Colorado homeowners will benefit from a property tax decrease next year, but local districts that are funded by property taxes are preparing for a hit.
Since 1982, state property tax value has, by law, been made up of 45 percent residential tax revenues and 55 percent commercial tax revenues, per the Gallagher Amendment, which was enacted into the Colorado Constitution that year.
But residential property taxes will drop next year for the first time since 2003, according to the state Department of Local Affairs, from 7.96 percent of assessed value to 6.56 percent. New residential target percentages are set in non-assessment years.
Due to the Denver-area increase in housing prices, along with a decrease in commercial values, residential property taxes have made up more than 45 percent, causing a mandatory cutback. Prior to the Gallagher Amendment’s passage, residential assessment rates hit 21 percent.
What is good news for homeowners is cause for concern for local governments.
“For our district, it means we’re going to have a tight year,” said Diane Doney, chief financial officer of Littleton Public Schools. “I’m hoping to avoid any draconian cuts.”
Doney said it is hard to tell yet, but the district may take a cut of about $500,000. The district’s budget is about $150 million.
“$500,000 is not huge,” she said, but noted that an increase in class sizes could be necessary.
South Suburban Parks and Recreation District Finance Director Steve Shipley said the district could lose out on $2 million, or approximately 10 percent of its property tax revenue. The only option, he said, would be to go to the voters to increase the mill levy.
“It’ll be big,” he said.
Shipley said that rural areas of the state will be affected more, however, and when home values are reassessed next year there could be a correction.
“I’m expecting a big increase in assessment,” he said.