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Upset about soaring property taxes? The 2020 repeal of the Gallagher Amendment is partly to blame

A 45/55 split of the state's overall property tax between residential and non-residential property owners that was mandated by Gallagher is no more.
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Posted at 8:31 AM, May 02, 2023

DENVER — Many Coloradans are suffering from sticker shock at the mailbox as they learn just how much their property taxes are set to increase in 2023.

The spike is largely due to a historic bump in property values statewide. Also contributing, though, is the decision by voters in 2020 to repeal the Gallagher Amendment.

The Gallagher Amendment, which was passed in 1982, was meant to be a way to keep residential property tax rates lower than the rates paid by non-residential property owners, such as businesses.

The share of the state’s overall property tax was split, with residential properties paying 45% of the share while non-residential properties paid 55% of the share.

As property values have increased over the years, assessment values on residential properties have had to steadily decrease to maintain the 45/55 split mandated by Gallagher. Assessment rates determine how much of a property’s value can be taxed.

“The reason homeowners have never experienced this before is [that,] until 2020, we had the Gallagher Amendment,” said Scott Wasserman with the Bell Policy Center, which focuses on economic policy in Colorado. “When Coloradans’ residential home values went up, the assessment rate went down, and the business side — the non-residential side — would go up to compensate."
“When we got rid of the Gallagher Amendment in 2020, that meant that when residential home values go up, so too will residential property taxes,” said Wasserman.

At the time, the repeal of Gallagher was seen as a victory for those who hoped to balance out the share of property taxes paid by businesses and ideally free more money up for schools, fire districts, hospitals and more — particularly in rural parts of Colorado.

Opponents of the repeal, including the amendment’s author, Dennis Gallagher, had argued that recessionary times — the months after the onset of the coronavirus — wasn’t the right time to repeal the amendment.

Gov. Jared Polis on Monday, May 1, unveiled proposed legislation that he said would take a three-pronged approach to cutting property taxes:

  • Relief for homeowners with “predictability over time” 
  • “Addressing some of the problems that Gallagher created” by lowering the tax rate for businesses over time
  • Preventing property tax rates from increasing faster than income by capping property tax collection at the rate of inflation

Advance Colorado, the conservative advocacy group, said the bill does not provide a long-term solution. The group called the bill a "half-baked proposal" that provides relief "with money taxpayers are already owed" through the Taxpayer Bill of Rights (TABOR).
You can read a detailed summary of the proposed property tax bill here.