Nearly 75% of the State Legislature voted to refer Amendment B to the ballot, and the campaign has received more than 100 endorsements from community leaders throughout Colorado…
— from an email advertisement by ‘Yes on B’, October 17, 2020.
As we discussed in Part One, taxes in Colorado are a complicated issue, and no matter how we look at them, they appear ‘unfair”. On our November ballots, we will be able to vote ‘Yes’ or ‘No’ on three tax measures, including Amendment B, which will alter the section of the Colorado Constitution commonly referred to as the Gallagher Amendment. If a majority chooses to vote ‘No’, we will see the residential property tax rate drop to 6% — or maybe lower — in the near future. If we vote ‘Yes’, the residential rate will be set permanently at 7.15%… and the non-residential rates will remain at 29%… until the voters decide to increase that rates.
In Colorado, the legislature can reduce tax rates; they cannot increase them without voter approval. The legislature also cannot change the Constitution… only the voters can approve changes.
From the Amendment B information included in the ‘non-partisan’ Colorado Blue Book:
…Amendment B is expected to eliminate projected future reductions in the residential assessment rate, and thus, could result in higher property taxes paid by residential taxpayers, if property values increase and if automatic mill levy increases do not offset assessment rate reductions.
If Amendment B passes and residential rates are frozen at 7.15%, homeowners can expect to pay higher taxes whenever the market rate of residential property increases locally. On the other hand, they can expect to pay less, if the real estate market should show a decline. But property tax collections are also controlled, to some degree, by the Taxpayer Bill of Rights — TABOR — which (theoretically, at least) sets limits on the growth of government spending.
The legislator responsible for drafting the original ‘Gallagher Amendment’ back in 1982, Dennis Gallagher, would like to see Coloradans vote ‘No’ on Amendment B. He wrote, in a recent Denver Post guest editorial:
There they go again. Corporate special interests are trying to fund an additional tax break on the backs of homeowners and renters. Their latest ploy is the repeal of the Gallagher Amendment…
As I read the language in Amendment B, however, “corporate special interests” will continue paying 29%, no matter whether Amendment B passes or not. So I’m not clear what Mr. Gallagher means by “an additional tax break on the backs of homeowners and renters.” But Mr. Gallagher has other points to make:
A vote to repeal the Gallagher Amendment, which is a “yes” vote on B, will cause huge property tax increases for homeowners and renters throughout Colorado. Since Gallagher was adopted residential property tax owners have saved $35 billion, an average savings of $17,000 per homeowner and renter…
The most offensive part of Amendment B is its attempt to deceive voters. Proponents claim it will not increase homeowners’ taxes. The reality is that this claim is a lie. According to the Colorado property tax administrator, residential property tax owners will pay an additional $203,781,937 in property tax increases in the first year after repeal. Over five years we will pay an astronomical increase of $1.02 Billion. While homeowners and renters face these increases, corporate special interests could see decreases in their property taxes.
Once again, I question how, exactly, “corporate special interests” could see decreases in their property taxes. I suppose that could happen… if every type of property tax saw decreases… due to a great recession, perhaps? But Mr. Gallagher is correct in stating that, if voters approve Amendment B, every residential property owner will most likely pay more in property taxes than they would if Amendment B did not pass. On the flip side, if the voters do not approve Amendment B, many rural government services — including school districts, county governments, and fire departments — will see a drop in their revenues from property taxes.
No doubt our Daily Post readers have as many different ideas — about taxes, and fairness, and government services — as there are readers. And no doubt some readers, sensing a steadily declining level of service from local governments, would support most any tax increase — as they did in 2018, when Archuleta County voted to increase the school district’s mill levy from 24.2 mills to 29.6 mills for seven years, to pay for better teacher salaries and improved school security. A ‘No’ vote on Amendment B would have the effect of cancelling some of that approved school mill levy increase, because a non-amended Gallagher will cause the assessment rate drop on residential property — based largely upon the real estate market in Denver and other fast-growing urban communities.
The old adage suggests that “You get what you pay for.” The opponents of Amendment B suggest that Coloradans will get a bigger bang for their buck, if they pay lower taxes and spend the extra money on… whatever they choose? In his Denver Post op-ed, for example, Dennis Gallagher writes:
…the Gallagher Amendment has worked. It kept residential property taxes low in Colorado. Comparing Colorado to New Jersey proves this point. The average homeowner in Colorado pays $2,046 while the average homeowner in New Jersey pays $8,477. Vote “no” on Amendment B and we will not have to pay these excessive property taxes.
Moral: you will be a happier person if you fund government at a lower level.
But Amendment B supporters obviously feel that we’ll get a greater benefit by opening our wallet and funding government services at a higher level. That argument would seem to hinge on the total amount of taxes — of all kinds — that we contribute, and how efficiently those various taxes get used.
According to an analysis published by the legal advice website NOLO.com, you can estimate taxpayer support of state government in a couple of ways. If you look, for example, compare the amount paid by all of the state’s taxpayers — in property, sales, excise, and income taxes, plus state user fees and other taxpayer contributions — to the total income of all the state’s residents, we Coloradans pay about 8% of our total income to support the state government. About 34 states pay comparatively more than that.
But as we noted, different taxpayers have different tax burdens in Colorado. For example: although the property tax rate, paid by landlords, has steadily declined in Colorado for the past decade, renters in Pagosa Springs have seen rental rates double over the same period. It would seem that declining property tax rates have not benefited renters in our community.
NOLO also suggests an alternate way to look at the total tax burden. If you analyze the percentage of an average family’s income that gets paid out in various forms of state and local taxes and fees — that is, based on a median US income of $55,754, a home with a median US value of $184,700, a car valued at $24,000, and spending what median-income US households spend each year — the percentage paid out in taxes in Colorado is reportedly about 9.3%.
That puts the total tax burden on a Colorado family far below what a ‘median family’ pays in, say, New Jersey (12.9%) or Illinois (14.9%) or Connecticut (13.9%)… and somewhat higher than what is paid by a family in Alaska (5.7%) or Delaware (6.1%) or Montana (7.3%). In NOLO’s assessment, Colorado’s overall ‘family’ tax burden puts us among the 13 lowest-paying states.
Which of course, says nothing at all about the tax burden borne by businesses in Colorado. (Including the “corporate special interests’ so despised by Mr. Gallagher.)
Or by agriculture, for that matter.
Bill Hudson began sharing his opinions in the Pagosa Daily Post in 2004 and can’t seem to break the habit. He claims that, in Pagosa Springs, opinions are like pickup trucks: everybody has one.