CMC to seek voter relief from state tax law
August 31, 2017
Colorado Mountain College district voters will be asked in November to give the college permission to adjust its mill levy annually so it can avoid potentially large revenue decreases associated with a 35-year-old state law related to property tax rates.
The CMC Board of Trustees, meeting in Steamboat Springs on Wednesday, voted unanimously to put the question before voters in the six-county taxing district. It seeks to retain up to $50,000 in property taxes levied this year and collected in 2018, and again in subsequent years as necessary.
The question relates to Colorado's 1982 Gallagher Amendment, which maintains Colorado's base property tax ratio at 55 percent for commercial property and 45 percent for residential.
Under the law, commercial property is assessed at a fixed 29 percent rate, requiring that the residential assessment rate be lowered periodically in order to balance things out.
Between 1985 and 2007, the residential assessment rate dropped from 21 percent to 7.96 percent, but has held steady for the past nine years. This year, the rate fell to 7.2 percent, and is expected to continue to drop every two years.
If commercial and residential values rise at roughly the same pace, change is not needed.
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But now, a business dip led by the oil and gas industry is coupled with a rebound in Colorado's real estate market, in which Front Range valuations are far outpacing Western Slope growth. With the lower residential rate, what otherwise would be a benefit to CMC and other taxing districts in the region would be a reduction without any levy adjustment.
If passed, the CMC ballot issue will authorize trustees to maintain property tax revenue levels by adjusting the CMC mill levy as needed in response to statewide revenue reductions caused by the Gallagher Amendment, the board explained in a news release.
Any mill levy increase would be limited to the monetary amount of the reduction caused by future recalibrating of the statewide residential assessment rate, which the Colorado Legislative Council has forecast should population and housing growth along the Front Range continue in future years.
"Forecasts suggest that Gallagher revenue adjustments have the potential to become more common and may over time pose a real fiscal threat to the college's ability to deliver its mission to the communities and students it serves," CMC Board President Glenn Davis told the Post Independent on Thursday.
"The trustees believed as well that the public should have an opportunity to decide whether to entrust the college with the authority to counteract only the actual revenue reductions caused by the Gallagher Amendment," he said.
The resolution placing the question before voters in the Nov. 7 mail ballot election does not contemplate a permanent mill levy rate, or an adjustable rate with a set revenue level. It also does not include a sunset clause, Davis said.
The latest Gallagher adjustment reduced CMC's revenues by 9.5 percent compared to projections based on increases in residential property values within the college district. Otherwise, CMC would have seen a revenue increase, college officials explained when the situation was first brought to the board's attention earlier this year.
If the statewide residential rate were to drop to 6.2 percent in the coming years, as projected by the Legislative Council, it would mean a $4 million to $6 million hit to CMC finances, unless residential valuations in the district grew by 12 to 14 percent, Matt Gianneschi, chief operating officer for the college district, explained at a June board meeting.
While residential valuations have been growing districtwide, they have not been growing at near that pace, he said.
If the ballot measure fails, options would be to make substantial service cuts or to increase tuition by a significant amount, he advised the board at that time.