The Colorado Supreme Court on Monday turned down a request from Gov. John Hickenlooper that sought to resolve what he believes are conflicts between the Taxpayer’s Bill of Rights (TABOR) and the Gallagher Amendment.
The Court did not provide a reason in denying the request.
Hickenlooper submitted “interrogatories” — a series of questions — on Nov. 20 that asked the Court to look at the conflicts between TABOR, passed by voters in 1992, and Gallagher, adopted by voters in 1982. Critics say the conflict is siphoning off tax revenue for schools and local government services, such as firefighting.
Those conflicts are “preventing local governments from funding even limited essential services,” Hickenlooper’s filing with the court said. “… It has resulted in the steady erosion of the budgets of local governments in communities throughout the state that rely on property taxes.”
The erosion is about to get a lot worse.
The Gallagher amendment permanently set the shares of total property tax statewide that owners of residential and commercial property pay, with homeowners paying 45 percent and businesses 55 percent.
The amendment also fixed the assessment rate on most commercial property at 29 percent of value, but called for the rate on residential property to slide up or down at a uniform level statewide as property values change so that the state’s homeowners kept paying 45 percent of total property taxes.
Experts say the substantial hike in home values over the last 36 years have shifted the property tax burden onto commercial properties, which haven’t seen the same increases in value.
TABOR bars tax increases unless approved by voters. One interpretation of TABOR is that it blocks the residential adjustments called for under Gallagher, with the effect of pushing down residential assessment rates statewide as property values have increased sharply in metro Denver in order to maintain the 45-55 percent ratio.
As a result, according to Hickenlooper’s filing, residential assessment rates have dropped from 21 percent in 1983 to 7.2 percent in 2018.
In 2019, that assessment rate is expected to drop to 6.1 percent, the lowest in history. And tax revenue to special districts, like firefighting, will drop with it.
Jerry Briese, head of the Colorado State Fire Chiefs, told Colorado Politics they were disappointed by the Court’s decision Monday, but that they aren’t giving up on attempting to get the Court to look at the issue.
He said the group’s next step is to meet with lawmakers to see what the General Assembly is willing to do in 2019. The legislature, by law, will set the next residential assessment rate. However, because of the TABOR/Gallagher conflict, they are required to set the residential assessment rate at 6.1 percent.
“We would like them to address in some manner the unintentional negative synergy between Gallagher and TABOR,” Briese said.
The fire chiefs, who manage more than 250 fire districts, believe the next drop in the residential assessment rate will spell fiscal disaster for the majority of fire protection districts in Colorado. At 6.1 percent, that’s a 25 percent reduction in revenue for those districts, Briese said. “That revenue is not recoverable from any other source.”
One option the fire chiefs intend to pursue is to ask the legislature to resubmit the interrogatories to the Supreme Court. The big question is whether the legislature will move quickly enough so that they can respond if — and when — the state Supreme Court takes up those questions, he said.
“The reality is, we will continue to have emergencies, fires and we have to respond,” Briese said. “The revenues to do that are declining.”
Ernest Luning and Mark Harden contributed to this story.