Pardon me… did you happen to see where I left my crystal ball? It’s no longer enough just to be able to cite recent sales statistics in response to a question about the local real estate market. Everyone already knows – it’s hot (or “Crazy” if you read last month’s column). Now, judging by some recent conversations I’ve had with folks, inquiring minds really want to know what the future holds. How long can prices keep going up at this pace? How much will pandemic-spawned unemployment / under-employment affect real estate here, or in the Denver / Boulder area? What will my house be worth three years from now if I add a bathroom? In these uncertain times I think I’d rather be a carnival guy who tries to guess your age and weight than to be held accountable for making predictions about future property values.
However, one thing that I do know with certainty is that there is an election looming. And one item on it is Amendment B, a measure to repeal portions of the 1982 Gallagher Amendment, which established fixed parameters relating to real property tax assessments. I feel like I should pause here and issue a warning: “this topic may induce drowsiness” because it’s some seriously arcane stuff, so I’ll do my best to keep it real.
You see, it all started a long long time ago (the 1970’s) in an enchanted place called Colorado. The state had been “discovered” bringing large companies, jobs, and people that caused real estate values to climb significantly – and property taxes. Fearing that people might be taxed out of their homes, the Gallagher Amendment established a fixed ratio between the residential tax base to all other types of property (commercial, agricultural, etc) at the then current balance of 45% to 55%. Today, however, residential real estate accounts for 80% of the total assessed value statewide and 68% in Delta County, according to our county assessor, Debbie Griffth. So, to maintain the required 45/55 ratio, the state legislature has been forced to continually reduce the property tax “assessment rate” on residential property from 21% in 1982 to 7.15% in 2020 with further declines anticipated as Colorado’s housing boom continues.
So, what’s the problem? Through a combination of this ratcheting down effect and the tax revenue / spending limitations imposed by the 1992 TABOR amendment, special districts that rely on funding through property taxes are experiencing severely declining revenues. Around here that means entities serving the public including: schools, the ambulance district, pool parks and rec, the North Fork and Colorado water conservation districts, the mosquito, hospital, library and fire districts.
To illustrate the magnitude of the problem, Debbie Griffith shared a couple examples with me. Delta Fire District #1 has experienced a reduction of $180,000 in funding from what had been a $620,000 budget, and from 2008 – 2018 the Town of Crawford lost fully half of its property tax revenue. It’s a budgetary train wreck that is literally making it difficult for the fire department, ambulance, and hospital to respond to an actual train wreck. Amendment B was placed on this year’s ballot by the legislature with the bi-partisan support of ⅔ of our representatives. Even though the Tax Payer’s Bill of Rights (TABOR) still provides its protections against non-voter-approved tax increases, and despite the fact that these vital public services face dire budgetary predicaments, I’ll predict that if Amendment B doesn’t pass, it will be because it has the word “taxes” in it.
Now, if I could just find that dang crystal ball, wouldn’t you love to know how all the other questions on the ballot will be answered.