TABOR limit, that money is first used to cover the senior exemption, and if there's a shortfall, it's filled from the General Fund.

This means that the senior exemption currently relies on TABOR excess revenue. This is the connection to NN.

So what exactly does NN do? It is a state legislative amendment that allows the state government to keep and use the money collected beyond the TABOR limit instead of returning it to taxpayers. The state legislature has referred it as SB26-135.

The new limit is the existing TABOR limit plus the highest past K-12 education spending amount. The official voter guide, the Blue Book, explains that the first-year limit will be $4.6 billion higher than the current limit. The actual amount retained will depend on that year's tax revenue.

The order of spending is key. According to the Blue Book, the retained funds will first be used to reimburse local governments for the property tax exemptions for seniors, disabled veterans, and spouses of Gold Star families.

Any remaining funds will go into a newly created Children's Account. For the first 10 years, at least half of this account will be used for K-12 education, with the rest allocated to child programs like preschool and childcare.

Looking at the numbers makes it clearer. The Blue Book's financial analysis shows that the property tax reimbursement for the 2027-28 fiscal year is estimated at $206.1 million.

In the same year, K-12 and child programs are each estimated at $234 million. The priority of property tax reimbursement is clearly reflected in the table.

So how much will taxpayers lose? The Blue Book estimates that if NN passes, TABOR refunds will decrease by $329.9 million in 2026-27 and $521 million in 2027-28, and those refunds will disappear in those two years.

On an individual level, the impact varies. A single filer with an income of $50,000 would see a refund of $21 in 2027 and $39 in 2028 under current law.

A couple filing jointly with an income of $100,000 would see refunds of $56 in 2027 and $96 in 2028. If NN passes, these amounts will all drop to $0.

These numbers are surprisingly small, which was a bit shocking. However, the Blue Book notes that there can be significant annual variations, and in some years, taxpayer refunds could drop by over $1,000 per person.

From a senior's perspective, there's a critical point to consider. If NN is defeated, the homestead exemption will not disappear. The reimbursement obligation remains under current law, and if excess tax revenue is insufficient, it will be filled from the General Fund.

Even if it passes, the exemption amount or eligibility criteria will not change. What changes is that the reimbursement obligation shifts from being a refund mechanism to the first use of retained tax revenue.

So saying that seniors must support NN to protect the exemption is only partially correct. A more accurate statement is that the funding will be tied to a slightly more stable source.

There's also one more variable. Proposition 137, which is also on the same ballot, reduces the tax revenue that counts toward the TABOR limit.

The Blue Book explains that if 137 passes, the actual amount of money retained under NN could decrease or even disappear. This is why the two cannot be viewed separately.

To share my opinion, I lean toward the opposing side. After the first 10 years, any remaining funds can be used for any purpose determined by the legislature, and the new limit continues indefinitely.

I acknowledge the data indicating a need for investment in education. However, if it's a permanent structural change, I believe the order should be to first demonstrate spending efficiency.

There is certainly a clear logic from the supporting side. The fact that already collected funds are being used for teacher compensation and class size reduction, and that spending details by school district are being made public, is commendable from an accountability perspective.

Practically, here's what I would do. Before voting, check the original Blue Book for the NN section and the financial analysis table directly. Seeing the numbers for how much refund will be lost in your income bracket is the quickest way to understand.

And if you haven't applied for the exemption yet, regardless of this vote, check your eligibility with the county assessor's office. The application deadline is July 15 each year, and once approved, you don't need to reapply every year.

Tax or exemption eligibility can vary based on individual circumstances, so it's advisable to confirm with a tax professional or the county assessor. A single ballot can change years of refunds and budget structures, so focus on the numbers rather than the labels when making your decision.