In 1982, voters passed Colorado Constitutional Amendment No. 1, more commonly known as the Gallagher Amendment. The Gallagher Amendment was intended to stabilize residential real propertyís share of the tax base by ensuring that assessed values for residential property make up no more than 45 percent of the stateís overall assessed values. The assessed values for non-residential property, which includes businesses, farms, oil and gas and vacant property, comprise the remaining 55 percent.Gallagher fixed the non-residential property assessment rate at 29 percent, but the residential assessment rate (RAR) was flexible and could increase or decrease as needed to maintain the 45/55 ratio. Prior to 1982, most property was assessed at 30 percent of actual value, according to the Colorado Department of Local Affairs. In 1983, the RAR was set at 21 percent, but in the years since, growth and increasing residential property values have caused the RAR to drop proportionately to maintain the mandated 45/55 split. The last change came in 2003, when the RAR adjusted to 7.96 percent.If Gallagher alone was considered, residential assessment rates should have been adjusted to a higher rate over the past 14 years. In each assessment cycle since 2003, DOLA estimated that the RAR should have ranged between 8.17 percent in 2005-2006 to 9.13 percent in 2013-2014. However, the Colorado General Assembly declined to ask voters for an increase to residential assessment rates in each assessment cycle since 2003, according to DOLA.Any residential property assessment rate increase must go before voters because of another, better-known constitutional amendment: TABOR. The Taxpayerís Bill of Rights, approved by Colorado voters in 1992, requires voter approval for all tax increases and property tax assessment rate increases.The result: Residential property assessment rates can go down to maintain the Gallagher ratio, but under TABOR, no rate increases can be enacted without voter approval. The voters cannot approve a property tax rate increase unless their state representatives opt to put such a measure on the ballot.
