How TABOR and Gallagher Impact Each Other
In 1992, the citizens of Colorado passed a constitutional amendment called TABOR, or the Taxpayers Bill of Rights. The amendment was authored by Douglas Bruce and states that Colorado’s annual revenue will rise only by the growth in the state’s population and rate of inflation. If revenue growth exceeds those factors, the revenue must be refunded to the taxpayers. TABOR also requires a vote of the citizens on ANY proposed tax increases. One option of TABOR, however, is for taxpayers in a set jurisdiction to vote to allow a taxing district to keep the excess revenue each year. This is called “De-Brucing,” and Ken-Caryl Ranch Metropolitan District (KCRMD) taxpayers approved this option by a vote years ago.
If you refer back to page 7 in the July 11 issue of Life at Ken-Caryl, we explained the Gallagher Amendment and the Residential Assessment Rate or RAR. TABOR does NOT allow the RAR to ever rise; it only can go down. In 2019, the County assessors will appraise our homes for their market value, and the Colorado legislature will adjust the RAR down, potentially to 6.1 percent. Even if our home values rise in the reassessment, with an RAR rate of 6.1 percent, our property taxes will decline, which will mean less tax revenue for the KCRMD.
The KCRMD Board is considering, along with other metro and fire districts, asking residents to “De-Gallagherize” on the November ballot. In the event the KCRMD would receive less tax revenue due to a RAR adjustment, De-Gallagerizing would allow KCRMD to raise the mill levy without an additional vote of residents to meet the tax revenue the District would have received at the current rate RAR of 7.2 percent. Unlike De-Brucing, which has been litigated and found Constitutional, there is no case law that states whether or not De-Gallagherizing would be considered the same. With many special and metro districts De-Gallagherizing across the state, these issues will likely be considered by the courts in the near future.
With the current market valuations and current 7.2 percent RAR, 32 of the 64 Colorado counties had a decrease in property tax receipts for 2018. With a 2019 reassessment and potential adjustment to a 6.1 percent RAR, ALL 64 counties will have a decrease in property tax receipts in 2020.
KRCMD has used all of its reserve funds, and without some changes in Gallagher or a new funding structure identified, the KCRMD will not be able to provide the same services that are offered today.
The KCRMD Board is considering asking the community for a mill levy increase or to “De-Gallagherize” or both this November in order to ensure the long-term financial sustainability of the District. Please check the website, read future issues of the paper, sign up for the e-News and stay tuned for more information.
By Jeff Esbenshade, KCRMD Board Member