Gov. Bill Ritter plans to announce a school-finance proposal today that would freeze property-tax rates statewide – allowing schools to collect as much as $63.6 million more next year than they would if rates were allowed to decrease.
At the same time, Ritter is expected to dump a proposal to use federal mineral lease revenues to cover some school costs – an idea that prompted outcries from West Slope interests who want the money to cope with the impacts of oil and gas drilling.
The proposal to freeze property-tax rates has bounced around the Capitol this year as a way to resolve an impending funding crisis for K-12 public schools.
Current financial projections for the state show that spending caps and mandatory increases for school spending are combining to pull money away from other state programs like universities and human services.
Evan Dreyer, spokesman for Ritter, declined to discuss details of the governor s property-tax proposal. He said Ritter plans to hold a news conference today in Northglenn. It s about school financing, Dreyer said.
Freezing property-tax rates is a potentially controversial move.
Let me make it very clear: That s called a tax increase, said Jon Caldara, president of the Independence Institute, a think tank based in Golden. If taxes were going to go down and action is taken to prevent them from going down, that s a tax increase. Get used to it. Democrats are in control. This is the first of many.
Lawmakers defend the action as a way to cure a problem caused by conflicting constitutional amendments.
I don t freeze property-tax rates, said Sen. Sue Windels, D-Arvada, who plans to amend the annual school funding bill to allow the change advocated by the Ritter administration. I stabilize them.
Less pressure on state
The average property-tax rate for districts in the current fiscal year covering July 2006 to June 2007 is $21.358 per $1,000 of assessed value, according to figures compiled by the nonpartisan Legislative Council. Based on the current state residential assessment rate of 7.96 percent, that would translate to about $425 for the owner of a $250,000 home.
Under the proposal, rates would remain at their current levels. In Denver, for example, the rate of $25.541 per $1,000 of assessed value would hold steady rather than decline to $23.688, according to the Legislative Council.
Keeping the current rate would allow schools statewide to collect an additional $63.6 million in the next fiscal year, according to the Legislative Council.
Windels said the money would relieve some pressure on the state.
Every year we see the property tax ratchet down, Windels said, adding that it shifts more of the cost of K-12 education to the state.
According to a December 2006 study by the Joint Budget Committee, rates range from $1.571 per $1,000 of assessed value in the Primero school district in Las Animas County to $40.08 per $1,000 in Washington County s Lone Star district.
State Sen. Joshua Penry, R-Grand Junction, said he s concerned about any effort that boosts the amount of taxes paid.
At first blush, I have real reservations because it amounts to a property-tax increase on working families and small business, said Penry, who was also worried about the plan to tap federal mineral lease revenues.
Competing amendments
State officials are in a bind because of competing constitutional amendments that have reduced property-tax bills, locked in those decreases and mandated K-12 spending increases.
The Gallagher Amendment, approved in 1982, requires that property taxes charged to residences and businesses stay in the same proportion to one another. Under Gallagher, the residential assessment is lowered whenever residential property values rise faster or fall slower than nonresidential values.
The Taxpayer s Bill of Rights, approved in 1992, requires voter approval of tax increases.
The overall impact of the Gallagher and TABOR amendments has been to reduce tax bills.
According to the state Department of Local Affairs, homeowners have saved $10.2 billion over 18 years because of the Gallagher amendment.
Windels said TABOR has undermined a mechanism in the Gallagher amendment that allowed school districts to catch up with growth in their districts. When Gallagher passed, districts covered more than 60 percent of the cost of operating schools, Windels said. Now, the state pays 60 percent.
On the other hand, Amendment 23, which mandates school-funding increases, has forced spending to grow faster than the state can afford, said Penry.
Staff writer Mark P. Couch can be reached at 303-954-1794 or mcouch@denverpost.com.
