Ballot Issue 6A
Thank you for your interest in the ballot issue 6A for the 2019 November election.  The ballot question is a revenue-stabilization question that will help continue the District's ability to:

  • maintain quick response times;
  • provide continuous funding to maintain reliable emergency equipment such as special automobile extrication equipment, cardiac resuscitation equipment, radios, and appropriate firefighter protection;
  • purchase emergency vehicles without incurring interest-bearing debt and have to use taxpayer funds to pay loan interest;
  • maintain maximized health and safety environments within fire stations;
  • provide competitive wages and benefits that greatly minimizes quality-affecting turnover rates; and
  • not require personnel cuts that affect service delivery

by providing stability to the District’s revenues without raising taxes.  It preserves the tremendous progress the District has made since the successful 2017 ballot initiative.  Many fire districts across the state are purusing this kind of initiative.  Here are the details behind it.

Your local property tax is calculated as below.

Property Tax  =  Property Market Value  x  Assessment Rate  x  Mill Levy Rate

The Assessment Rate is the percentage of the market value of a property that taxes can be assessed against.  This figure is decided by state legislators biennially and applied statewide.  (In 2019, the residential rate is 7.2% and in 2020, it will be 7.15%) The local mill levy rate is the actual tax rate of the assessed value.  


As an example for TLM for property tax collected;

Residential:                       $394.68 = $300,000  x  7.15%  x  18.4 mills
Non-Residential:              $1,600.80 = $300,000  x  29%  x  18.4 mills

What Issue 6A does is to ask voters if the state reduces the amount of property that can be assessed (see below black), can the TLMFPD Board have the option of beginning in fiscal year 2022, to raise the mill levy rate (see below red), without additional voter permission, an amount that offsets the revenue loss from the reduced property assessment.  This would just preserve existing revenues, not increase them (see below green). 


Using the above example with a state-mandated RAR adjustment:

Old:        $394.68 = $300,000  x  7.15%  x  18.4 mills
New:      $394.68 = $300,000  x  7.00%  x  18.8 mills

In this example, if the state were to reduce its RAR from 7.15% to 7.0%, the District’s Board would be allowed to consider and approve an option of raising their mill levy from 18.4 mills to 18.8 mills without additional voter approval.

The current RAR is 7.2% and the state has reduced the RAR for fiscal years 2020 and 2021 to 7.15%.  This next decrease would be absorbed into the budgets for the next two years and only considered an option starting in the 2022 budget year and only if the RAR was to decrease (which is anticipated).


Here is the complete background. In 1982, Colorado residents passed a constitutional amendment called the Gallagher Amendment.  The purpose of the amendment was to address rapidly rising residential property taxes by creating a formula that proportioned property tax revenues across the state between residential and non-residential property.   The formula was based on the proportion between the main property types that existed in 1982, 55% non-residential property and 45% residential property.  In other words, for every dollar collected across the state in property taxes, $0.55 was to come from non-residential property and $0.45 was to come from residential property.
 
$1.00 (collected property tax) =
$0.55 (non-residential property) + $0.45 (residential property)

To maintain this proportion, property assessment rates (the percentage of the market value of a property that is taxable) would be adjusted on a biennial basis in order to produce this fixed ratio.  To create a non-arbitrary starting point for the calculation, the Colorado legislature fixed the non-residential assessment rate at 29% but decided to float the residential assessment rate (RAR) which, at that time, was 21%.  The idea was if residential building increased across the state at a faster rate than non-residential and created a greater market value, the RAR would be lowered to maintain this 55/45 proportion.   If non-residential building increased at a faster rate, than the RAR would be increased to maintain the 55/45 proportion.

The following examples are extremes just used to demonstrate the point.

Example 1: (Starting values)

                                Total Market Value   Total Non-Residential   Total Residential                                                       Market Value               Market Value               Market Value
Values                            $1,000,000                    $500,000                      $500,000
Assessment Rates                                                    29%                             21%
Assessment Value                                                $145,000                     $105,000*
(* - In 1982, 21% was the RAR valuation.  The 55/45 ratio was set as the goal).
    
Example 2: (Higher residential growth)

                                Total Market Value   Total Non-Residential   Total Residential                                                       Market Value               Market Value               Market Value
Values                            $2,000,000                    $800,000                      $1,200,000
55/45 Percent                                                       $232,000                      $189,818
Assessment Rates                                                    29%                             15.8%
  
Example 3: (Higher non-residential growth)

                                Total Market Value   Total Non-Residential   Total Residential                                                       Market Value               Market Value               Market Value
Values                            $2,000,000                    $1,200,000                    $800,000
55/45 Percent                                                       $348,000                      $284,727
Assessment Rates                                                    29%                             35.6%

Notice how in Example 2 that when the residential market value increased faster than non-residential, the assessment rate dropped from 21% to 15.8% to maintain the 55/45 proportion.   In Example 3 where non-residential growth was higher, the RAR increased from 21% to 35.6% to maintain the proportion.   

However, two problems have arisen associated with this methodology.  First, in 1997, Colorado residents passed the TABOR Amendment which has been interpreted to put an additional factor into the Gallagher intent.  If the residential assessment rate was calculated to increase, citizens across the state would now need to vote on it.  It would no longer float and happen automatically.   The results are that RARs can decrease (and reduce local government revenue and possibly services) without voter approval but not increase. 

The second issue, and the one that affects us more directly, is that growth of either type (residential or non-residential) is not consistent across the state.  Therefore when total statewide growth requires an assessment rate to decrease, if there is not the associated growth locally to offset this, property tax revenues decrease forcing difficult service decisions by local leaders.   The majority of fire districts in El Paso County are in this situation now and while the Tri-Lakes Monument area is currently experiencing growth, once this growth slows down or a recessionary economy affects us, we will be affected.

Ballot 6A seeks to remove this risk from District finances and services to the community.

If you have further questions, please don’t hesitate to contact the Fire Chief at 719-484-0911 or chief@tlmfire.org.


Ballot Issue 6A