Summit County works to find solutions for potential $5.5M loss in revenue
BRECKENRIDGE — In an effort to avoid a more than $5.5 million drop in revenue in 2022, Summit County officials are considering a ballot question that would ask voters to allow the property tax rate to be higher than state law allows.
Currently, the state projects the residential assessment rate will drop from 7.15% to 5.88%, which is done to maintain the 45-55 ratio of residential to nonresidential property put in place by the Gallagher Amendment to the state’s Constitution.
Under Gallagher, which was passed in 1982, residential property tax revenue is allowed to make up only 45% of the state’s budget. Since Gallagher was enacted, the residential assessment rate has plummeted as values have increased.
With the onset of the novel coronavirus pandemic, residential values are continuing to rise as nonresidential property values drop, causing the residential tax rate to fall. Ultimately, the effect of the rate dropping leads to a substantial and widespread budget shortfall for the county.
The current assessment rate is subjected to change and will be finalized at the next legislative session.
However, if the projected residential assessment rate of 5.88% takes effect, the county is looking at a $1.33 million loss to the general fund, which amounts to a 13% decrease in operating funds in 2022, Finance Director Marty Ferris said.
“We’re seeing other decreases in fees and sales taxes,” she said. “So we’re in a double whammy here.”
It also would mean a $159,916 loss for fire mitigation, $309,968 loss for mental health services and a $700,000 loss to the Safety First fund, which supports the county’s ambulance service, emergency 911 capital improvements and water protection efforts, among other losses across the county.
The Taxpayer’s Bill of Rights prevents the county from altering tax rates to help offset the potential losses. The county instead will have to propose a ballot measure that allows it to have a different residential assessment rate than the state. The Summit Board of County Commissioners will review a proposed ballot question at a special meeting at 4 p.m. Thursday, Aug. 13.
“What we’re really trying to do is not focus too much attention on the question itself because it is such a confusing issue,” County Manager Scott Vargo said. “What we’re trying to do is make it more clear to folks what’s at risk and what’s at stake with regards to the question itself.”
Vargo said it won’t just be the county that is affected by the loss in revenue. Other partners like Building Hope Summit County, the High Country Conservation Center and more will see decreases to their funding, he said.
“The biggest concern is our ability as county government to do our job and to provide the services that people have come to expect,” he said.
If voters don’t approve the ballot measure, there will be few other options for the county to make up the loss in revenue. A measure to repeal the Gallagher Amendment statewide will be on the ballot in November.
If that measure passes, the current residential assessment rate would remain. Vargo said he’s more confident in Summit County voters approving a countrywide ballot measure rather than a statewide measure passing. In 2003, 78% of voters voted against a similar ballot measure that would have repealed Gallagher statewide, according to reporting by the Colorado Sun.
“Maybe the climate has changed, and maybe it will be more successful this time, but that’s anybody’s guess,” Vargo said.
The county also has an option to ask for more funding through a ballot measure; however, that isn’t an “appropriate or logical way to deal with” the revenue loss, Vargo said.
If no ballot measures pass, Vargo said the county would have to look at cuts to personnel. To make up for the money lost, Vargo estimates the drop in revenue equals about 70 of the county’s nearly 500 positions.
“I’m not suggesting that we would be looking for 70 positions … but it is a big number, and it is hard to find those kinds of dollars within the county budget without significantly impacting personnel,” he said.
If the projected 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 Amendment 1A, which was approved in 2010:
- Open space: $393,982
- General: $224,253
- Housing, fire, recpaths and energy efficiency: $279,364
Losses to the 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
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