Wednesday, March 23, 2016

Higher Property Values Mean Higher Property Taxes, But What About TABOR?



Some homeowners have asked me why their property taxes have increased as much as they have.  Isn’t TABOR (the Taxpayer’s Bill of Rights) supposed to limit revenues to growth plus inflation?

I asked Rep. Max Tyler how he would respond to this question, and he got me an explanation from Larson Silbaugh, senior economist with the Colorado Legislative Council, which provides research assistance to legislators.

Yes, TABOR does limit how much revenue a taxing district can collect, unless that district’s voters have passed a ballot measure exempting the taxing district from that requirement.
 
The Jeffco School District, which has the single largest mill levy in our county — currently 48.721 mills — did succeed in passing such a measure, so it can enjoy the windfall from increased property values.  (Only three of 178 school districts in the state have not obtained voter approval for exemption from TABOR’s revenue limitation requirements.)
 
When voters were asked to let the school district keep tax revenues that exceed TABOR limits, it didn’t occur to me that the increased revenue would come from me as much as from the growth of the economy as a whole. I didn’t realize that when my home’s value increased by 20% that my tax bill would increase by nearly the same percentage!
 
As a voter, I also thought that this provision of TABOR was implemented through the refund process, which is not the case with property taxes.  Instead, since property tax revenue is easily predicted based on biennial valuations by the county assessors, the taxing districts are able to adjust their mill levies downward so they only collect the amount of revenue allowed by TABOR. 
 
For example, Lakewood’s mill levy has gone down from 4.711 mills in 2011 to 2.03 mills in 2015. The Jeffco Sheriff’s mill levy has gone down from 3.2 mills in 2011 to 2.928 mills in 2015.  The West Metro Fire District’s mill levy has gone down from 13.774 mills in 2011 to 13.55 mills in 2015. 
 
Neither Golden’s nor Arvada’s mill levies have changed from 2011 to 2015, indicating that those jurisdictions must have passed a ballot measure exempting them from that provision of TABOR. 
 
Investigating other taxing districts, I was intrigued to discover that Edgewater’s mill levy was 5.03 mills in 2011, but went to zero in 2013 and is still zero.  According to the City’s finance director, this had nothing to do with TABOR. Rather it had to do with ending the city’s volunteer fire department and shifting that responsibility to neighboring Wheat Ridge Fire Department.
 
Looking at the figures above, I’m sure you’ve noticed that the mill levy reductions are nowhere near enough to offset the increase in assessed valuations.  If your mill levy dropped by 3 or 4 percent, but your valuation increased by 20 percent, it’s easy to question whether growth plus inflation justifies your increased property tax.  
 
However, as Larson Silbaugh pointed out in his Legislative Council report to Max Tyler, “The revenue limits in TABOR are calculated on a district-wide basis rather than for individual taxpayers.  When the taxable value of an individual property increases, property taxes can increase faster than district-wide revenue limits.”

Published Mar. 24 2016, in the YourHub section of the Denver Post (Jeffco editions) and in four Jefferson County weekly newspapers.
 

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