CMC is weighing ballot question as tax rates drop
June 26, 2017
Population growth and a booming Front Range housing market are having a negative effect on Colorado Mountain College finances, which could mean voters in the six-county taxing district will face some big decisions.
The fiscal dilemma is being triggered by the 1982 Gallagher amendment, which maintains Colorado's base property tax ratio at 55 percent for commercial property and 45 percent for residential.
While commercial property is assessed at a fixed 29 percent rate, the amendment requires that the residential assessment rate be lowered periodically in order to balance things out. Between 1985 and 2007, the residential assessment rate dropped from 21 percent to 7.96 percent, but has held steady for the past nine years.
However, a rapid increase in residential property valuations and a growing number of new housing units, particularly along the Front Range, meant that the assessment rate had to be recalibrated again, this year to 7.2 percent.
As Front Range population continues to grow, the rate is expected to be adjusted again in 2019, and every two years afterward as long as the boom continues, Matt Gianneschi, chief operating officer for the college district, explained to the CMC board of trustees last week.
That means the college and other taxing entities that rely on property taxes, such as counties, fire districts and water districts around the state, will see a decline in property tax revenues as a result, he said.
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The latest adjustment reduced CMC's revenues by 9.5 percent compared to projections based on increases in residential property values within the college district.
That would have resulted in a revenue increase, Gianneschi said. He explained the net effect of Front Range growth far outpacing local growth, under the Gallagher provisions, is a revenue decrease for the college district.
If the statewide residential rate were to drop to 6.2 percent in the coming years, as projected by the Colorado Legislative Council, it would mean between $4 million and $6 million less to run the college district, Gianneschi said.
CMC would need to see growth in districtwide residential assessments of between 12 to 14 percent in order to offset that, he said.
Trustees could float a ballot question seeking to remove CMC from Gallagher by allowing the district to adjust its mill levy as a way to maintain the same revenues.
That question could be on the ballot as soon as this fall.
"Ultimately, the goal is not to increase taxes, but to try to stabilize the impacts of these adjustments we are seeing because of Front Range growth," Gianneschi said.
If the board decides not to pursue a ballot question or if the measure fails, options would be substantial service cuts or to increase tuition by a significant amount, he advised.
Trustees tabled a decision on whether to put together a ballot question for this year, but are expected to revisit the question in mid-July after more information is available. That will include a report on how similar measures have fared in other special districts.
If a ballot question is to be pursued this year, county clerks need to be advised by next month, and ballot language has to be set by Sept. 8.
CMC trustees would also need to decide whether to set a permanent mill levy rate, set a revenue level and adjust the mill levy accordingly, and whether to put a sunset clause on the provision after five, 10 or 20 years.
"The ballot language is important because people don't want their taxes to go up," said Mary Ellen Denomy, the western Garfield County representative on the CMC board.
Lake County representative Pat Chlouber agreed.
"My concern is that people will perceive this as the board having the authority to raise the mill levy and their taxes," she said. "Whether that would be true or not, people are very concerned."
Similar measures in Lake County have failed just on that perception, she said, "even though it wasn't a tax increase."