Vail Valley districts watching effort to repeal tax amendment
Amendment's cuts to residential property tax assessments have hit hard in the state's special districts
Those who run and work for special districts in Colorado are usually pretty busy with their own affairs. But special districts throughout the state are keeping a careful eye on a bill making its way through the Colorado legislature.
If passed, SR20-001 would ask voters in November to repeal the Gallagher Amendment to the state constitution. The bill requires two-thirds majority votes from both the House and Senate to send the question to voters.
The Gallagher Amendment, passed by state voters in 1982, established a ratio for commercial and residential property taxes in the state. Under the amendment, commercial property owners will always pay 55% of a jurisdiction’s property tax collections. The rest is paid by residential property owners.
Since more homes are built than commercial property, the assessment rate on homes needs to continually fall to meet the amendment’s ratio.
The decline in the assessment rate means trouble for districts that rely primarily on property taxes from residential property owners.
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Those districts range from school districts and library districts to cemetery districts to fire and ambulance districts.
The Gallagher effect between 2016 and 2018 essentially erased a property tax increase voters approved for the Gypsum Fire Protection District. In fact, the district hadn’t even had a chance to allocate money from the tax increase before the state’s bi-annual property re-assessment took away all of the increase’s gains.
As a result district officials asked voters another question, this time to essentially exempt the district from further residential assessment rate decreases. Voters approved.
The next round of rate decreases “would have gutted us,” Gypsum Fire Protection District Chief Justin Kirkland said.
The Eagle County Paramedic Services District, which covers the length of the Eagle River Valley, in the fall of 2019 asked its voters a similar question. Voters approved that measure as well.
While local fire districts received virtually all of their funding from property tax collections, Eagle County Paramedics also relies on patient billing.
Chris Montera, the CEO of Eagle County Paramedic Services, said patient billing has fallen sharply since local ski resorts closed and the valley quickly emptied of guests and seasonal employees.
Montera said the district has built some financial reserves over the past few years, and can weather this particular storm, at least for a year or two. But, he added, if the district also had to weather the next drop in the residential assessment rate, it could now be planning for a 20% drop in revenue.
“That highlights the necessity of what we did as a local government,” to exempt the district from Gallagher’s continual declines, Montera said. A number of the state’s smaller special districts haven’t yet taken that step, and are in serious budget trouble because of it, he added.
The Eagle River Fire Protection District covers the valley from the top of Tennessee Pass to Wolcott. That district a few years ago passed a combination of a mill levy increase. It was planning another ballot question this year, but shelved that plan due to the economic crisis brought on by the COVID-19 pandemic.
District Chief Karl Bauer said in response to the national recession that hit the valley in 2008 and 2009, district voters approved an adjustable mill levy. Bauer said the mill levy would fluctuate as needed to ensure revenue wouldn’t drop too much. That adjustable levy is capped.
“What was supposed to happen was that as we came out of (the recession), the adjustable levy would diminish,” Bauer said. But many properties haven’t completely recovered from the previous recession. Combined with reductions from Gallagher, the adjustable mill levy is about to hit its cap. The revenue still won’t cover the district’s needs.
Those needs include the continuing need to purchase “mission critical” equipment including breathing apparatus and radios.
The district has already eliminated three open positions, and is looking at further cutbacks.
Good progress so far
Dylan Roberts represents Eagle and Routt counties in the Colorado House of Representatives. Roberts said the bill is making good progress through the legislative process.
The bill passed its first committee test, in the Colorado Senate, with a unanimous vote. And he added, he hopes voters agree if the proposal makes it to the November ballot.
“It isn’t going to raise anybody’s taxes,” Roberts said, adding that the measure would lock in current residential assessment rates.
Locking in current assessment rates will allow school and other districts to survive, Roberts said.
“If we remove Gallagher, we can be more consistent, and can better plan for the future,” Roberts said.
There are still details to be worked out, but Kirkland said it’s time to repeal Gallagher.
“This has to happen,” Kirkland said. And, he added, it’s essential for the future of other districts besides Gypsum fire.
“Even though we’re technically protected, we rely on (the Greater Eagle Fire Protection District), and the ambulance district,” Kirkland. “We rely on Garfield County agencies, too. It puts us at risk if they’re cut back.”
Vail Daily Business Editor Scott Miller can be reached at firstname.lastname@example.org.
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