We find it interesting how excited folks in Colorado get when there’s an opportunity to cut their taxes, even though we already enjoy one of the lowest tax rates in the nation: Colorado is ranked 45 of 50 in Total State Taxes. (http://www.coloradofiscal.org/wp-content/uploads/2017/02/Colorado-Fiscal-Institutes-Tax-Basics-2017.pdf)
How Selected State Taxes in Colorado Compare per $1,000 of Income (FY 2013-14) Source: U.S. Census Bureau and Bureau of Economic Analysis
|Colorado||50 State Average|
|Total State Taxes||45 of 50||$46.30||$155.24||$33.08||$60.09|
|Sales and Use||44 of 45||$10.30||$43.74||$0.00||$18.83|
|Individual||26 of 43||$22.29||$41.39||$0.00||$21.58|
|Corporate||29 of 46||$2.83||$10.79||$0.00||$3.21|
|Motor Fuel||38 of 50||$2.55||$6.62||$1.08||$2.88|
|Alcohol||43 of 50||$0.16||$1.03||$0.06||$0.43|
|Tobacco||39 of 50||$0.76||$3.12||$0.15||$1.17|
COLORADO FISCAL INSTITUTE | JANUARY 2017 pg.10
Lately, there’s been a lot of buzz about the Gallagher Amendment (to the Colorado Constitution) that will lower our property tax rates. Currently our property tax rates are set at 7.96%. This is the tax that pays for schools and metro services such as fire departments.
“A report from the Legislative Council, released April 17, sets the assessment rate for 2017-18 at 7.2 percent. While the rate is not as low as economists predicted, localities across the state will still miss out on more than $5.4 billion that could be used for schools and other services.”
An important aspect of Gallagher is that it also has set in stone a provision –
“… that the amount of revenue collected from residential property taxes must always be lower than the amount from nonresidential property taxes at an approximate ratio of 45 percent to 55 percent.” (https://legisource.net/2016/01/21/gallagher-amendment-reduces-residential-property-tax-bills/)
This means our “nonresidential property taxes” or our businesses carry 55% of our local funding burden.
For those of you who have been involved in school mill levy and bond campaigns, this is the key reason it’s sometimes so difficult and so important to get the business community to sign on in support of the issue. It’s because they pay 55 percent of any increase.
In Jeffco, 47% of our funding for public schools comes from our property taxes, the state backfills at 46% and the small difference comes from tuition fees and Specific Ownership Tax.
What this means is as the rate for residential property taxes drops from 7.96% to 7.2%, 45% of the local funding for schools will also drop.
For the 2016/17 school year, Jeffco’s collected Property Taxes were $322,703,505 – 47% of our total funding. With the decrease in assessment property tax rates, that number shrinks.
Need we remind you, Jeffco Schools continues to struggle to deal with the failure of the 2016 mill/bond? Our school staff deserve many kudos for doing great work with less, but how much longer can we expect these results when our resources continue to shrink, but the cost of living and doing business, and other expenditures grow?
Even our conservative friends in Douglas County are concerned about the impact this change can and will be to all of our Colorado communities. http://arvadapress.com/stories/assessor-cites-downside-to-falling-property-tax-rates,246081
Douglas County Assessor Lisa Frizell claims, “… we’re going to see is this perfect storm that’s been 27 years in the making…”
“Property tax assessment rates have been falling despite increasing property values. The reason, in short, is an amendment to the state Constitution that limits the amount of revenue that can be collected from homeowners.
“Lower assessment rates mean the local districts collect less revenue to fund schools and other government services. As the population and demand for those services increase, mill levies for schools and fees for other services like water and sanitation will have to increase to cover the shortfall…”
Even Conservative Colorado Senate Majority Leader Chris Holbert, R-Parker, “…said he thinks voters … may feel differently if they understood how paying less in property taxes can lead to higher mill levies.”
We’d love to know what you think.
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