What is Amendment B – Real Property Tax Assessment Rates ( Partial Gallagher Repeal) on this November’s Ballot
If Amendment B does not pass this November, the Residential Assessment Rate (RAR) (how property taxes are calculated) will drop from the current 7.15% to 5.88%. There will be a significant impact on local government funding such as County revenue, Fire, Water and Special District funding, and especially School district funding where the local share is the first source of funding followed by state funding:
Per Jeffco Schools Director of Budget and Treasury: “For Jeffco schools, the current estimate is a loss of $31.0M”
Jefferson County is expecting to see a $29M decrease in revenue
Some background information:
State Property Tax Administrator JoAnn Groff presented to the Joint Budget Committee (JBC) as a brief addendum to the May revenue forecast. She explained, “The mechanics of how the Residential Assessment Rate is calculated, like everything related to Colorado finances, is complicated.
“The impact to school districts,” is that the residential assessment rate likely will have to drop next year from 7.15% to 5.88%. Groff calculates that will mean a $246 million drop in district Total Program Funding revenues – which the state will have to backfill in 2021-22 – a $490 million drop in all school district revenues, including MLOs and bonds, and a $203 million drop in revenues for counties. Again, an important caveat is that when the state does not have the revenue to backfill K-12, the Budget Stabilization Factor increases, currently $1.7 Billion (dollars the state owes K-12 education). An important caveat is that when the state does not have the revenue to backfill K-12, the Budget Stabilization Factor increases (currently the Budget Stabilization Factor -aka BS Factor – is currently $1.7 Billion the state owes our schools).
See video below to see Gallagher Amendment explained by the Colorado Fiscal Institute.
Here’s the Ballot Language from the Legislative Council’s Impact Statement:
Partial Gallagher Repeal – Senate Concurrent Resolution SCR20-001 http://leg.colorado.gov/bills/scr20-001
Ballot Language: “Without increasing property tax rates, to help preserve funding for local districts that provide fire protection, police, ambulance, hospital, kindergarten through twelfth grade education and other services, and to avoid automatic mill levy increases, shall there be an amendment to the Colorado Constitution to repeal the requirement that the general assembly periodically change the residential assessment rate in order to maintain the statewide proportion of residential property as compared to all other taxable property valued for property tax purposes and repeal the nonresidential property tax assessment rate of twenty-nine percent?”
The legislature also passed a companion bill, Senate Bill 20-223 which would take effect if voters approve the constitutional amendment. Senate Bill 223 would prohibit the legislature from changing assessment rates for property, thereby freezing the current rates of 7.15% for residential property and 29% for non-residential property in state statute. SB223 would allow the legislature to adjust the assessment rate in state statute. Under the Gallagher Amendment, property tax assessment rates were expected to continue to decrease. Therefore, repealing the Gallagher Amendment and freezing property tax rates at current levels was expected to result in higher residential assessment rates than under the Gallagher Amendment.
SB20-223 Fiscal Note: http://leg.colorado.gov/sites/default/files/documents/2020A/bills/fn/2020a_sb223_f1.pdf
Bonus: The Gallagher Amendment explained in a video by the Colorado Fiscal Institute: