DENVER — Colorado’s 38-year-old Gallagher Amendment has been repealed by voters, who passed Amendment B in a 58%-42% vote as of 10:30 p.m. Tuesday, with 82% of precincts reporting.
The Associated Press called the race not long after 10 p.m. Tuesday. The repeal of the Gallagher Amendment to the state constitution, which was first passed in 1982, is a victory for those who have fought for years to repeal it to balance out the share of property taxes paid by businesses and ideally free more money up for schools, fire districts, hospitals and more – particularly in rural parts of Colorado.
Amendment B’s passage repeals the amendment, meaning that the 45%-55% ratio, which requires residential properties to pay 45% of the state’s property tax share and non-residential properties to pay 55% of the share, will no longer be intact.
When the amendment was originally passed, the residential assessment rate was set at 21%, but it has been adjusted every two years to keep the 45-55 ratio intact and currently sits at 7.15%, with another expected drop to 5.88%, as residential property values increased in Colorado’s urban areas but not as much in rural areas.
Because of the repeal, the reference to the original 21% rate is also repealed, except for producing mines and lands or leases that are producing oil or gas.
Assessment rates for both residential and non-residential properties will be frozen under a moratorium that takes effect because of Amendment B’s passage.
The Gallagher Amendment, combined with the Taxpayer Bill of Rights (TABOR), have not allowed for local governments to raise taxes on businesses, which could compensate for falling residential rates over the years, without calling a vote of the people – a requirement under TABOR.
The push to pass Amendment B came from bipartisan lawmakers hoping to bring more money into all of Colorado – but particularly rural parts of the state that have been even more tightly squeezed because of Gallagher than urban areas – to help the budgets of fire districts, school districts and health care facilities as the state faces a massive budget shortfall.
Fire districts were among the most vocal in pushing for Amendment B’s passage, as they do not receive funding from the state to make up budget differences as schools do. Some fire districts, like West Metro, have asked voters on a local level to approve allowing them to adjust their mill levy rates to compensate for the falling residential property rates.
The falling residential property tax rates has resulted in tens of billions in savings for Colorado homeowners over the past three decades but have shifted a massive taxpayer burden to business owners, some of whom have cited the massive property tax bill each year – which can often be in the tens of thousands of dollars – as reasons for closing shop or moving out-of-state.
Opponents of the measure, including the amendment’s author, Dennis Gallagher, had argued that it wasn’t the right time during a recession to repeal the amendment, with some homeowners struggling to pay their property taxes, and other opponents argued special interests could try to get legislators to reduce taxes for their clients.
This is a developing news story and will be updated.