Property tax challenges for taxing orgs
Efforts to ease burden on property owners lowers revenue for districts
Special districts that rely on property taxes for a major share of their revenue find themselves in a bad place as Colorado struggles to hold down skyrocketing taxes. Local governments and special districts have been sharpening their pencils as they try to budget for 2024.
Lower South Platte Water Conservancy District is one of those districts and board members learned last week the district will see a 7% reduction in mill levy revenue in Sedgwick, Washington and Logan counties, thanks to a move by the Colorado Legislature to ease the property tax burden. General Manager Joe Frank said it’s not yet known how much of a reduction will be seen in Morgan County, but he is assuming it will be about the same.
At the center of the issue is Colorado’s ever-rising property values, in some cases nearly 20% over the course of a year. And as property values rise so do property taxes, which are assessed on a percentage of the value, known as the assessment rate. Hardest hit was residential property, with some homeowners staring down the barrel of a doubled tax bill.
In an at attempt to ease the burden, state government first reduced the assessment rate on residential property from 6.765% to 6.7% and then, during a special session in late November, allowed homeowners to exempt the first $55,000 of their property value from taxation.
In addition, some entities, either through their own actions or happenstance, have seen mill levy reductions. Logan County’s Board of Commissioners voted in October to reduce the county’s 29.868 mill levy by .679 mills. And just last week the RE-1 Valley School District Board learned that the district’s property valuation has dipped from $245 million down to about $228 million. In addition, RE-1 will pay off a bond is
sue, paring roughly 6 mills from the district’s levy.
For the Lower district, the revenue decline means an expected 8% increase in revenue has been slashed to 0.5% for a potential loss of about $54,000. Frank pointed out that board members’ packets included a letter from Gov Jared Polis urging taxing entities to trim their mill levies as much as possible to help ease property tax burdens across the state, but the letter was given short shrift at the meeting.
Ironically, on the day the board learned of the revenue reduction, board members were scheduled to travel to Denver to hear oral arguments before the state’s Court of Appeals on a lawsuit over the water district’s mill levy.
When it was formed in 1964, the water conservancy district was allowed by state statute to levy up to 1 mill on property within the district, which includes parts or all of the four counties. The district’s board had previously only asked for 0.5 mill because that was all that was needed.
At the end of 2019, however, the board decided to raise the levy to the statutorily allowed 1 mill for 2020 to, among other things, help fund preparatory work on a project that eventually will help supply both the district and the City of Parker extra water from the lower reaches of the South Platte River. That mill levy was certified by county commissioners in the four counties at that time, and the district began collecting the tax revenues in 2020. An ad hoc taxpayer group filed suit claiming that, when the district de-bruced in 1996, it promised that “No local tax rate or property mill levy shall be increased at any time, nor shall any new tax be imposed without the prior approval of the voters of the LSPWCD.”
The 13th Judicial District Court ruled in Lower’s favor earlier this year, and the plaintiffs immediately filed an appeal. A decision on the appeal is expected sometime early next year.