Summit County officials consider impacts of property tax relief on budget, public services
An impending ballot question to reduce tax increases coupled with legislation allowing temporary mill levy reductions have left the county government uncertain of its financial future
Summit County officials are preparing to draft multiple budget proposals for 2024 amid uncertainty about how efforts to blunt property tax increases could affect the county’s revenues.
“There’s no doubt that there is some serious financial impact to residents of Summit County,” said Finance Director David Reynolds, during a May 16 Summit Board of County Commissioners meeting.
According to Reynolds, some property values have doubled in the past two years, a 100% increase. The countywide average, however, is a roughly 48% increase in values, Reynolds said.
That figure includes homes, land and commercial property, Reynolds said. According to the Summit County Assessor’s Office, most residential property has seen closer to a 60% to 70% increase.
“Some categories saw much higher increases,” Reynolds said. “Vacant land pieces are up over 100%. Residential ranges anywhere from 25% to 100%, depending on the type of property.”
Property taxes are determined by assessments conducted every two years by the Assessor’s Office. That value is then multiplied by the statewide assessment rate for either commercial or residential properties before being multiplied again by local mill levy rates.
In Summit County, mill levies fund around 40 different entities including Summit Fire & EMS, the Red, White & Blue Fire Protection District, and the Summit School District. Those revenues also go toward voter-approved funds controlled by the county government, such as the Strong Futures Fund, which has subsidized a slew of programs including early childhood care, behavioral health, fire mitigation, recycling and public infrastructure.
The county takes in about one-third of the revenue generated by property taxes, Reynolds said.
“Another third goes to the school district, and then another third is all of the special taxing districts,” Reynolds said.
Property tax bills are set to be issued at the beginning of 2024 and paid later that year. If property owners paid the full amount based on their increased value, and mill levies remained unchanged, the county could net an additional $19.8 million in overall funding, according to an estimate from the county’s finance department.
But there’s a chance that won’t be the case.
Assessment reduction, value exemptions
In the final days of the 2023 legislative session, state Democrats pushed through a sweeping proposal that, if approved by Colorado voters this November, could lower property tax increases across the state over the next decade. Lawmakers also passed a bill to allow local taxing entities to temporarily reduce mill levies before reinstating the rates without needing voter approval.
State Democrats say the legislation is meant to ease the burden of tax increases on some homeowners, especially those on fixed incomes who may have purchased their homes before values skyrocketed.
According to reporting by the Colorado Sun, if voters approve the property tax ballot question, it would reduce the statewide residential assessment rate from 6.765% to 6.7% in 2023 for taxes owed in 2024 and from 6.976% to 6.7% for taxes owed in 2025. Rate reductions for commercial and agricultural properties would also go into effect.
Additionally, it would exempt $50,000 of a home’s value from taxation for taxes owed next year. Homeowners would then see a $40,000 exemption each tax year through 2032. For second-home owners who use their property as a short-term rental or vacation home, the benefit would expire in the 2025 tax year.
The county’s finance department estimates that if the measure passes, it could lower the combined value increase for homes, land and commercial properties from 48% to 41%. Reynolds said it would also mean a roughly 15% to 20% reduction, on average, for property taxes paid in 2024.
That would translate to a $16.9 million increase in overall county funding, down from $19.8 million, Reynolds said. If the county were to also lower its mill levies between 1% and 10%, it would lead to a further reduction in revenue increases, between $580,000 and $5.8 million, respectively.
Mill levy impacts
While mill levies may hold significant sway over the county’s budget, those rate reductions may not have as large an impact on individual homeowners.
Reynolds gave two examples of homes that have seen value increases this year: A house in Summit Cove which increased from $754,700 to $1,061,400 (equalling a $1,055 tax increase) and a condo in Dillon Valley which increased from $212,000 to $335,700 (a $444 tax increase).
A 1% to 10% mill levy reduction would lead to a $12 to $121 property tax decrease for the Summit Cove property. It would lead to a $4 to $38 decrease for the Dillon Valley condo, Reynolds said.
However, that only accounts for county mill levy reductions, Reynolds said. Relief could be greater if other taxing entities outside the county government’s control also lower rates.
Still, Summit County commissioners Elisabeth Lawrence and Tamara Pogue said they were concerned that changes to mill levy distribution could hinder the county’s ability to provide voter-approved services.
“How would that be in keeping with the intent of the voters?” Pogue said. “(A distribution change) doesn’t seem like that’s what we communicated to the voters.”
And, as inflation continues to keep operating costs high for the county, reducing revenue streams now could lead to potential cuts in the future, officials said.
Commissioner Josh Blanchard said it’s worth looking at mill levy adjustments while also informing residents about what those could mean for county operations. A 10% reduction, for example, “could be meaningful,” Blanchard said.
But he added, “Let’s balance that with the impacts it could have on our community budget and what that means for services, programs. That’s the feedback I think we need.”
With the county needing to adopt a 2024 budget by October, and much of the future of its property tax revenue hinging on the November ballot question, officials said they will need to consider multiple budget scenarios in the coming months.
Commissioners also signaled they would pursue more outreach with residents, such as through a town hall or community survey, as those budget scenarios come into focus.
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