The Gallagher Amendment is a 40-year-old formula that has no business in the constitution.
We are proud to stand with the state’s small business leaders, who say Gallagher poses an enormous threat to Colorado’s small businesses in this post-COVID world.
We are proud to stand with firefighters, teachers, law enforcement and rural hospitals, who all oppose Gallagher’s crowd-out of essential local services.
And we’re proud to stand with leaders from rural Colorado and our urban neighborhoods – Gallagher is a reckless policy that traps low-income communities in a downward spiral of higher business taxes and declining local services.
As voters weigh Amendment B, which would repeal the outdated Gallagher amendment from our state constitution. they need only remember the “rule of holes”: If you find yourself in one, stop digging.
Since being placed into our constitution nearly four decades ago, Gallagher’s complicated formula and unintended consequences have put countless Coloradans and Colorado communities in a hole.
Its one-size-fits-none approach is increasingly unfair to rural communities, to low-income areas and to our schools, small businesses and first responders — particularly given the recession and pandemic.
To understand Gallagher, it helps to think of a scale.
When it was put into the constitution in 1982, that scale was reasonably balanced: Gallagher mandated that residential properties make up 45% of state property-tax collections, and that commercial businesses — including small businesses, agricultural properties and commercial space — pay 55%. At the time, residential properties made up 53% of all the property value in the state, and commercial 47%.
But fast forward to 2019, when Colorado’s residential properties account nearly 80% of the property value in the state and pay 45% of the taxes, whereas local businesses, commercial properties and farmers are paying 55% of the property taxes when they have just 20% of the value.
The scale is now seriously out of balance. Small local businesses currently pay a tax rate (29%) that is four times higher than the residential rate (7.15%), and that imbalance is projected to be five times higher next year.
The trouble with locking financial formulas into the constitution is that it makes it impossible to adjust them as unintended consequences and negative impacts come to light. So for Colorado, repealing the Gallagher Amendment is the only way to stop digging the hole.
Under Gallagher, increases in property values in metro Denver have for years resulted in budget cuts for schools, libraries, fire departments and first responders in rural and low-income communities where there is not a sizable commercial property tax base.
And in economic downturns, when businesses suffer and lose value, Gallagher has the result of lowering residential tax rates to maintain the 45/55 split.
So, unless we vote yes on Amendment B, wealthy homeowners across the state (including second- and third-home owners in resort communities) will be getting a break on their property taxes next year, while struggling local businesses like restaurants, day care providers and farmers are further walloped by out-of-balance property taxes.
Opponents of Amendment B are, not surprisingly, trying a sleight of hand. They look at the projected residential rate cuts that we simply cannot afford, and call Amendment B a tax increase.
Don’t be fooled. Amendment B specifically says residential property tax rates will be frozen at the current level — which are third-lowest in the country. The only way tax rates can go up, is by a vote of the people.
To be clear, Amendment B is not the solution to the numerous fiscal challenges Colorado faces, but it stops a bad situation from getting much, much worse.
By voting yes on Amendment B, we will free our first responders, hospitals and schools from the financial burden placed on them by Gallagher. We will stop an additional shift in property-tax burden to our local businesses and our farmers and ranchers.
Let’s stop digging the hole that cuts funding for our schools, our first responders and our local businesses. Let’s stop digging a hole that unfairly penalizes areas — largely rural and low-income communities — -that don’t have significant commercial property-tax bases. Let’s get the Gallagher Amendment out of our constitution. Join us in voting “yes” on Amendment B.
Wellington Webb served as Denver mayor from 1991-2003 and is the former president of the National Conference Democratic Mayors, the past president of the U.S. Conference of Mayors and National Conference of Black Mayors. Ken Salazar served as Colorado Attorney General from 1999-2005, in the U.S. Senate from 2005-09, and as Secretary of the Interior from 2009-13.
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