Gov. John Hickenlooper on Tuesday asked the Colorado Supreme Court to look into conflicts between two state constitutional amendments that critics say combine to drain away tax revenue needed by communities around the state to fund schools, firefighting and other services.
Those conflicts are “preventing local governments from funding even limited essential services,” Hickenlooper’s filing with the court says. “... It has resulted in the steady erosion of the budgets of local governments in communities throughout the state that rely on property taxes.”
The two amendments, both passed by voters years ago, are known as the Taxpayer’s Bill of Rights, or TABOR, and the Gallagher Amendment. Conflicts between the two overlapping amendments have kept residential property tax revenue across the state lower than it would be otherwise, the governor argues.
In a statement, the governor’s office said Hickenlooper had submitted “interrogatories” to the state Supreme Court asking it to examine conflicts between the two amendments.
“The interaction of TABOR and Gallagher has resulted in a system in which provisions in both amendments are not working as intended and is adversely affecting local communities,” Tuesday’s statement said.
Under the state constitution, the governor can directly submit “important questions upon solemn occasions” on constitutional issues to the Supreme Court in the form of interrogatories. It’s up to the court whether to review the questions and rule on them.
“Colorado’s local governments must be able to provide essential services,” Hickenlooper said. “With clarification from the Colorado Supreme Court, we will be able to address the funding issues caused by the conflict and find a workable solution.”
The Gallagher amendment, adopted in 1982, permanently set the shares of total property tax statewide that owners of residential and commercial property pay, with homeowners paying a combined 45 percent and businesses 55 percent.
The amendment also fixed the assessment rate on most commercial property at 29 percent of value, but called for the rate on residential property to slide up or down at a uniform level statewide as property values change so that the state’s homeowners kept paying 45 percent of total property taxes.
But TABOR, passed in 1992, bars tax increases unless approved by voters. TABOR has been interpreted by lawmakers as blocking the residential adjustments called for under Gallagher, with the effect of pushing down residential assessment rates statewide as property values have increased sharply in metro Denver in order to maintain the 45-55 percent ratio.
As a result, according to Hickenlooper’s filing, residential assessment rates have dropped from 21 percent in 1983 to 7.2 percent currently.
Since home values have increased far less in rural areas, local governments in those parts of the state have been receiving less property tax revenue each year as the residential assessment rates get pushed down under Gallagher as impacted by TABOR, Hickenlooper argues. Rural communities that rely on property taxes to fund schools, fire departments and other services are being squeezed, he said.
“What the governor wants is for the Supreme Court to weigh in if there actually is a conflict between the Gallagher Amendment and TABOR,” Christopher Jackson, a political and public law attorney in Denver, told 9News. “The government thinks there is some kind of conflict, and so he is trying to get some kind of guidance from the Supreme Court to say, if these two provisions conflict, what are state and local governments to do? What is the best way for them to address that conflict?”
Jackson said that if the Supreme Court finds a conflict, the legislature or a group of citizens can ask for a constitutional amendment in the next election.
Backers of the two measures say that it’s proper to ask taxpayers to approve any tax increases. But others say that TABOR should not be seen as overriding Gallagher’s provisions and that assessment rates should be allowed to rise or fall as the voters intended.
Hickenlooper’s interrogatories ask the court to determine whether TABOR had “overwritten or superseded” parts of the Gallagher Amendment, or even “invalidated” Gallagher.
It also asks at what level the General Assembly can set the residential property-tax assessment rate in future years.
Hickenlooper asked the Supreme Court to answer his interrogatories ahead of the next legislative session in January, but there was no immediate indication of whether the court could act that quickly.
State Rep. Daneya Esgar, D-Pueblo, a member of the legislature’s Joint Budget Committee, issued a statement Wednesday supporting Hickenlooper’s move.
“If the unintended consequences of the Gallagher amendment are not addressed, Colorado will continue to see major problems for education, fire, library districts and our rural communities,” Esgar said. “It will be helpful to get additional clarity from the court on this issue as we continue looking for solutions. Whether you’re a Republican, unaffiliated, Democrat or the governor, we all recognize that this is a critical issue that is depriving communities and that we have to work together and to address it.”
In 2017, the Colorado State Fire Chiefs, facing severe budget cuts, asked Hickenlooper to seek the Supreme Court examination of the matter, The Denver Post reports.
Tom Demint, president of the Colorado State Fire Chiefs and chief of the Poudre Fire Authority in Fort Collins, noted that his group has been engaged in a “long effort to address the negative fiscal synergy between Gallagher and TABOR.”
He thanked Hickenlooper for his action.
“We are extremely pleased that the governor decided to ask the questions of the Supreme Court prior to the 2019 General Assembly. Depending on the action of the Supreme Court, we may have a more positive fiscal future for the fire protection districts in Colorado,” Demint said in a statement.
In an interview with 9News in April, several Colorado fire chiefs complained that the situation was hampering their ability to provide services and save lives.
“We have two (fire) stations,” Chief Alan Fletcher of the Fairmount fire district near Golden said at the time. “The potential is we’d go down to one.”
The fire chiefs group was listed as a “supporting agency” in Hickenlooper’s filing, along with the Colorado Professional Fire Fighters, the Special District Association of Colorado, Colorado Counties Inc., the Colorado Association of School Boards and the Metro Denver Chamber of Commerce.