The Plot to Kill Gallagher

No, not that one.

If you’re a fan of public schools, firefighters, and libraries, then you’ll want to pay particular attention to this story. A bipartisan group of lawmakers — led by State Sen. Jack Tate (R-Centennial) and State Sen. Chris Hansen (D-Denver) — is pushing legislation intended to eventually kill off the Gallagher Amendment once and for all. The hope is to pass legislation that will put a repeal of the Gallagher Amendment on the 2020 ballot so voters can head off further economic disaster in our state.

The Gallagher Amendment, passed in 1982, is a bit complicated to explain (here’s a video from Colorado Fiscal Institute that may or may not help). But going through the minutiae of how the Gallagher Amendment works is probably less important than understanding why it is a problem for Colorado.

Essential services such as public schools, local firefighters, and library districts rely on funding from property tax revenues. Residential property represents roughly 75% of all valued property, but under the Gallagher Amendment it can only provide 45% of all property tax revenue for local services. When the value of commercial properties decreases — which, for obvious reasons, is happening during the coronavirus pandemic — then commercial property values are lowered; that means less money for local services.

Moreover, residential property tax rates adjust based on current rates for commercial real estate properties. When the value of commercial properties goes down, the Gallagher Amendment requires an associated lowering of residential property tax rates to maintain the 45/55 split for revenue from residential/commercial properties. Yada, yada, yada…massive cuts to local school districts, fire departments, and libraries.

The purpose behind the Gallagher Amendment was to make sure that residential property rates didn’t increase too much compared to the tax rates for other properties and services, which in the 1980s was a particularly popular complaint for East Coast property owners. The Gallagher Amendment would be problematic enough on its own, but it is doubly-destructive in Colorado because we also have TABOR. As Conrad Swanson writes for The Denver Post:

Estimates from the state’s property tax administrator show that residential rates could drop from the current 7.15% to 5.88%, spelling a $491 million cut for school districts statewide and a $204 million cut for county governments, as Chalkbeat reported.

“The impact on schools is going to be brutal if we don’t repeal Gallagher,” Hansen said. “Massive.”

And that lost revenue will stay lost, Rep. Daneya Esgar said. While the Gallagher Amendment allows residential rates to float up and down as needed, a second amendment passed in 1992, the Taxpayer’s Bill of Rights, prevents the taxes from rising again, she said.

“If we get rid of Gallagher before the residential assessment rate drops, we can at least maintain where it is right now,” Esgar said. Otherwise, “we’ll never be able to get back to where we are now.” [Pols emphasis]

Repealing the Gallagher Amendment would not increase anyone’s property taxes — it would just stop a process of ratcheting those funds ever downward. Legislators need to get a 2/3rds majority to approve putting a repeal on the ballot in November; a corresponding measure would ask voters to freeze residential property tax rates for several years.

And if that doesn’t pass? The Post provides one particularly grim assessment:

Fire departments across the state will lose a substantial amount of cash. Already the Glenwood Springs department’s 28 full-time employees face staggered furloughs, but another hit to the budget would mean fire stations would go unstaffed, [Pols emphasis] Fire Chief Gary Tillotson said. Emergency calls would be answered by other stations across town or from neighboring departments dealing with their own budget shortfalls.

In a very real sense, the Gallagher Amendment needs to die in order to help keep Coloradans alive. That battle has now begun.

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  1. gertie97 says:

    A marketing whiz will have to figure out how to explain this in 20 snappy seconds if there's to be a ghost of a chance of passage.

    Good luck with that.

  2. Genghis says:

    Gertie's right about the need for a snappy 20 seconds, but damn, this needs to happen.

    This also draws a big red circle around a couple of indisputable facts: (1) using property tax revenues to fund libraries, and fire departments, ffs, is spectacularly stupid; and (2) using property tax revenues to fund public schools is both spectacularly stupid and egregiously violative of the "thorough and uniform system" provision of the state constitution. The state supreme court's decision to OK the system is a disgrace of biblical proportions.

  3. Conserv. Head Banger says:

    TABOR is the problem, not Gallagher. 

  4. JohnInDenverJohnInDenver says:

    Years ago, Alicia Caldwell of The Denver Post had an article and a follow-up of a 2011 discussion on funding Colorado's government.  the Post brought together Steve Tool, Norma Anderson, Penfield Tate and Alice Madden to find ways to address the state budget process. The follow-up article had this coherent comment:

    In Colorado, spending and revenue are controlled by constitutional amendments approved by voters. The Taxpayer’s Bill of Rights imposes a wide range of limitations on how much money government can collect. The Gallagher amendment, in combination with TABOR, holds down the proportion of residential tax value that is subject to taxation. And Amendment 23 guarantees minimum levels of funding for K-12 education, which comprises 43 percent of the general fund, by far the largest part of it.

    That is the essence of the so-called Gordian Knot.

    Unless the contradictions are unraveled, we will continue to lurch from crisis to crisis.

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