Town and county finalize budget stabilization measures

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Grand County Commissioners and the Kremmling Town Council each approved final language for a budget stabilization measure to be placed on the November ballot, allowing voters to decide whether or not to allow floating mill levies and thereby circumventing, at least in the short term, an anticipated shortfall in property tax revenues in the immediate future.

The shortfall comes as a result of a piece of the Colorado Constitution, the so-called Gallagher Amendment, put in place in 1982 and intended to simplify the process of property assessment, exempting certain personal and professional properties from taxation and providing tax relief for rapidly increasing property taxes.

Gallagher sets a static ratio between residential and non-residential property tax revenues at 45% and 55% respectively. However, with Colorado’s increasing population, rising residential property values, and decreasing number of commercial properties (due to the growth of web-based business and other factors), the long-term impacts have been a nearly 66% decline in the residential assessment rate and a marked decline in property tax revenue, monies that are used to fund schools, road and bridge, and other special districts, such as libraries, fire protection, recreation, water and sewer.

With the current residential assessment rate at 7.5%, down from 21% in 1982, and scheduled to be re-evaluated in 2021, local government entities have been discussing the issue of de-Gallagherization for the last few months. De-Gallagherization efforts propose an option to “stabilize” property tax revenue by “freezing” current assessment rates and potentially asking for floating mills in order to maintain consistent levels of revenue.

Ballot language approved
At their most recent meetings, the Town and County passed resolutions approving nearly identical measures to be put before the voters this fall.
The resolutions read:
“Without increasing total tax revenues collected, shall the Town of Kremmling/Grand County be authorized to adjust its mill levy annually to offset revenue reductions caused by state imposed changes to the percentage used to determine assessed valuation, including any changes made pursuant to the 1982 Gallagher Amendment to the Colorado Constitution, so that, to the extent possible: The revenues generated by such mill levy are the same as the tax revenues that would have been generated had such changes in the method of calculating assessed valuation not occurred.”

Kremmling’s ballot language adds a second clause to the very end, clarifying that the effort is to ensure that “the Town of Kremmling can sustain its ability to provide municipal services such as public safety, snow removal, infrastructure repairs, and general services.”

These resolutions may accompany a third resolution from local fire protection districts and will be alongside a statewide measure hoping to repeal the Gallagher Amendment to prevent residential property assessment rates from falling even more in the future. If this measure passes, residential assessment rates would still not be able to be increased without voter approval, due to TABOR restrictions.

The statewide measure may become even more important for commercial property owners. While local de-Gallagherization efforts would allow mills to increase without a negative impact on residential property owners, commercial properties are taxed at a flat 29% each year. If mills were to be raised, commercial property owners would see an increase in their tax obligation.

“If commercial property owners would like to help special districts, towns, and counties to keep their revenues but not see their own taxes go up, they would likely hope for the statewide measure to pass,” explains Grand County Commissioner Rich Cimino, who has also been working with regional and statewide groups to explore future options for alleviating a long-term problem that has no immediately comprehensive solution.

For more information on the impacts of the Gallagher Amendment, budget stabilization efforts, and how to calculate your residential property taxes, go to co.grand.co.us/budget. There is found a 5-minute informational video, a recent Town Hall on the issue.

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