Vail Valley Partnership board recommends voters support Amendment B and local de-Gallagher efforts
Quality of life is the general well-being of individuals and societies, outlining negative and positive features of life. How exactly “quality of life” is measured is debatable, but it is hard to argue that property taxes support quality of life. Yet ballot issues in Colorado typically result in a knee jerk reaction of “NO!” causing special districts to go the voters to mitigate future service cuts.
What’s impacting these special districts that drive our quality of life in Eagle County? Why do they continually face declining revenues even though property values increase?
Booming home values along the Front Range are triggering cascading statewide property tax cuts, providing relief to urban homeowners but squeezing government agencies in rural areas where property values weren’t growing in the first place and increasing the burden on small business owners at a time they can least afford it.
The reason: a little-known property tax-limiting provision of Colorado’s state constitution: the Gallagher Amendment.
As a result of the Gallagher Amendment, the assessment rate for residential property has declined by more than two-thirds over the years because of Colorado’s population growth and because of increases in residential real estate values. The net effect has been a marked decline in revenues collected from property tax to fund special districts.
Sounds great on the surface. Yeah, less tax! But the flip side of paying lower residential property tax rates is reduced services from local special districts and shifts the burden to small business.
In layman’s terms, when home values grow faster than business values, homeowners pay proportionately less and commercial property owners pay proportionately more. Amendment B and local de-Gallagher ballot issues will prevent an additional shift in property tax burden to small businesses while freezing property tax rates and ensuring fire departments and schools receive the funding they need.
Since 1982, residential property values in Colorado have grown faster than nonresidential properties, causing the assessment rate on residential properties to drop from 21 percent in 1982 to 7.15% today. The assessment rate on Colorado businesses is 29%.
That means whenever home values rise faster than those of commercial, industrial and agricultural properties, the residential assessment rate — the formula that determines a property’s assessed value — must drop. Which reduces the ability for local special districts to fulfill their services (fire, school, recreation, metro district, etc.).
Gallagher has never been about keeping taxes low. It was always a backdoor effort to raise taxes on small businesses, industry, farmers and ranchers. Under TABOR, you taxes can’t be raised without a vote from the people — so your property tax rates would not increase. The rise in local property values has shifted the tax burden to non-residential properties, notably increasing costs for small local businesses across the state.
We need to protect our quality of life by addressing the intense, negative impact the Gallagher amendment has had, and will have, in the future. We encourage voters to avoid the knee jerk reaction to ballot questions, and to thoroughly research each initiative when voting.
Eagle County, Town of Vail, Town of Avon, Town of Eagle, and Eagle River Fire Protection District have local ballot inititiaves and the state legislature has referred – in an overwhelmingly bipartisan manner – Amendment B to the voters.
In a state already limited in the financial resources we can provide to schools, transportation, and community investments, the economic consequences of COVID-19 have the potential to set Colorado back decades. Because of this, Vail Valley Partnership’s board of governors recommends a YES vote on Amendment B and on local measures.
Chris Romer is president & CEO of Vail Valley Partnership, the regional chamber of commerce. Learn more at VailValleyPartnership.com