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Published
Oct. 19, 2017
By Megan Tackett
Sopris Sun Staff
Despite the state-mandated wording on the Nov. 7 ballot, Colorado Mountain College is not asking that its district taxes actually be raised — it merely wants to mitigate future losses as property taxes continue to decline in rural Colorado. It may be 2017, but the institution’s current — and future, if 4B does not pass — financial situation comes back to an amendment made to the state constitution in 1982.
“You’ll hear a lot about this over the coming years,” Matt Gianneschi, CMC Chief Operating Officer, said of the Gallagher Amendment, stressing that the constitution “unintentionally affects local communities, in particular higher education.”
The nuts and bolts of a decades-old state constitutional amendment can seem dry and complex at the outset, but that nuance has real consequences for local governments, said Gianneschi, who has 12 years’ experience working at the state capitol.
The Gallagher Amendment essentially governs Colorado’s property tax burden by dividing it between residential and nonresidential categories. In 1982, when the amendment was ratified, residential property taxes comprised 45 percent of the state’s property tax value and the remaining 55 percent came from commercial property taxes; the Gallagher Amendment made that ratio permanent. The only way to maintain that balance, however, is by altering the tax assessment rate for residential properties.
Contrary to popular belief, the entire value of a property is not eligible for property taxes — only a percentage of the total value actually gets taxed. The Gallagher Amendment froze the commercial assessment rate at 29 percent, so the only flexibility available to legislators to maintain the 45/55 ratio is by tweaking the residential assessment rate, Gianneschi explained. In 1982, the residential assessment rate was 21 percent. As the Front Range population exploded during the next few decades, that assessment rate dropped to 7.96 percent. It then remained unchanged between 2003 and 2017, when the legislation dropped it further to 7.2 percent.
That may seem trivial, but it’s a more-than 9.5-percent decrease. That’s a big deal for local governments and entities that rely on property taxes for funding. CMC is one such entity: 70 percent of the college’s budget comes from property taxes.
“This year, the change in the assessment rate was an operating loss, if you will, of approximately $2.7 million” Gianneschi estimated. Next year, it’s projected that the assessment rate will be further lowered to 6.2 percent. As the Front Range and Denver Metro populations continue to grow, housing values grow, too. The higher the housing values, the lower the assessment rate needs to be in order to keep residential taxes at 45 percent of the total. The 4B ballot measure is the CMC Board of Trustees’ attempt to curtail future revenue losses from continually lowered assessment rates by allowing trustees the authority to increase the mill levy — but only to the extent that an increased mill levy would offset Gallagher-induced tax reductions.
“What’s happened in the last couple of years is that that balance has become unbalanced,” Gianneschi said of Gallagher’s statewide, blanket formula. “This [ballot] question simply says that a Board of Trustees, if there is a reduction created by the Gallagher Amendment [in the instance that] Denver grows faster than the rest of the state, the CMC Board of Trustees would have the authority to adjust the mill levy to only the amount that was reduced by the growth in the Front Range. That’s the ceiling: they couldn’t go above that. It has a fixed ceiling and a fixed event. It cannot happen in any other circumstances.”
Without this additional “tool in the toolbox,” as Gianneschi called it, the Board of Trustees is limited in its resources to increase revenue, which could mean tuition hikes in the future.
In addition to educating more than 20,000 students every year, CMC also employs 1,200 people throughout the six counties it serves. “Our budget is $66 million; our estimated economic impact is over $300 million every year,” Gianneschi said.
The $50,000 noted in the language for 4B on the ballot represents the cost of the election for CMC, Gianneschi said. “It’s a not-to-exceed [item] in part because there AREN’T any new taxes that would come in. There’s no new revenue; it’s just forestalling a reduction” for the college.
Portscheller, Winkler vie for trustee
In addition to 4B, voters will also elect a new District 3 Trustee, a contested seat that represents Western Garfield County. Peg Portscheller, whose educational roles have included teacher, superintendent, education policy director of the Mid-Continent Research for Education and Learning and president of her own education consulting company, is vying for the seat against Randy Winkler, mayor of Rifle (who will not be seeking reelection in that capacity due to term limits) and owner of Micro Plastics.
“As mayor, I think I have a good grasp on what’s good for this community,” Winkler said, adding that “I’ve been associated with CMC for the last four years as mayor on several projects and I really, really think they’ve got a great staff.”
Portscheller, for her part, also has a work history with CMC.
“It was my privilege to partner with CMC on many, many ventures, programs and projects,” she said in an email. “I am a passionate supporter of CMC, given my belief that post-secondary options and higher education opportunities should be accessible and affordable to all.”
“You’ll hear a lot about this over the coming years,” Matt Gianneschi, CMC Chief Operating Officer, said of the Gallagher Amendment, stressing that the constitution “unintentionally affects local communities, in particular higher education.”
The nuts and bolts of a decades-old state constitutional amendment can seem dry and complex at the outset, but that nuance has real consequences for local governments, said Gianneschi, who has 12 years’ experience working at the state capitol.
The Gallagher Amendment essentially governs Colorado’s property tax burden by dividing it between residential and nonresidential categories. In 1982, when the amendment was ratified, residential property taxes comprised 45 percent of the state’s property tax value and the remaining 55 percent came from commercial property taxes; the Gallagher Amendment made that ratio permanent. The only way to maintain that balance, however, is by altering the tax assessment rate for residential properties.
Contrary to popular belief, the entire value of a property is not eligible for property taxes — only a percentage of the total value actually gets taxed. The Gallagher Amendment froze the commercial assessment rate at 29 percent, so the only flexibility available to legislators to maintain the 45/55 ratio is by tweaking the residential assessment rate, Gianneschi explained. In 1982, the residential assessment rate was 21 percent. As the Front Range population exploded during the next few decades, that assessment rate dropped to 7.96 percent. It then remained unchanged between 2003 and 2017, when the legislation dropped it further to 7.2 percent.
That may seem trivial, but it’s a more-than 9.5-percent decrease. That’s a big deal for local governments and entities that rely on property taxes for funding. CMC is one such entity: 70 percent of the college’s budget comes from property taxes.
“This year, the change in the assessment rate was an operating loss, if you will, of approximately $2.7 million” Gianneschi estimated. Next year, it’s projected that the assessment rate will be further lowered to 6.2 percent. As the Front Range and Denver Metro populations continue to grow, housing values grow, too. The higher the housing values, the lower the assessment rate needs to be in order to keep residential taxes at 45 percent of the total. The 4B ballot measure is the CMC Board of Trustees’ attempt to curtail future revenue losses from continually lowered assessment rates by allowing trustees the authority to increase the mill levy — but only to the extent that an increased mill levy would offset Gallagher-induced tax reductions.
“What’s happened in the last couple of years is that that balance has become unbalanced,” Gianneschi said of Gallagher’s statewide, blanket formula. “This [ballot] question simply says that a Board of Trustees, if there is a reduction created by the Gallagher Amendment [in the instance that] Denver grows faster than the rest of the state, the CMC Board of Trustees would have the authority to adjust the mill levy to only the amount that was reduced by the growth in the Front Range. That’s the ceiling: they couldn’t go above that. It has a fixed ceiling and a fixed event. It cannot happen in any other circumstances.”
Without this additional “tool in the toolbox,” as Gianneschi called it, the Board of Trustees is limited in its resources to increase revenue, which could mean tuition hikes in the future.
In addition to educating more than 20,000 students every year, CMC also employs 1,200 people throughout the six counties it serves. “Our budget is $66 million; our estimated economic impact is over $300 million every year,” Gianneschi said.
The $50,000 noted in the language for 4B on the ballot represents the cost of the election for CMC, Gianneschi said. “It’s a not-to-exceed [item] in part because there AREN’T any new taxes that would come in. There’s no new revenue; it’s just forestalling a reduction” for the college.
Portscheller, Winkler vie for trustee
In addition to 4B, voters will also elect a new District 3 Trustee, a contested seat that represents Western Garfield County. Peg Portscheller, whose educational roles have included teacher, superintendent, education policy director of the Mid-Continent Research for Education and Learning and president of her own education consulting company, is vying for the seat against Randy Winkler, mayor of Rifle (who will not be seeking reelection in that capacity due to term limits) and owner of Micro Plastics.
“As mayor, I think I have a good grasp on what’s good for this community,” Winkler said, adding that “I’ve been associated with CMC for the last four years as mayor on several projects and I really, really think they’ve got a great staff.”
Portscheller, for her part, also has a work history with CMC.
“It was my privilege to partner with CMC on many, many ventures, programs and projects,” she said in an email. “I am a passionate supporter of CMC, given my belief that post-secondary options and higher education opportunities should be accessible and affordable to all.”
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