If you’ve ever worked out or gone for a swim at the rec center, enjoyed a nice walk in the park, dropped your kids off to school, visited a departed loved one in the cemetery, walked through the doors of the local hospital, or flushed a toilet, you’ve benefited from a local tax district.
WHAT ARE SPECIAL TAX DISTRICTS?
From the schools to water conservancy to firefighting to pest control and more, tax districts exist to fund specific public projects and services not otherwise offered by the county or municipality of which they are a part. Rio Blanco County has 26 tax districts, including three K-12 school districts, the junior college district, and 22 “special districts” or bonds.
Examples of services provided by special districts in RBC include hospitals, water and soil conservation, pest control, fire protection, parks and recreation, sanitation, libraries and cemeteries. The districts are defined by set geographic or political boundaries such as city limits, areas that will benefit from the projects or services being funded by the district, or even areas most in need of a specific project or service. For example, a special tax district could fund the installation of new utility lines in an underserved area, in which case the boundaries of the district might relate to the area that would be served by the new utilities.
No matter how boundaries are drawn, they must be clearly defined so that property owners in the district know whether they will be subject to the special taxes or fees it imposes. This can sometimes cause confusion for landowners due to multiple overlapping district boundaries all with different mill levies and/or bonds. County Assessor Renae Nielson encourages taxpayers with questions about the districts to reach out for clarification of district boundaries, mill levy details or other general information about tax districts. “I talk to a lot of people and show them the map and they’re like, oh, OK, this is where I live. That’s why I pay into whatever,” stated Nielson. She referenced a map available for public viewing at the Assessor’s office and noted that RBC residents can come view it and ask questions anytime.
HOW ARE TAX DISTRICTS FUNDED?
These districts are funded in large part by mill levies (property taxes expressed in mills). A mill is equal to one-tenth of a cent, so a mill levy of 10 mills equals one cent in taxes for every $1,000 of a property’s value. For example, if a city has a mill levy of 10 mills and the taxable value of a particular property is $100,000, the property owner would owe $100 in property taxes (10 mills x $100,000 / 1,000 = $100).
Districts can also propose “bonds,” to fund specific projects such as the renovation or construction of buildings and other infrastructure, to fund new services, or be used generally as additional funding mechanisms for the district. Generally bonds are proposed with a set dollar amount, meaning once that amount is reached via collection of property taxes, the bond is then “paid off” and the collection of the bond-specific mill levy/tax stops.
Per state statute, property values are assessed every other year. Fluctuations in value can have major impacts on local governments and district services. In RBC this is particularly true for oil and gas/Industrial property values, which represented 73% of assessed value in the most recent budget cycle. “We are pretty much contingent on that oil and gas and industry property tax and sales tax, that’s where it all comes from,” said Janae Stanworth, RBC Budget and Finance Director during a special meeting this month when the board of commissioners approved the 2023 budget. She also noted RBC’s mill levy is one of the lowest in the state.
HOW ARE NEW TAX DISTRICTS CREATED?
In Colorado, the taxpayers bill of rights (TABOR) prevents government entities from increasing existing mill levies, or proposing new ones. Instead, creating new tax districts and funding public infrastructure projects falls to the public in the form of ballot measures. This is also one of many reasons why elections are handled at the county level, since each county votes on different tax increases and special bonds almost every year.
Alternatively, tax districts can decrease their mill levies and take a temporary “credit levy,” without a ballot measure. Renae Nielson said it doesn’t happen that often, but said when it does, it’s generally because districts decide they don’t need the excess funding that comes after a significant increase in property valuations.
Nielsen also highlighted that even though the assessor’s office is responsible for property valuations, it’s not responsible for how much tax may be collected in every case, since among other factors, lowering mill levies falls under the jurisdiction of each individual district.
WHAT RULES DO TAX DISTRICTS FOLLOW?
Statutes governing special tax districts are extensive, as different rules apply to different types of districts. Some statutes impose limits on how many mills a district can collect, others regulate which types of property within a boundary are eligible for tax collection, or set special requirements for things like oversight and transparency.
In general, tax districts function as governmental entities that are in some ways similar to municipal and county governments, for instance, they’re overseen by special boards made up of elected or appointed representatives. These boards are often volunteer, but they can also allocate funding to pay members. Most district boards also employ and oversee staff who run district operations.
As public entities, district oversight means public oversight. Elected boards are subject to open meetings rules, or “Sunshine Laws,” meant to ensure accountability and transparency. Among other requirements, districts must publish notices of board meetings including agendas in designated public locations prior to meetings. They are also required to keep meeting minutes available for public inspection; cannot meet, discuss, or make decisions about district business outside of official, publicly disclosed meetings; and more. You can (and should) read more about Colorado’s open records and open meetings laws at coloradofoic.org/open-government-guide
By LUCAS TURNER | [email protected]om
