The Pagosa Fire Protection District (PFPD) Board of Directors approved a resolution expressing opposition to Colorado statewide ballot initiatives 50 and 108 at its Aug. 6 meeting.
Both initiatives will appear on the 2024 general election ballot in Colorado and provide proposals to reduce property taxes that would also potentially impact the funding of local governments reliant on property taxes for revenue.
Fire Chief Robert Bertram opened the discussion of the resolution by explaining that the Special District Association of Colorado and the Colorado State Fire Chiefs are urging fire districts to adopt resolutions opposing ballot initiatives 50 and 108.
PFPD board member Wayne Hooper asked PFPD legal counsel Dino Ross to present “both sides” of the issues related to the initiatives, including their impact on the PFPD and on the property taxes for local residents.
Ross began by explaining that the state has experienced large increases in property values and assessments due to rising housing prices, which has caused protests from residents about the increasing tax burdens they face.
He stated that Colorado has had the Gallagher Amendment in place since 1982, which fixed commercial property taxes at 29 percent of actual value.
Under the amendment, Ross indicated, residential property taxes are adjusted to maintain a statewide balance where 55 percent of property tax revenues come from commercial and 45 percent come from residential.
However, he stated that the increases in residential property values “far outpace” increases in commercial values, causing decreases in residential property taxes, falling from 21 percent in 1982 to 7.15 percent in 2020.
He explained that the function of the Gallagher Amendment was damaged by the imposition of the Colorado Taxpayer’s Bill of Rights (TABOR), which prevented property taxes from increasing in years where property values fell.
“So, the swing that was supposed to happen with Gallagher got broken,” Ross said, adding that the Gallagher Amendment was removed by the Colorado Legislature in 2020.
He explained that the removal of the Gallagher Amendment created a situation where the Legislature frequently adjusts the property tax rates with little guidance and has “opened the door” for statewide ballot issues like initiatives 50 and 108.
Ross stated that Initiative 50 will change the state constitution to cap yearly revenue growth at 4 percent for local governments, meaning that a government cannot collect more than 4 percent more property tax revenue one year than it did the year before.
He commented that this would benefit the taxpayers by reducing the growth of property taxes, although it would also have the “unintended consequence of devastating local governments.”
The cap would potentially prevent local governments from keeping up with inflation and would stop them from accumulating revenue for “the lean years,” such as when a recession occurs.
“I sincerely, in my heart, believe if something like this goes through, you could be seeing the door shut on a lot of local governments that just can’t make ends meet anymore with that kind of cap,” Ross said. “It’s well intentioned perhaps and would provide short-term benefit, but the trade-off is going to be devastating in terms of local services.”
He explained that Initiative 108 has, in his opinion, “even more significant issues with it than Proposition 50.”
He noted that, since Initiative 108 is a legislative amendment and not a constitutional amendment, it would only require 50 percent of votes to pass compared to the 55 percent required for a constitutional amendment.
Initiative 108 would permanently reduce the residential assessment rate from 7.15 percent to 5.7 percent and the commercial rate from 29 percent to 24 percent, Ross commented.
He added that this would be a “staggering reduction” in property tax revenues, with a projected initial impact of reducing property tax revenues statewide by $3 billion.
Ross explained that the initiative requires the state government to backfill local governments for the reductions in property tax revenues.
He commented that this “simply is not going to happen” given the backfill amount would be 50 percent of the state’s overall budget.
“That’s really the pros and cons,” Ross said. “You get a property tax reduction — could be substantial depending on your area and what your property’s worth. But, you’re going to see a significant impact on local government and services.
Hooper asked if the Legislature is working on a third property tax reduction proposal.
Ross explained that the Legislature passed Senate Bill (SB) 233, which would go into effect if the ballot initiatives fail and would also cause “substantial” reductions in property assessment rates.
He commented that SB 233 would also impact local government, but not to the same degree as the two ballot initiatives.
Hooper stated that he read that smaller counties and districts would experience the largest impacts from the ballot initiatives and asked Ross if he agreed with this.
Ross stated that this is true and that smaller districts would be less able to absorb the revenue losses compared to larger districts with more diverse revenue streams.
PFPD board member James Martin commented that there is no cap on the increases of costs of equipment and supplies, which could make it difficult for the district to maintain its current equipment and operations if the rate of growth of its revenues is lower than the rate of increase for its costs.
Ross commented that the initiatives do not account for the rising costs districts are experiencing.
Martin asked if there is another revenue source the district could use to make up the cost shortfalls.
Bertram stated that the district now has the ability to seek the approval of a sales tax for the district and to impose impact fees due to recent legislation, which gives it “more options than we’ve ever had.”
Martin commented that sales tax could be useful because the burden would partially follow on persons traveling through the community.
Ross commented that the Legislature approving allowing fire districts to collect sales taxes is a significant success for fire districts as it opens up other revenue sources to help reduce the impact of declines in property tax revenues.
PFPD board member Ronald Beckman asked if there would be a public education component included in the resolution to oppose the passage of the ballot initiatives.
Bertram commented that the resolution would allow statewide groups to list the district in lists of fire districts opposing the ballot initiative, thus assisting the statewide campaign against the initiatives.
Ross stated that the district is limited in what public education it can do by the Fair Campaign Practices Act.
He explained that the district could only publicize the resolution in the same manner that it publicizes other official district acts, which would mean publishing the resolution on the district’s website.
Ross noted that the district cannot expend funds to campaign against the resolution except for the fire chief being able to spend $50 expressing his opinions on the resolution.
He added that the district could put together a factual statement presenting the arguments for and against Initiative 108, although it could not do so for Initiative 50 since it is a constitutional amendment and the courts have determined that districts cannot spend district funds presenting factual statements on constitutional amendments.
The value of adopting the resolution would be having the district listed alongside other local governments opposing the initiatives, Ross stated, adding that this information would be used by statewide campaign organizations against the initiatives.
He noted that this campaign will be expensive, involving millions of dollars of expenditures.
Ross stated that the district can also answer unsolicited questions about the initiatives and their impact on the district, although it cannot advocate for how to vote on the initiative as part of providing this information.
However, he noted, the fire district board members as private citizens have the ability to express their personal opinions on the initiative, although they must be clear that they are not speaking for the district when doing so.
The board then unanimously voted to adopt the resolution opposing initiatives 50 and 108.
The resolution covers the concerns discussed at the meeting, adding that the losses in property tax revenues may negatively impact the district’s ability to provide services and its ability to successfully plan for the future.
