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Colorado Supreme Court ruling on mill levy paves way for property tax increases, more school funding

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Posted at 7:41 PM, May 25, 2021
and last updated 2021-05-26 08:01:45-04

SOUTHERN COLORADO — Colorado lawmakers have passed a bill that will increase property taxes without voter approval for some school districts.

House Bill 1164 will gradually increase local taxes over two decades without a vote, generating more than $91 million for schools next year and more than $288 million a year overall.

The decision comes after the Supreme Court ruled 6-1 that the legislation is constitutional and doesn't violate the state's Taxpayer Bill of Rights (TABOR).

"You have to have voter approval for a mill levy, that's the property tax rate, a mill levy above that for the prior year," said Douglas Bruce, Author of TABOR.

Bruce believes the bill is unconstitutional, and that funds will not go toward K-12 education as intended.

"The money isn't going to the children, the children won't get one dollar from the tax increase. They are going to take it from their parents and other people who don't have kids in the school. They are going to spend it on pay raises, million-dollar pay raises," said Bruce.

While TABOR imposes a cap on school district tax revenue, between 1994 and 2002, voters in 174 of 178 school districts in Colorado chose to permanently waive TABOR’s revenue limitations (“de-bruce”) in order to fill in the gaps caused by its restrictions on public school funding. However, contrary to this voter approval, the Colorado Department of Education issued guidance directing school districts to continue to reduce their tax rates (total program mill levy) to remain under TABOR’s revenue limits.

Proponents say this error has caused some property owners to pay tax rates that are 16 times higher than those of taxpayers in neighboring school districts on properties of the same value, which forces the state to send disproportionately high state funding to the wealthiest districts.

"Canon City has a mill rate set at 27 and there are some that have mill rates of five," said George Welsh, Superintendent of Canon City Public Schools.

Through the passage of the bill, he hopes it helps create a more even playing field for districts.

"School districts around Colorado are going to be asked to increase the contribution they make to their local share of education funding. That will free up space in the state budget to offer more funding for all students in Colorado," said Welsh.

"What this will do is take those dollars that are currently going to some communities at the expense of others. We'll see them invested in education and they'll go to all kids," said Leslie Colwell, Colorado Children’s Campaign.

The bill requires the department of education to adopt a correction scheduled to begin phasing out the tax credits in the 2021 property tax year. The correction schedule must apply consistently to each affected school district and must require each district's tax credit to phase out as quickly as possible but by no more than one mill per year.

"What House Bill 1164 proposes is this reasonable incremental phase-in of a higher property tax rate. In some districts, they won't have to increase their mill levies and others will have a long way to go but they will have two decades to get to where they were," said Colwell.

"It limits the correction to one mill per year. The average correction that needs to be made is around four mills. One mill equates to around $7 per year for every $100,000 of taxable value," said House Majority Leader Daneya Esgar, (D) Pueblo, and co-sponsor of the bill.

She says the bill is expected to minimally impact Southern Colorado.

"Many of the districts in Southern Colorado will not be impacted by this change. Both Pueblo School Districts are at 27 mills so nothing is going to change for Pueblo residents. In Colorado Springs specifically, Harrison School District 2 has not de-bruced locally so this is not going to impact them. Only recently de-bruced, so their levy will stay the same, is Colorado Springs School District 11 which de-bruced in the 2020 election," said Esgar.