SOUTHERN COLORADO — Colorado lawmakers voted 6-3 Wednesday to advance a bill that proponents hope will make the state's K-12 school finance system equal across districts.
HB21-1164 would restore budget cuts from last year, and generate millions for education in the state. It would also gradually increase taxes over two decades for some school districts.
"Building back stronger Colorado truly means that every student in Colorado has access to the education they need to thrive. All Colorado taxpayers and students deserve fair and sufficient funding of the public K-12 system. We are simply correcting an error in our property tax system to help get us there," said House Majority Leader Daneya Esgar, (D) Pueblo, and co-sponsor of the bill.
For the 2020 property tax year, the existing statute corrects the total program mill levies for school districts that are not subject to constitutional property tax revenue restrictions but whose mill levies were erroneously reduced. Each school district that levies a higher number of mills as a result of the correction must grant a tax credit for the number of mills by which the levy is increased.
"It will ask the Colorado Supreme Court to make a determination if the Colorado Department of Education made a mistake in the 1990s when it started forcing property taxes down in school districts around the state based on their property assessment wealth," said Superintendent George Welsh, Cañon City School District.
Right now, taxpayers in different school districts pay different rates with a large chunk of the state's budget taking care of the rest.
"It's created a situation in the state where some school districts pay twice or four times as much into their base mill levy to support their local education institutions," said Welsh. "You can be on one side of the street and pay 27 mills into your local education system and you can be on the other side of the street in a different school district and pay 15 mills into your local education system."
Welsh says the bill would create a more even playing field for districts. In his district, taxpayers pay the maximum mill levy rate of 27.
"There are several districts in the state that have never passed a mill override. In our situation in Canon City, we had two failed mill override attempts in the 1980s and 2017. The most recent failure was in 2013. In 2017, we put a very small question on the ballot for our community. It was a four mill increase so it drove local contribution up from 27 to 31, and it raised a little over $1 million a year. We committed to that money to teacher salaries and putting a device into every child's hand. We had to put a sunset on it ten years out. This thing passed by fewer than 300 votes out of 18,000 cast so it was close," said Welsh.
Under the state's Taxpayer Bill of Rights (TABOR), all tax increases need a vote to pass, but HB21-1164 would gradually increase property tax rates without a vote.
The bill would require the Colorado Department of Education to adopt a correction schedule to begin phasing out the tax credits in the 2021 property tax year. The correction schedule would 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.
"Out of 178 school districts in the state, 127 were affected by this error. There are some that may need to go up one or two mills, but there are others that honestly need to go up 20 mills. No taxpayer or school district deserves that burden slammed on them so we spread it out over 20 years," said Esgar.
Senator Paul Lundeen, (R) Monument, says there are two aspects to the public education aspect.
"How we bring the money and we put the money out. We spend almost $13 billion dollars a year, it averages out to about $15,000 per student on average across the state for public K-12 education. It's been my argument all along that we must be attentive to the student's specific needs and how we spend the money. How the money flows right now is based on a lot of factors and criteria that is all about the institution that isn't student-focused," said Lundeen.
He says once the state figures out how to utilize the funds they spend on students rather than the system then it would be time to raise the question of public education funding.
"It's really not a public education question, it's a tax policy question. What's the appropriate way to collect the taxes so that's really a tax discussion and not an education discussion," said Lundeen.
Before the bill can become law, the Colorado Supreme Court will need to weigh in on whether it’s constitutional.
"If we go to the Supreme Court through an interrogatory, it will actually settle the constitutional question on whether the state has the legal authority to remedy the error by phasing out mill levy credits without that voter approval because we believe the voters already approved to do this. CDE just interpreted what the voters said in what we believe as incorrect so to make sure we are under what the constitution says we should be doing, we want that Supreme Court opinion in order to move forward," said Esgar.
But Tyler Sandberg, Vice President of Ready Colorado, says the bill is unconstitutional under TABOR.
"It will cause an unapproved tax increase for voters who have chosen to not raise their taxes. If they wanted to, they could to their ballot and chose to do so under TABOR," said Sandberg.
He says it fails to solve the larger problem of how the state shares funds with local districts.
"It doesn't provide equality, it doesn't change the school finance formula. Right now as a state, we subsidize Aspen. We send money to Aspen who spends $26,000 or $27,000 per student and yet the state is still subsidizing that rather than giving the money where it's needed to communities that have high degrees of poverty, English Language Learners, special needs students," said Sandberg.
He says the state should focus more on student needs rather than a bill that would increase taxes but not improve how the state uses funds.
"The districts that have the high need students that need additional resources are not going to see more resources because of that. That's the biggest problem with our education system, we are asking or rather telling voters that taxes are going to be increased without asking them and we're not spending the money to meaningfully improve student needs. It's not based on student outcomes, it's based on systemic needs such as wealthy areas getting more money which is not the way to improve education," said Sandberg.
He says the bill is not a long-term fix to the school funding inequities in the state.