Ways Sought To Avert Residential Tax Increase in Colorado
Legislative decisions in in the past few years to place a ceiling on the state's contribution to local school districts and to change assessments on which property taxes are based could "unfairly" increase property taxes for Colorado homeowners next year, according to the chairman of the state Senate education committee.
Under a state "equalization formula," Colorado school districts are guaranteed a level of support at a fixed dollar amount per pupil, based on average daily attendance. The formula was established to equalize per-pupil spending throughout the state. When local property-tax revenue in a district is low, the state pays more to keep the district at the state average.
But at the end of this year, according to state Senator Al Meiklejohn, the state's equalization fund will be frozen at $620 million, while school districts will be allowed to increase their budgets by the usual 7 percent.
"Obviously," he said, "if you freeze the state's share, the property-tax payer is going to pick up the difference." Estimates show that property taxes will increase by an average of 12-to-13 percent, he said.
Currently, 49 percent of the cost of education in the state comes from property taxes, excluding such programs as state special education of the handicapped and transportation reimbursement to local districts.
Senator Meiklejohn has introduced a bill that would remove the cap on the the equalization fund, allowing the state to contribute up to 51.6 percent of school costs over the next two years.
The shift in funding to property taxes that is about to occur is based on legislation passed in 1978. At that time the state legislature passed a bill requiring that local property taxes in Colorado be based on 1973 levels of assessed value. But the law also provided that beginning in 1983, taxes would be based on 1977 assessments.
Residential property increased in value at a greater rate (about 20 percent) than other types of property during those four years. That means, according to Edwin Steinbrecher, assistant state commissioner of education, that homeowners would be hit with a large tax increase and that their tax burden would be relatively larger than that borne by owners of other types of property beginning in 1984. The issue, according to Mr. Steinbrecher, is how to hold down the impact on individual property owners.
A proposed constitutional amendment, which would have to be approved by the voters of the state in November, would both reduce the assessment for tax purposes on residential property from 30 percent to 22 percent of market value and give the state more power to ensure that accurate assessments are conducted in the counties.
An amendment is necessary for such a move because the Colorado constitution requires that all property in the state be as-sessed at the same rate.
Mr. Meiklejohn, however, does not consider the amendment a good way to solve the property-tax problem. "Putting those numbers into the constitution is not good government," he said. "That's a legislative function."
But he would like to see more uniform county assessments. He claims that underassessment of property in some counties is probably costing the state up to $100 million per year in school support funds.
Mr. Meiklejohn said the state's equalization formula gives county property assessors an incentive to underassess property, thus increasing the share of money the state must provide.