Property tax fervor puts politicos under scrutiny
ASPEN – Elected officials from Aspen to Glenwood Springs will be under extra scrutiny this year when it comes time to set tax rates.
The lousy economy combined with inflated property values have left taxpayers particularly vulnerable to potential tax increases this year. Most taxing districts, from the city of Aspen to small special districts, have the power to leave their tax rates at current levels despite the soaring valuation of property. Unless governing boards of the districts voluntarily lower the tax rates, the entities will reap large windfalls – and force property owners to pay significantly higher taxes.
“It would be really wrong for any entity to collect extra revenues this year,” said Bill Hegberg, a Basalt resident who is concerned about the potential tax increase. “These are difficult times for people who own property.”
The windfall is possible because of the well-publicized increase in property values. Although the real estate market is sour now, a reassessment this year was based on values of sales between Jan. 1, 2007, and June 30, 2008, when the market was much stronger.
That state-mandated reassessment doesn’t reflect the current realities of the market and economy, Hegberg said.
Colorado voters approved an amendment to the state constitution in 1992 that limits governments’ abilities to raise revenues through taxes. That amendment was known as the Taxpayers’ Bill of Rights, or Bruce Amendment. But over the past 17 years, voters of many municipalities, counties and special districts have approved removing those limits, a process commonly known as “de-Brucing.” Therefore, elected board members in the governments and special taxing districts have discretion on the tax rates.
“I hope the taxing entities that have de-Bruced will reduce their revenues to stay in line with the economy of the valley,” Hegberg said.
Bob Guion, a member of the Basalt and Rural Fire District’s board of directors, said he couldn’t speak for his five-member board, but he personally supports lowering the tax rate and foregoing the revenue windfall.
Reaping the windfall at a time when some people are out of work and many are struggling with bills would be “irresponsible,” Guion said. “One of my biggest concerns is increasing the tax burden on anyone right now. It just doesn’t make sense.”
Basalt Town Councilwoman Jacque Whitsitt said she will assess whether the town should keep extra revenues based on the size of the windfall.
“If it ends up being $5 per household [in extra property taxes per year] I’d have to think long and hard,” she said. “If it’s going to be impactful on the household, it seems like the wrong time.”
The council’s challenge will be judging what is “impactful,” she said.
Guion has been on the fire district’s board of directors for nine years. He believes board members have an obligation to act in the best interests of taxpayers and other constituents, not act simply in the interests of the fire department. It’s a distinction that board members of various districts don’t always make, he said.
Two years ago the Basalt fire district board decided after lengthy debate not to lower the tax rate despite a drastic increase in the value of property in the district. The board voted to dedicate the resulting windfall to building affordable housing.
The situation was different that year, Guion said. The economy was humming along, and people could absorb the tax hike easier.
This year, Guion will look at traditional annual increases in the fire district’s operating budget along with the current rate of inflation for the Boulder area to establish a modest increase in the fire district’s revenues. Once that modest increase is established, he wants to lower the tax rate to raise just the targeted revenues – without a windfall.
Guion said the higher property values themselves don’t have an impact. How the taxing districts respond to the higher valuations is the key to tax bills.
“The real issue lies with the taxing districts themselves and how they spend our tax money,” he said.
There are more than 40 taxing districts in Pitkin County, ranging from broad-based entities like the county government and city of Aspen to neighborhood special districts that affect just a few people, like the Gateway (subdivision) Metropolitan District.
Pitkin County Assessor Tom Isaac said his office will send a certification of values to each district on Aug. 25. Those values will be the starting point for establishing the 2010 budget.
Most of the taxing districts in Pitkin County have considerable ability to adjust their tax rates. The city of Aspen, for example, had a total mill levy of 5.467 last year. It has permission from voters to leave 4.789 of that levy fixed. In other words, if the council took no action in this budget cycle, it could leave most of the tax rate at the same level and reap a big windfall.
Pitkin County itself has little flexibility in its tax rate. A locally passed revenue cap called the Fenton Amendment has been in place since 1979. Only the county’s open space fund is at a fixed rate or immune to either the Fenton Amendment or the Bruce Amendment.
Colorado Mountain College has a history of leaving its tax rate in place despite higher valuations. It didn’t adjust its tax rate last year. Board members said they wanted to build reserves so they kept the windfall. CMC can keep its tax rate fixed at 3.997 unless its governing board votes to lower the level.
Other major taxing districts that have been partially or fully “de-Bruced” include: Aspen Historic Park and Recreation; Aspen Valley Hospital; Snowmass Water and Sanitation; town of Snowmass Village; the fire districts of Aspen, Snowmass Village, Basalt and Carbondale; and numerous small special districts.
For details on the taxing districts, including contacts, go to the Pitkin County assessor’s website at http://www.aspenpitkin.com/depts/3/ and click on the link for “understanding your property taxes.” Next, look for a chart labeled, “Taxing authorities with fixed mill levies.”
Most taxing districts will set their mill levies during public hearings this fall.
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