Our View: Unintended consequences of Gallagher must be fixed
October 23, 2018
The Gallagher Amendment, adopted by voters in 1982, continues to have far-reaching, unintended consequences, now forcing taxing districts, especially those in rural Colorado, to seek voter approval for workaround initiatives all of which appear on the Nov. 6 ballot.
West Routt, Oak Creek, Yampa and Steamboat Springs Area fire protection districts, as well as Colorado Mountain College, are seeking voter approval to allow them to adjust their mill levy rates to offset reductions in property tax revenues linked to Gallagher. In essence, referendums 6C (Yampa), 6E (West Routt), 6F (Oak Creek), 6G (Steamboat) and 7D (CMC), if passed, would enable each taxing entity to maintain current revenue levels by adjusting the mill levy, compensating for the Gallagher-imposed decreases. The mill levies could never be raised above 2018 levels.
Gallagher is complicated, but in a nutshell, it's a property tax-limiting provision of the state constitution that mandates the amount of property taxes collected on homes must always be lower than the amount collected on nonresidential property, and it limits residential properties to 45 percent of the statewide property tax base.
When Gallagher was passed in 1982, residential properties were assessed at a rate of 30 percent. Today, they're assessed at 7.2 percent with the rate expected to decrease again next year to 6.85 percent, and these drops are crippling essential services in rural Colorado.
At a glance
At issue: Due to rising residential property values on the Front Range, the Gallagher Amendment has triggered a decrease in property tax revenue for rural taxing entities forcing them to turn to voters for help.
Our View: We encourage voters to approve local referendums 6C, 6E, 6F, 6G and 7D, and we implore the state legislature to come up with a permanent fix to Gallagher during the 2019 session.
• Logan Molen, publisher
• Lisa Schlichtman, editor
• Mike Burns, community representative
• Melissa Hampton, community representative
Contact the Editorial Board at 970-871-4221 or lschlichtman@
For example, the Steamboat fire protection district expects to lose about $130,000 in revenue to property tax reductions next year, and those decreases translate to a reduction in firefighting services the district provides local residents.
CMC officials said the college lost $2.8 million in the last Gallagher residential rate reduction, and this coming year, it is expecting the revenue loss to increase to $4 million annually if voters don't approve Referendum 7C. The implications? Drops in funding, program cuts and/or tuition hikes for a valuable institution that provides affordable higher education on the Western Slope.
We feel the pain of these entities that provide vital services to our local residents, and we encourage area voters to approve all four referendums, to allow the districts to freeze their residential assessment rates at the current 7.2 percent rate should rates continue to fall.
And while we endorse these local measures, we call on Colorado state legislatures to seek a permanent fix to Gallagher and find a way to lessen the impact a booming Front Range has on its rural neighbors.
Right now the burden of Gallagher, an amendment to the constitution that was enacted over three decades ago, is putting a financial squeeze on small towns and small taxing entities all across Colorado, and it's high time our elected state officials deal with the issue. What made sense to voters 36 years ago is not working today, and the problem needs to be a legislative priority in 2019.
Last year, the value of residential properties rose faster than commercial properties, which triggered a 9.5 percent cut in residential property tax assessments, according to an article in The Denver Post, and an even greater decrease in assessments is anticipated in 2019. And because of the TABOR amendment, even if residential property assessments should decline, property taxes would not automatically go up without voters approving a tax increase to basically restore the tax amount to its original level.
Gallagher must be addressed, and it's up to our state legislators to fix a problem that's been hamstringing rural communities for years. Currently, the state legislature is considering several different solutions to Gallagher, and one passed out of committee two weeks ago. It proposes to create regional residential assessment rates to counter the urban/rural divide when it comes to property rates.
We urge our state legislators to vet this proposal while continuing to work on additional solutions that would finally provide rural communities with some long-term relief.