Summit County government asks voters to pass Measure 1A to prevent $5.5M loss in revenue
KEYSTONE — Faced with a potential $5.5 million loss in revenue in 2022, the Summit County government is asking voters to approve a ballot measure that could result in higher property taxes than the state on average.
If it passes Nov. 3, ballot Measure 1A would allow the Summit Board of County Commissioners the ability to adjust the county’s mill levy rate in order to preserve revenue that would otherwise be lost because of declining property tax rates.
Summit County isn’t alone in its effort to preserve funding: Both Grand County and Park counties have similar questions on their ballots.
To understand the reasoning behind Measure 1A, it’s important to first look to the Gallagher Amendment, which requires that residential property tax revenue makes up no more than 45% of the state’s tax base. In order to maintain the 45-55 ratio required by Gallagher, counties use an equation to determine property taxes. The equation multiplies the property’s assessed value by the mill levy rate and the residential assessment rate. Measure 1A allows the county to increase its mill levy rate in order to make up for a drop in the residential assessment rate.
When the Gallagher Amendment first passed in 1982, the residential property tax rate was 21% with commercial properties sitting at 29%. Because residential property values have skyrocketed since the 1980s, the residential assessment rate has plummeted to 7.15% in 2020. The forecast rate for 2022 is 5.88%, which will lead to the $5.5 million loss in revenue in Summit County — unless local Measure 1A or statewide Amendment B pass.
“(The measure) is intended to allow the county to maintain its revenues and avoid a decrease in revenues,” County Attorney Jeff Huntley said. “The ultimate goal of that is to maintain existing county services and stabilize the revenues.”
County officials say the drop in revenue will impact nearly every aspect of public life. The county expects a $1.33 million loss to the general fund, which amounts to a 13% decrease in operating funds. Additionally, county officials forecast a $159,916 cut to fire mitigation funding, a $309,968 loss for mental health services and $700,000 loss to the Safety First Fund — which helps pay for ambulatory services, emergency 911 capital improvements and water protection efforts — among other losses across the county.
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Proponents of the measure argue the potential losses are just too great to ignore.
“If this was a one-time cut of the forecast 13%, it would be one thing,” Summit County Commissioner Thomas Davidson said. “But that is not what this is. The forecast is a cut like this every two years, every single cycle.”
While the measure does not allow the county to increase net tax revenue, if it passes, county commissioners will have the ability to adjust mill levies as needed going forward, Huntley said.
Is it a tax increase?
The language for Measure 1A can be confusing for a person not well-versed in taxes to comprehend.
The beginning of the ballot question, which reads “shall Summit County taxes be increased zero dollars ($0.00) in tax collection year 2021 …” is language required by the Taxpayer Bill of Rights, an amendment to the Colorado Constitution that requires voter approval for tax increases.
Many aspects of TABOR are up to legal interpretation, including whether a mill levy adjustment counts as a tax increase, Huntley said.
“You have to look at more than just that issue, and you have to look at the purpose and what’s going on; what’s the net result,” he said.
For opponents of the measure, the wording makes it clear that what the county is trying to do is raise taxes.
“They’re going to ratchet up the mill levy ratio beyond what it would be, and then it’s fixed,” Summit County Republicans Chairman Mike Tabb said. “So now moving forward, property taxes are going to increase, and for every individual you’re going to pay more.”
Davidson said that people should not read Measure 1A as a tax increase question.
“That is not what the 1A question allows us to do. It simply isn’t,” he said. “What the 1A question allows us to do is increase the mill rate just enough to offset the decrease in the residential assessment ratio. We cannot gain one more cent in tax revenues through what this question authorizes.”
Tabb and other opponents of the measure believe the county should look into its finances and find other ways to make up for the loss in revenue.
“That’s why you accumulate fund balances,” Tabb said. “When you have a temporary drop, that’s what you have fund balances for.”
Tabb believes the county should be looking to cut spending rather than asking the people for money.
“You guys should be prioritizing short-term spending cuts and using your unrestricted fund balances,” he said. “Quit going back, hat in hand, woe is me. We can’t fund the things you guys treasure.”
Davidson said the county keeps its reserves for emergencies, such as wildfires and floods.
“The county, very diligently, during the last at least 14 years that I’ve been serving has worked hard to build up a reserve,” he said. “That reserve is so vitally important to have in waiting.”
Also on the ballot this November is Amendment B, a statewide move to repeal the Gallagher Amendment all together.
Although both ballot measures are connected to Gallagher, they are not connected to each other, Huntley said. However, if both measures pass, the county will still have the ability to adjust its mill levies but it likely won’t be needed.
Davidson argued that people should vote “yes” on both measures if they want to keep vital services alive in their community.
“If you want a good public school for your kid to go to in the future, if you want your roads plowed of snow in the future, you should be voting ‘yes’ on Amendment B,” he said. “Almost all of the counties on the Western Slope really take the brunt of the Gallagher calculations.”
If the projected residential assessment rate of 5.88% takes effect, Summit County expects to lose more than $5.5 million in revenue. Here’s how those losses shake out:
- General fund: $1,326,249
- Road and bridge: $238,578
- Library: $189,046
- Social services: $45,723
- General abatements: $7,035
- Capital expenditure and Legacy Fund: $663,966
- Right Start program: $146,571
- Safety First fund: $700,902
Funds provided through 1A, which was approved in 2010:
- Open space: $393,982
- General: $224,253
- Housing, fire, recpaths and energy efficiency: $279,364
Losses to the 1A Strong Future fund:
- Summit pre-K program: $397,426
- Recycling: $263,466
- Mental health: $309,968
- Fire mitigation: $152,916
- Public facilities (county): $170,462
- Public facilities (child care): $77,458
Total loss in revenue: $5,579,364
Shall Summit County taxes be increased zero dollars in tax collection year 2021, and thereafter shall Summit County be authorized to maintain existing county services, including those recently approved by local voters, by adjusting its mill levies for the sole purpose of sustaining services that will otherwise be lost due to state-imposed changes in the method of calculating assessed valuation, such as changes in statewide property tax assessment rates, so that the actual tax revenues generated by the county’s mill levies are the same as the actual tax revenues that would have been generated had the state of Colorado not imposed such changes, with all adjustments and expenditures subject to annual financial audit, and shall all revenues be collected and spent notwithstanding any limits provided by Article X Section 20 of the Colorado Constitution or any other provision of law?
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