Governments keep eye on amendment
March 15, 2002
Local governments are keeping their fingers crossed as a push to amend the Taxpayer’s Bill of Rights slowly gains steam in the Colorado Legislature.
TABOR, the decade-old amendment to the state constitution that limits government taxing and spending, is the focus of a fledgling Senate resolution that is now in draft form.
If it ever gets to a vote in the legislature and goes to a statewide vote – and those are big ifs – the measure would put the decision to apply TABOR in the hands of local voters in communities across Colorado.
For Pitkin County, it would mean the opportunity to ask county voters to approve a real estate transfer tax, or RETT, which has proven a lucrative source of revenue to municipalities that enacted them before they were outlawed by TABOR.
For Aspen, it would mean a chance to amend a RETT that is taking in more money than the city really needs.
Sen. Pat Pascoe, a Denver Democrat who owns a second home in Steamboat Springs, is sponsoring the legislation in the Senate. Supporters are still seeking a sponsor in the House. Western Slope backers of the measure are hoping to enlist Rep. Gregg Rippy, the Glenwood Springs Republican who represents the 57th District, as the sponsor in the House.
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The measure, if it made it out of committee and onto the floor, would require a two-thirds vote in both the House and Senate to put it on the state ballot.
Pitkin County has drafted a letter of support for the amendment and is looking for supporters to join it.
The letter notes the county has taken a hit with the weakened economy, watching its revenues from sales taxes, building permits and other fees fall. In addition, TABOR restricts what additional money the county can take in through property taxes as its tax base increases in value without voter authorization.
If the county had a 0.1 percent RETT, it would have generated about $1 million last year, when the county recorded about $1 billion in real estate transactions, according to Tom Oken, county treasurer. The tax is assessed each time a property changes hands.
Aspen has two RETTs. A 0.5 percent RETT was first approved by voters in 1980 to fund the operation, maintenance and capital improvements for the city’s Wheeler Opera House. A decade later, voters approved a 1 percent RETT that helps fund Aspen’s affordable housing program. Both taxes were recently renewed for 20 more years.
The Wheeler RETT, which does not apply to the first $100,000 worth of a real estate sale, is expected to bring in $1.8 million this year. The housing RETT is forecast to generate $3.9 million, though accurately predicting RETT revenues is almost impossible, cautioned city finance director Bill Powell.
With various future housing projects on the city’s plate, it will have no difficulty finding a use for all of its housing RETT revenues, but the Wheeler tax is generating enough money that an endowment fund for the opera house has been created. That fund will have a $3.5 million balance by the end of this year and $10.4 million by 2010, according to city financial projections.
“The Wheeler cannot stand and operate on its own revenues, but the current real estate transfer tax is producing more revenues than the Wheeler needs to operate,” said City Manager Steve Barwick.
Article X, Section 20
When anti-tax crusader Douglas Bruce introduced TABOR, its overriding premise – that taxpayers should have a say whenever government wants to raise taxes – appealed to voters.
The amendment that became Article X, Section 20 of the state constitution won approval on a statewide ballot in 1992. It applies to any taxing district, from cities to fire protection and school districts to the state.
“The TABOR amendment was primarily sold as a right to vote . every tax increase had to be approved by the voters – a very positive thing in my mind,” Barwick said.
But TABOR was a complex measure that addressed many issues. In fact, the legislature subsequently limited constitutional amendments to one issue, he noted.
Far down in the TABOR amendment is section (8)(a): New or increased transfer tax rates on real property are prohibited.
“That has been interpreted to mean that if an existing real estate transfer tax comes up for renewal, voters can vote on it again, but you can’t change anything about a RETT, nor can you enact a new one,” Barwick said.
Any attempt by the city to reduce its Wheeler RETT could be challenged as the creation of a new RETT, which TABOR prohibits, he said.
The Wheeler endowment could eventually be used to construct an addition to the theater on the vacant lot next door, providing a second stage or other amenities for the opera house, according to Barwick. Or, if the endowment grows large enough, the Wheeler could conceivably operate solely off the fund and the RETT could be allowed to lapse, he said.
The proposed amendment to TABOR would not repeal the amendment, but would add a measure of local control to its application.
The language of the draft amendment reads: “Voters of a district may approve one or more ballot issues waiving or otherwise weakening the application of any or all of the provisions of [Section 20] to the district with or without a time limit on the period of such waiver or other weakening.”
The measure has garnered the support of various municipalities around Colorado, as well as the Colorado Municipal League and Colorado Association of Ski Towns.
For counties, however, the amendment alone won’t pave the way to proposing a real estate transfer tax to voters.
Currently, counties are not authorized to enact a RETT under state law. Further legislative action would be necessary to make RETTs available to counties.
About two dozen municipalities – mainly Western Slope resorts – had RETTs in place before TABOR’s adoption. Revenues are dedicated to various needs, including transit, open space purchases, capital projects and general operations. Some RETTS are not earmarked for any particular purpose.
Pitkin County could direct RETT revenues to a variety of needs, according to Commissioner Patti Clapper, who chairs the Board of County Commissioners.
“It could be used for a lot of things – affordable housing, road maintenance and improvements. It could be used to maintain the level of county services,” she said.
Clapper said she believes county voters would approve a RETT, given the opportunity, if the county was explicit about its use.
“I truly believe the voters of Pitkin County wouldn’t say no, but some people would argue with me,” she said.