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Plan tackles ed funding

Ritter says freeze property tax rates to boost revenues

Berny Morson, Rocky Mountain News

Published March 14, 2007 at midnight

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Gov. Bill Ritter on Tuesday proposed a freeze on property tax rates, a move that would eliminate reductions for some homeowners in order to fund public schools.

For years, a 1994 school finance law has driven down property tax rates. The resulting decrease in local tax revenue has forced the state to make up the difference to close the gap in school district budgets.

The portion of the state budget that pays for schools could be more than $100 million in the red by the 2011-12 academic year, Ritter said.

Ritter's proposal drew a sharp rebuke from El Paso County Commissioner Douglas Bruce, a longtime tax opponent. He said the freeze is the same as a tax increase.

"The absence of tax relief is a tax increase," Bruce said.

He said Ritter's proposal will be challenged in court, either by himself or others.

Freezing the tax rate will boost local revenue to schools by $84 million per year, saving that much for the state. The money will be used primarily to boost programs for the youngest children, with $65 million going to kindergarten and $12.6 million to pre-school programs, Ritter said.

"If we're going to cut the high school dropout rate in half over the next decade, we need to take these steps today," Ritter said of the early-years programs.

Bruce warned that even if tax rates are frozen, homeowners could get a higher bill if their property's assessed value goes up.

But Ritter said that's not the same as a "tax increase."

"That's a loaded word to use," Ritter said. "If your property value increases and you benefit from the equity in that property increasing, then you may well pay a higher property tax."

Bruce is the author of a 1992 state constitutional amendment, the Taxpayer's Bill of Rights, that limits the amount of revenue that government agencies, such as school districts, may collect. Agencies must return revenue in excess of the cap.

Ritter said his proposal does not interfere with TABOR. Most school districts have already voted to exempt themselves from the TABOR revenue caps, he noted.

Ritter said his proposal addresses the 1994 school finance law that also included caps on property tax revenue.

That law allows tax rates to decline, but not to increase, driving the demand for state aid, Ritter said.

Ritter's proposal will be offered as an amendment to a school finance bill that comes up today in the Senate Education Committee.

A freeze on tax rates would come at a time when neighboring districts have different property tax burdens. For example, the basic property tax rate in Jefferson County is 26.252 mills, while in neighboring Denver the rate is 25.541.

But the rates vary sharply in some outlying districts. In Aspen, for example, the rate is 4.836 mills.

Sen. Sue Windels, D-Arvada, chairwoman of the Senate Education Committee and the sponsor of the school finance bill, said the discrepancy in rates will have to be dealt with in future legislation.

What's next

• Ritter's proposal will be offered today as an amendment to SB 199, which deals with school funding.

• If it passes, the bill still must be approved by the full Senate and by the House before going to Ritter for his signature.

• Then it would become part of state school finance law.

• Homeowners may not see any change in tax notices until the next time their homes are valued by a county assessor.

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