Are two tax amendments threatening Colorado’s ability to sustain some of its most essential community services?

RBC | Panelists at Club 20’s March 31 conference in Grand Junction targeted the so-called “Taxpayer’s Bill of Rights” or the TABOR amendment, as a major cause of the growing fiscal dilemma in Colorado.

TABOR was added to the Colorado constitution in 1992. The amendment limits government agency tax revenues (tied to the Consumer Price Index) and requires taxpayer approval of any taxation increases.

Rapidly increasing population and the number of homes, together with the increases statewide in residential property values, have caused the residential assessment rate, in order to stay at that 45 percent proportion, to drop from 21 percent in 1982 to 7.2 percent this year under the 1982 Gallagher amendment, which limits residential property tax collection to 45 percent of total property tax revenues. The rate is predicted to drop to 6.1 percent next year. This causes local governments and special districts dependent on property tax revenues to have to look at increasing mill levies which, under TABOR, would require a vote of the affected taxpayers. All this tends to play out badly for rural districts, especially where property values may not have risen so significantly.

Maintaining revenues in the face of the downward ratcheting of the Gallagher amendment will require mill levy increases which then require TABOR ballot issues. Colorado Mountain College (CMC) pursued that route last year and failed, discouraging many local governments and leaving elected officials wondering how needs would be met. The CMC proposal earned only 47 percent of the vote even though it reportedly had significant support from the business community.

Possible solutions include removing the Consumer Price Index language from TABOR (which would require another Constitutional amendment) and freezing the current residential assessment rate at the current 7.2 percent level until 2022, by which time the legislature or other social engineers could conjure a further fix.

According to panelist Carol Hedges, executive director of the Colorado Fiscal Institute in Denver, TABOR, Gallagher and other tax policies put into the state Constitution have taken taxing authority and spending options away from our local elected officials, and that Colorado is the only state to have gone this far. One result, she said, is that the state share of K-12 education funding in Colorado has shifted from 46 percent state vs. 54 percent local in 1982 to 66 percent state vs. 34 percent local in 2016. She wonders “whether or not Colorado Constitutional policy will continue to hinder our ability to support and protect our way of life in the state.”