Economy & Economic Development  September 1, 2015

CSU study: TABOR has led to higher school property taxes for most of state

FORT COLLINS — A new study from Colorado State University reports that a whopping 81 percent of Coloradans pay more in school property taxes than they would if voters had never enacted the Taxpayer Bill of Rights, the 1992 state constitutional amendment that was supposed to do just the opposite.

The phenomenon, the study’s authors wrote, has led to increased funding disparity between school districts and unequal property-tax burdens, with state taxpayers subsidizing a few often-wealthy districts.

The study comes from CSU’s Colorado Futures Center and was published by the Lincoln Institute of Land Policy, a nonpartisan think tank.

Lead author Phyllis Resnick said that since TABOR’s passage, the state has “enacted layers of reform in pursuit of two conflicting goals — lower property taxes and well-funded public schools.”

“The result is greater inequality and inconsistency, and surprisingly, a greater tax burden for more Coloradans,” Resnick said in a release from CSU.

TABOR limited taxes and spending for all units of government and barred tax rate increases without voter approval.

The CSU study looked at the impact of those reforms that were intended to reduce property-tax burdens and control public-education spending. They also modeled the tax burdens had TABOR never been passed.

They found that 74 of the state’s 178 school districts — representing 81 percent of the state’s population — pay more in property taxes than they would have without TABOR.

Conversely, the 21 districts with the lowest school property-tax burdens have enjoyed reductions of between 59 percent and 97 percent, and nine of those districts are among the 25 percent most-wealthy in the state. Because the state mandates a minimum amount of taxpayer funding per student, those districts not only received a greater percentage of school funding from the state than from local property taxes, but they were able to further pad their funding with increased use of override levies.

The study outlined three main circumstances by which certain counties’ base property-tax rates declined:

  • Some counties have fluctuating enrollments. During periods of decline, the limit TABOR places on property-tax revenue is reduced, leading to a reduction in the mill levy. But because the mill levy can’t be increased without a vote, it remains at the lower level even when enrollment increases, meaning shortfalls in per-student funding must be made up by the state.
  • Other districts, often ones where property value is closely tied to natural resource production, see large periods of assessed value increases that lead to a decline in the district’s mill levy. That’s because when production is high, the mill levy must be reduced to keep the district’s property-tax revenue from exceeding TABOR limits. Once again, a vote is needed to increase the mill levy, so it leads to a “ratcheting down” effect where the mill levy remains at the lower levels even after resource production declines.
  • Finally, major economic development not associated with enrollment increases, such as gaming in Gilpin and Teller counties, has led to rapid growth in assessed value and decreased mill levies.

“As these results show, Colorado’s experience should serve as a cautionary tale for other states as they consider enacting tax and expenditure limitations,” Resnick said. “In many cases, Colorado’s property tax limits relied on simple formulas that failed to take into account the complex factors affecting school district financing, such as changing local economic conditions and volatile school enrollment. As a result, these limits have served mostly to redistribute — rather than reduce — Coloradans’ tax burden.”

FORT COLLINS — A new study from Colorado State University reports that a whopping 81 percent of Coloradans pay more in school property taxes than they would if voters had never enacted the Taxpayer Bill of Rights, the 1992 state constitutional amendment that was supposed to do just the opposite.

The phenomenon, the study’s authors wrote, has led to increased funding disparity between school districts and unequal property-tax burdens, with state taxpayers subsidizing a few often-wealthy districts.

The study comes from CSU’s Colorado Futures Center and was published by the Lincoln Institute of Land Policy,…

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