There’s a funny thing about Amendment B, which asks if the Gallagher Amendment to the Colorado Constitution should be repealed. Adopted in 1982, Gallagher requires a fixed ratio for how residential and nonresidential property tax revenues are assessed, and proponents from schools to special districts and business interests say the methodology, as it now exists, is broken.
Unlike most ballot measures where there are clear constituencies advocating for one position or another, organized groups advocating for a no vote on Amendment B, which would leave the constitutional provisions in place are not easy to find. An issue committee, Keep Property Taxes Low, has raised $750,000 to defeat the measure, according to Michael Fields, executive director of Colorado Rising Action.
As written, Gallagher mandates a 45% to 55% division between residential and commercial properties. Since 1982 when Gallagher became part of the state’s constitution, the residential assessment rate, once set at 21%, has declined to 7.15% of the assessed value. Noncommercial tax assessment rates remain fixed at 29%, which businesses claim leaves them with an unfair and unsustainable burden since residential properties are the majority in rural areas.
“Commercial properties are taking the brunt,” said Deb Bamesberger, Pitkin County’s assessor. And if Gallagher isn’t repealed, the residential rate could drop further, to 5.81 or below, she speculated. The impact to schools and special districts could be severe.
“The largest concern from the Colorado Department of Education is if Gallagher stays in place school districts with a mill levy ceiling may not be able to fully fund their Mill Levy Override,” said Linda Warhoe, chief financial officer for the Aspen School District, in an email. She went on to say this could amount to “a double whammy” for certain school districts and potentially equate to lower per pupil amounts received from the state in the future.
The Colorado Association of School Boards created a Sample Resolution to Repeal the Gallagher Amendment for use by school boards to present the general facts about Amendment B, said Aspen School board of education member Susan Marolt. She said ASB has not adopted the resolution.
Repealing Gallagher could provide Colorado Mountain College, which is funded by taxes from seven counties, with some budget stability, said its chief operating officer Matt Gianneschi. And when it comes to future curriculums, funding predictability is sought. That will be seen in the continued offering of classes like English as a second language and police and fire training, at affordable levels, he said.
“Funding enables the mission,” Gianneschi said. “When there’s volatility then some choices have to be made, how we offer them, how we price them.
“Unfortunately, Gallagher throws a wrench into the predictability. If Gallagher remains unchecked, the residential rate can only go one direction, decline,” he said.
Bamesberger, county assessor since Jan. 2019, said within the town of Redstone it may be seen how residential and non-residential assessment imbalances are damaging commercial businesses (she pointed out that the general store has closed). A hefty mill levy to support the town’s water and sanitation district is also impactful.
“Pitkin County doesn’t have a lot of commercial businesses. Neither do Eagle or Garfield” counties, Bamesberger said. “Rural communities are going to suffer — special taxing districts, schools, hospitals — because we don’t have the volume of cities.”
Michael Adams, who is part of the BJ Adams brokerage team with Compass real estate, said if Gallagher is not repealed, “A lot of commercial businesses will not be able to survive,” and that the timing now was as good as any to make this change.
The period assessors will use for this next taxing year is July 1, 2018-June 30, 2020. In the 2023 reappraisal year, the period of July 1, 2002-June 30, 2022 will be used, according to Bamesberger.
Asked if two years down the road will the Gallagher Amendment’s repeal (should it pass on Nov. 3) be felt by local property owners, Pitkin County’s assessor said, “There is that possibility. The way they’ve got it now is the next three years are frozen at 7.15% of the assessed value. After three years there will be an opportunity to raise residential rates. Nobody knows,” she said.
According to the state of Colorado’s 2020 information booklet, should Amendment B pass and Gallagher goes by the wayside, “any future increases in the assessment rates would require a vote of the people.”
Michael Fields of Colorado Rising Action said in an email that "There are a lot of people concerned about the impact of higher property taxes on Coloradans - especially seniors and low income people."