Colorado Gov. Jared Polis sent a letter to leaders of local governments Wednesday calling on them to lower property tax rates, and he wrote a guest column in The Denver Post Thursday calling on constituents to echo his call.
“I appreciate that you work hard to pass a budget that is responsive to the needs in your community,” Polis wrote to leaders. “With the historic rise in property values, most districts can make significant rate cuts and still maintain strong revenue growth at or above the rate of inflation. I urge you to consider this and reduce your mill levy as much as possible.”
But property owners in Southwest Colorado should not hold their breath.
Officials at taxing districts across the region say they cannot afford to lower taxes any more as the costs of labor, equipment and materials continue to rise.
In fact, those officials have strong words for the governor, who they accuse of not understanding the financial constraints of districts in rural Colorado.
Hal Doughty, the outgoing chief of the Durango Fire Protection District, said “absolutely not” in response to the request.
“How would that be if I told the governor how he ought to do his business? It’s just ridiculous to think that we can continue to provide the outstanding service that we provide while cutting the funding that it takes to provide that service,” Doughty said.
With property values up as much as 30 or 40% in some pockets of the market this year, property taxes have also jumped. Proposition HH, the convoluted and verbose ballot question that Democrats put forth to limit tax increases, flopped in the November election, prompting Polis to convene a special legislative session before Thanksgiving.
How are property taxes calculated?
Property taxes are calculated by multiplying the actual value (determined by the market and set by county appraisers), by an assessment ratio to produce the assessed value. The assessed value is then multiplied by the mill levy – one mill is a $1 tax on every $1,000 of taxable value – to produce a tax bill.
Example
A home worth $640,000 with an assessment rate of 6.7% and a mill levy of 35 mills:
$640,000 (actual value) x 0.067 (assessment ratio) = $42,880.
$42,880 (assessed value) x .035 (mill levy) = $1,500.80 property tax
The General Assembly passed a bill containing several provisions similar to those in Prop. HH. The bill limited property tax increases by lowering the assessment ratio from 6.765% to 6.7% and bumped the amount of a home’s value that is exempt from taxation from $15,000 to $55,000.
But lowering the assessment ratio and increasing the exempt value modifies the two factors that local taxing entities cannot control. The only factor districts can control, the mill levy, can only be raised with voters’ approval.
Prop. HH contained a mechanism that could have reimbursed some taxing districts for some lost revenue. However, the new property tax relief plan will only compensate fire districts, as well as local governments in which the assessed value of property did not increase by more than 13.5%.
Now, the governor is calling on taxing entities to take advantage of SB23-108, a law he signed this year that allows for a temporary decrease in mill levies. In the past, any increase in taxes, even back to a previously approved rate, would have to be once again affirmed by voters.
“While these savings will certainly help, property tax bills will still go up for most Colorado families, which is why I am asking local governments to provide additional savings by reducing their property tax rates,” Polis wrote in The Post column.
The foundation of the request was that property values – and thus, tax revenues – have outpaced growing inflation.
But officials aren’t so sure.
Marsha Porter-Norton, the chair of the La Plata Board of County Commissioners, says the county already considered this option when the bill passed and decided that the finances were just too tight.
“Governor, thank you for your leadership and caring about giving property tax relief,” she said. “We also are extremely important in the conversation, because each of the 64 counties is different, and that's why we have local elected officials.”
Her counterpart in Montezuma County, Commissioner Jim Candelaria, agrees.
“This is a local control issue,” he said. “It always has been and it needs to stay local. He (Polis) doesn't have any idea what our finances are.”
Other officials, such as incoming DFPD Chief Randy Black, say the same thing.
“This is the problem when you have somebody that's somewhat detached from what's happening in La Plata County making decisions in Denver that affect us,” Black said.
He said construction prices have gone up 166% since 2018 and fire trucks are 30-40% more expensive.
“Governor Polis understands that different taxing districts will have different financial positions, and is urging local governments to look at their budgets and do what they can to provide additional property tax relief to Coloradans where possible and help keep our communities affordable,” a spokesperson for the governor said in an email to The Durango Herald.
La Plata County will not drop its mill levy of 8.5 mills, already the fourth-lowest in the state, because of what Porter-Norton characterized as “very pressing” needs across county funds.
“While we respect that people are out there and struggling, we also have services that we are trying to provide in a growing county,” she said.
Total tax rates vary across the county depending on the metro district, water provider, school district and other taxing entities to which a property owner must pony up.
For the median home, worth $640,000, with the median mill levy of 46.242, a hypothetical decrease of the county tax by 2 mills would save the homeowner $78.40 on a tax bill that would otherwise total $1,812.69.
But Porter-Norton warns that when aggregated, those cuts would have a significant impact on county operations. And she isn’t the only one to feel that way.
“Our expenditures are outrunning our revenue right now,” Candelaria said. “We've already made significant cuts. So there's no way for us responsibly to lower our mill levy.”
Montezuma County has a total tax rate of 15.7 mills.
Guy Patterson, manager of the Forest Lakes Metropolitan District, said the district has no intention of cutting its taxes at this time, especially given that there are several expensive projects that will have to happen in the next few years.
Even though district managers are not lowering mill levies, the recent legislation foists an added workload onto county assessors, who must go back and revise actual values to include that added exempt values.
That process will take two to three weeks, County Assessor Carrie Woodson said. The state extended the deadline by which final certifications are due from Dec. 10 to Jan. 3, and is giving taxing entities more time to certify mill levies.
“Thank goodness for that,” Woodson said. “We couldn't have got it done if they had not. It would have been impossible.”
rschafir@durangoherald.com
