Gallagher Amendment Summary

Gallagher Amendment Summary

JOINT FACTUAL SUMMARY

DONALD WESCOTT FIRE PROTECTION DISTRICT AND NORTHERN SUBDISTRICT

NOVEMBER 3, 2020 ELECTION FOR VOTER
AUTHORIZATION TO STABILIZE PROPERTY TAX REVENUE

THE FIRE DISTRICT AND NORTHERN SUBDISTRICT. Donald Wescott Fire Protection District (“Fire District”) and Donald Wescott Fire Protection District Northern Subdistrict (“Northern Subdistrict”) provide fire suppression, rescue, extrication, hazardous materials, ambulance, and emergency medical services to approximately 12 square miles including Gleneagle and portions of unincorporated El Paso County.

SUMMARY OF THE ISSUE. Residential property owners in Colorado do not pay property taxes on 100% of their home’s value. Instead, residential property owners pay property taxes on only a percentage of their home’s property value, called the “residential assessment rate”, or “RAR”. A Colorado Constitutional provision called the Gallagher Amendment of 1982 requires the percentage of property taxes paid by residential property owners in the State to be 45% of the total property taxes paid. In every odd year, the Colorado Legislature is required to set the RAR at a level
that will maintain the 45% tax share required by the Gallagher Amendment. Due to the steady increase in residential property values across the State, the RAR has been reduced from 21% in 1982 to 7.15% in 2019. Preliminary projections indicate the Colorado Legislature will further reduce the RAR to 5.1% in 2021. The anticipated reduction in the RAR to 5.1% will reduce the Fire District’s and Northern Subdistrict’s combined property tax revenue by over $635,000.

THE BALLOT ISSUES. During their meetings on August 18, 2020, the Fire District’s and Northern Subdistrict’s Boards of Directors each adopted a Resolution calling for an election on November 3, 2020 to seek authorization from its eligible electors to stabilize its property tax revenue and has certified the following Ballot Issues:

Donald Wescott Fire Protection District Ballot Issue 6B
SHALL DONALD WESCOTT FIRE PROTECTION DISTRICT BE AUTHORIZED TO INCREASE OR DECREASE ITS CURRENT AND ALL FUTURE MILL LEVIES IF, ON OR AFTER NOVEMBER 3, 2020, THERE ARE CHANGES IN THE METHOD OF CALCULATING ASSESSED VALUATION OF ONE OR
MORE PROPERTY CLASS, INCLUDING BUT NOT LIMITED TO A CHANGE IN THE PERCENTAGE OF ACTUAL VALUATION USED TO DETERMINE RESIDENTIAL ASSESSED VALUATION DUE TO ARTICLE X SECTION 3 OF THE COLORADO CONSTITUTION (COMMONLY KNOWN AS THE GALLAGHER AMENDMENT) OR FOR ANY OTHER REASON SUCH AS ACTION BY THE LEGISLATURE, SO THAT, TO THE EXTENT POSSIBLE, THE ACTUAL TAX REVENUES GENERATED BY SUCH MILL LEVIES ARE THE SAME AS THE ACTUAL TAX REVENUES THAT WOULD HAVE BEEN GENERATED HAD SUCH CHANGES NOT OCCURRED?

Donald Wescott Fire Protection District Northern Subdistrict Ballot Issue 6C
SHALL DONALD WESCOTT FIRE PROTECTION DISTRICT NORTHERN SUBDISTRICT BE AUTHORIZED TO INCREASE OR DECREASE ITS CURRENT AND ALL FUTURE MILL LEVIES IF, ON OR AFTER NOVEMBER 3, 2020, THERE ARE CHANGES IN THE METHOD OF CALCULATING ASSESSED
VALUATION OF ONE OR MORE PROPERTY CLASS, INCLUDING BUT NOT LIMITED TO A CHANGE IN THE PERCENTAGE OF ACTUAL VALUATION USED TO DETERMINE RESIDENTIAL ASSESSED VALUATION DUE TO ARTICLE X SECTION 3 OF THE COLORADO CONSTITUTION (COMMONLY
KNOWN AS THE GALLAGHER AMENDMENT) OR FOR ANY OTHER REASON SUCH AS ACTION BY THE LEGISLATURE, SO THAT, TO THE EXTENT POSSIBLE, THE ACTUAL TAX REVENUES GENERATED BY SUCH MILL LEVIES ARE THE SAME AS THE ACTUAL TAX REVENUES THAT WOULD HAVE BEEN GENERATED HAD SUCH CHANGES NOT OCCURRED?

ARGUMENTS AGAINST THE PROPOSALS. Further reductions in the residential assessment rate required by the Gallagher Amendment will reduce the tax revenue the Fire District and the Northern Subdistrict receive and may result in a reduction in governmental services, which may be preferred by individuals who wish to reduce the size of government. Homeowners in the Fire District and Northern Subdistrict would not enjoy the potential financial benefit of any further reductions in the residential assessment rate that may occur in the future. Non-residential property owners may see a net increase in property taxes, as under the current law, they will not see a corresponding decrease in the assessment rate for their property.

ARGUMENTS FOR THE PROPOSALS. The Fire District and Northern Subdistrict are not seeking a tax increase. They are seeking authorization to adjust their mill levies to keep property tax revenue they will otherwise lose as a result of further reductions in the residential assessment rate. In order to avoid collecting too much tax revenue, the Fire District and Northern Subdistrict will also reduce their mill levies if the Gallagher Amendment ever requires the residential assessment rate to increase. Increasing costs and service demands, and the loss of revenue caused by the Gallagher Amendment, will make it difficult for the Fire District and Northern Subdistrict to keep up with increased population, emergency call volume, and inflation, and may adversely affect future staffing, and construction and maintenance of fire trucks and stations. Stabilizing the property tax revenue will enable the Fire District and Northern Subdistrict to maintain their ISO ratings which may prevent homeowners’ and business owners’ property insurance rates from rising.