Colorado’s General Assembly has approved a measure asking voters to repeal the 1982 Gallagher amendment in the November General Election.
Gallagher was designed to limit residential property taxation and ensure that business property owners paid a fair share. It requires 45% of the state's property tax base be levied on homes and 55% on commercial properties.
Commercial and residential property values usually move in the same direction, either increasing or decreasing. But according to the Colorado Division of Property Taxation, COVID-19 is expected to cause a 20% drop in commercial property values for the 2021 reassessment. Meanwhile residential values are expected to rise by 10%.
Over the years, the assessment ratio for all properties other than residential has been maintained at 29%, as Gallagher requires, but the residential rate has fallen from 21% to 7.15%. If the amendment is not repealed, the rise in residential values and the fall in commercial values could result in the residential assessment rate being cut from to 5.88%. This would mark the second-largest drop in the residential assessment rate since Gallagher was passed.
The repeal of Gallagher would keep residential property tax rates from dropping in future years, saving schools, local governments, and the state from taking huge financial hits as a result of the coronavirus-induced recession.