Ritter's proposal to manipulate property taxes for schools not new

Plan was rejected as unpopular or illegal in the past

Berny Morson, Rocky Mountain News

Published March 20, 2007 at midnight

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A property tax manipulation proposed by Gov. Bill Ritter last week to stabilize school funding has been considered by lawmakers at least since 2004.

But they rejected it as either illegal or unpopular, even as a crisis in funding education loomed larger with each budget year.

"The property tax is never a popular tax and it never will be," said former House Majority Leader Keith King, R-Colorado Springs. King opposed a 2004 proposal similar to the one Ritter has put forward.

"I think, frankly, Gov. Ritter is taking a huge political risk," King said.

Colorado schools are funded by a combination of local property taxes and state aid.

At the heart of the current problem is a Gordian knot of state constitutional amendments and statutes that drives school spending up while driving property taxes down. The result is an increasing demand for state money to fill the budget gaps in the 178 school districts.

That situation is unsustainable, Ritter warned last week. Projections show a $100 million deficit in the state school fund by the 2011-12 school year, Ritter said.

Ritter wants to repeal part of a 1994 school finance act that pushes down the school portion of the local property tax. He would freeze property tax rates indefinitely at current levels, bringing in an estimated $65 million more per year.

If his measure passes, property owners will forgo tax reductions beginning in 2008.

Freezing the rate won't stop increases in the bills homeowners receive. Taxes could go up if property values appreciate in future assessments.

Former Sen. Norma Anderson, R-Lakewood, added exactly the proposal Ritter now champions to a 2004 school finance bill she sponsored.

She still supports the idea.

"It would slow that shift (of school funding) to the state," she said.

The state used to pick up one-third of school costs and local property taxes the rest, Anderson pointed out. Now, the state pays about two-thirds.

Soon, the state will be picking up 80 percent of school costs, she said.

"I give Gov. Ritter credit for bringing it on," Anderson said of the proposal.

But King said the proposal probably runs counter to the Taxpayer's Bill of Rights, the 1992 constitutional amendment that limits tax increases and the amount agencies may spend.

King was the House sponsor of the 2004 school finance bill Anderson carried in the Senate. He was instrumental in removing Anderson's tax rate freeze from the measure.

A 2004 opinion by legislative legal advisers said the rate freeze would be legal since most of the 178 school districts have already voted to exempt themselves from the spending caps contained in Tabor.

King disagrees. While the districts voted to exempt themselves from the spending caps, they did not necessarily suspend Tabor provisions that apply to the tax rate that Ritter wants to freeze, King said.

The immediate cause of the funding problem is a 2000 constitutional amendment requiring the state to increase school funding each year by inflation plus 1 percent.

Voters approved Amendment 23 during a boom economy. It went sour almost immediately, and legislators found themselves dipping into a reserve fund for education in order to cover burgeoning Medicaid, prison and higher education costs.

The fund never recovered.

While Ritter and the lawmakers refer to the problem as a crisis for education, exactly the opposite is the case, budget experts say.

Because of Amendment 23, schools will continue to be funded, even when the education fund is $100 million in the hole.

"We might not have a dime to spend on everything else in the state, but it's not a school crisis," said Rep. Jack Pommer, D-Boulder, a member of the Joint Budget Committee. "What would happen is, somebody could go to court and there would be no judge or the state colleges wouldn't open, because the Constitution protects the K-12 schools."

Milling it over

Estimated impact in selected school districts of a mill levy freeze on $100,000 of residential value. Increases in the assessed value of homes could rise or fall by additional amounts due to changes in the assessed value of properties.

Property taxes '07-'08 '07-'08 per $100,000 law mill mill levy Mill levy of residential District levy freeze change value*

• Aurora 25.420 26.010 0.590 $4.70

• Boulder 24.479 25.023 0.544 $4.33

• Brighton 26.144 26.262 0.118 $0.94

• Cherry Creek 27.568 27.568 0.000 $0.00

• Commerce City 23.870 24.688 0.818 $6.51

• Denver 23.688 25.541 1.853 $14.75

• Douglas 24.401 25.440 1.039 $8.27

• Englewood 19.449 21.895 2.446 $19.47

• Jefferson 25.473 26.252 0.779 $6.20

• Littleton 24.740 25.353 0.613 $4.88

• Mapleton 24.848 26.080 1.232 $9.81

• Northglenn- Thornton 27.524 27.524 0.000 $0.00

• Sheridan 18.907 20.947 2.040 $16.24

• St. Vrain 24.882 24.995 0.113 $0.90

• Westminster 27.066 27.066 0.000 $0.00

• State total 20.521 21.320 0.799 $6.36Source: Legislative Council Staff *The Amount Taxes Will Rise For Each $100,000 Of Assessed Value. For Example, A Home Valued At $200,000 Will Go ...

What's next

• Ritter's proposal will be offered as an amendment to the annual school finance bill - but not when the measure, SB 199, comes up for debate this morning. Even some Democrats are nervous about backing a proposal that Republicans characterize as a tax hike.

• Sen. Sue Windels, D-Arvada, Education Committee chairwoman, said the amendment will be added in the House, allowing time for more legal review. The House has not scheduled a hearing on SB 199, but Rep. Jack Pommer, D-Boulder, its sponsor,said he hopes to offer the amendment. "We're talking to people and seeing what they think."

morsonb@RockyMountainNews.com or 303 954-5209

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