Club 20 addresses restrictions of Colorado Tax Policy; fire districts example

RBC | Saturday, March 31, some 120 attendees at Club 20’s annual spring conference in Grand Junction heard from U.S. Senator Michael Bennet (D) and then Colorado’s Third District Congressman Scott Tipton (R-Cortez). Thereafter, the organization devoted more than half of its day-long agenda to presentations and discussions about the creation and local government impacts of the 1982 Gallagher and 1992 TABOR (Taxpayer Bill of Rights) Amendments to Colorado’s Constitution.

The lead-off speaker was Carol Hedges, executive director of the Colorado Fiscal Institute, officed near the State Capitol in Denver. Hedges, a Kansas native, started by extolling the virtuous beauty and splendor of Colorado, stating “her passion that we are incredibly privileged to live here.” While her manner remained very invigorated, her attitude toward the wonders of the state reversed as she explained that the state’s taxation policy including Gallagher and TABOR are locked into the Constitution. Other related taxation and spending policies, she said, also set in the Constitution, include the Amendment 23 provisions for annual increases in K-12 school funding (hasn’t been possible), the prohibition on general obligation debt and the requirement that annual state budgets be balanced.

Gallagher, approved by voters in 1982, was intended to equalize property tax rates on nearby properties which then, very often, were unfairly uneven. The Gallagher formula established that residential property not make up more than 45 percent of property tax collections in the state. Commercial property taxes were to comprise the other 55 percent. The amendment also required that property valuations be re-appraised based on market value every two years. The original 45/55 split equated to residential property being assessed at 21 percent of value while commercial properties were assessed at 29 percent.

With tremendous growth in the number of residences in the state and their statewide value since 1982, the residential assessment rate (RAR) has been forced down to 7.2 percent this year and is projected to be down to 6.11 percent for 2019, according to the Colorado Association of Fire Chiefs, which would represent a 23 percent reduction in the residential tax base over the 2017 to 2019 time frame. The chiefs ask “what business, much less a fire department, can absorb this kind of reduced revenue while demand for services continues to rise? More than half of all fire departments in the state are fire protection (special) districts which depend on residential taxes for 60 to 100 percent of their budgets.

The negative impacts of the continued reduction of the RAR on fire districts also hit all fire departments, other special districts and school districts. In rural Colorado, where home values may grow more slowly, if at all, special district budgets are hit even harder as they’re saddled with the state RAR.

The fire chiefs were represented at the Club 20 discussion by Grand Junction Fire Chief Ken Watkins. Watkins urged attendees to push for at least a temporary solution, a bill in the legislature that would keep the RAR at 7.2 percent until 2022 giving stakeholders and the legislature time to find longer term solutions.

Hedges went on to explain how provisions of the 1992 TABOR Amendment have interplayed with Gallagher to make Colorado’s fiscal management even more difficult. For one thing, she reported, it has “taken away fiscal authority from Colorado’s elected officials.”

Rio Blanco County is one of the 20 Western Slope member counties of Club 20. Members of the chamber of commerce-like Club 20 in each county elect three delegates to represent their county on the Club 20 board of directors. RBC is currently represented by Jeff Rector, Si Woodruff, and this writer.