Property tax measure challenges constitution

In an unusual ballot measure that walks uncharted constitutional ground, Colorado Mountain College plans to ask voters in six counties for blanket approval to offset any future property tax cuts triggered by the Gallagher Amendment.

CMC’s board of trustees late last month approved the referred measure, which would give the board permission to raise property taxes any time the state constitution requires a cut to residential property assessments.

The measure won’t erase the cut that Gallagher has already caused: an anticipated $2.78 million this fiscal year for the Glenwood Springs-based institution.

But if it’s successful, it could provide a model for government entities across the state that are grappling with how to address the ongoing tax cuts that Gallagher is projected to cause in coming years.

“We are certainly the largest (taxing) district that has made such an attempt,” said Glenn Davis, president of CMC’s Board of Trustees. “The concern that we’re all wrestling with at the moment is that … there may be a day where there’s no choice but to start raising tuition to cover the impacts that Gallagher might be creating.”

Adopted in 1982, the constitutional provision known as Gallagher was designed to limit the tax burden of homeowners by requiring that businesses pay at least 55 percent of property taxes statewide.

Most of the time, it’s a nonfactor. But this year, the booming housing growth on the Front Range has pushed home values above the threshold allowed un-

der the state constitution.

In response, state lawmakers this year dropped the residential assessment rate from 7.96 percent to 7.2 percent. That represents a 9.5 percent cut to property tax bills all over the state in 2018, providing relief to homeowners but squeezing local governments and schools.

That has left local governments across the state searching for a solution. But like so many things in Colorado’s so-called “fiscal thicket” of constitutional restrictions, that’s easier said than done.

While Gallagher can force the residential rate down when housing prices balloon, it can’t bring the rate back up if the balloon pops. To increase taxes, the Taxpayer’s Bill of Rights, or TABOR, requires elected officials to get permission from voters.

And experts on both sides say it’s anyone’s guess how this attempt would be viewed by the courts, if voters ultimately approve it.

“It’s a novel idea — whether you call it creative or misguided,” said Mike Feeley, an attorney who represents a group of public officials seeking to overturn TABOR. “When it’s inevitably challenged in court, I don’t know if anyone right now could definitively suggest what the outcome would be.”

One legal hurdle the initiative is likely to face is that tax referendums under TABOR are supposed to be narrowly written, asking for a specific amount of new revenue for a particular purpose. But the CMC measure seeks permanent, ongoing authority to raise mill levies to offset any drops in residential assessments. And, because mill levies apply to homeowners and businesses alike, any attempt to offset a drop in residential taxes would also raise taxes on commercial properties.

Penn Pfiffner, a former Re- publican state lawmaker, said the measure may go further than is allowed under the constitution.

“A game that people on the left and the center-left have been trying to play with TABOR for a long time is to say, ‘Well, TABOR allows people to vote on relaxing rules, so let’s try to change the constitution with a statutory change,’ ” said Pfiffner, chairman of the board for the TABOR Foundation.

CMC’s unusual among colleges in the state. A large chunk of its funding comes from property taxes in Pitkin, Garfield, Eagle, Routt, Lake and Summit counties, rather than the state government.

And with the Front Range housing boom projected to cause another tax cut two years from now, the college is bracing for further cuts — as much as $3.66 million a year starting in 2019, on top of the cut it has already absorbed. Combined, the two cuts would add up to more than 15 percent of the college’s $42.5 million budget.

“The kinds of decisions that the organization will have to make will be much more difficult going forward,” Davis said.

Before the measure can appear on November’s ballot, its language still must be approved by the state.

“We certainly anticipate that there could be (a legal challenge),” Davis said. “I think it would be the position of the board that the ballot initiative is something that the electorate should have the opportunity to have input on.”

“It’s a novel idea — whether you call it creative or misguided.”

Mike Feeley, an attorney who represents a group of public officials seeking to overturn TABOR