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September 3, 2024 HCR 24B-1002
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Final Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 24B-0021
Rep. Bradley
Date:
Bill Status:
Fiscal Analyst:
September 3, 2024
Postponed Indefinitely
House Trans., Hous. & Local Govt.
Greg Sobetski | 303-866-4105
greg.sobetski@coleg.gov
Bill Topic: RESTORE GALLAGHER AMENDMENT TO PROPERTY TAX
Summary of
Fiscal Impact:
☐ State Revenue
☒ State Expenditure
☐ State Transfer
☐ TABOR Refund
☒ Local Government
☐ Statutory Public Entity
The resolution would have referred a constitutional amendment to voters at the
November 2024 General Election. If approved, it would have required annual
adjustments of the residential assessment rate to hold constant the residential share
of statewide assessed values. The resolution conditionally would have decreased local
revenue and expenditures and increases state expenditures beginning in FY 2027-28.
Appropriation
Summary:
No appropriation is required.
Fiscal Note
Status:
The fiscal note reflects the introduced resolution. The resolution was postponed
indefinitely by the House Transportation, Housing, and Local Government Committee
on August 26, 2024.
Summary of Legislation
This concurrent resolution refers a constitutional amendment to voters at the 2024 general
election. If approved, it holds nonresidential assessment rates constant at their 2026 level by
adding those rates to the Colorado Constitution. The resolution requires the General Assembly
to adjust the level of the residential assessment rate annually in order to hold constant the share
of statewide assessed values attributable to residential real property. It would first apply to
residential assessments for the 2027 property tax year.
Background
Referred constitutional amendment. The General Assembly may refer constitutional
amendments to voters. Referred constitutional amendments require a two-thirds majority vote
on Third Reading in each chamber. This amendment adds new text to the Colorado Constitution
and therefore requires 55 percent of the vote at the November 2024 election to take effect.
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September 3, 2024 HCR 24B-1002
Gallagher Amendment. The referred measure resembles a 1982 constitutional amendment,
known as the “Gallagher Amendment.” The Gallagher Amendment added a 29 percent
nonresidential assessment rate to the Colorado Constitution and required annual adjustment of
the residential assessment rate in order to hold constant the share of statewide assessed values
attributable to residential real property. The Gallagher Amendment was repealed in 2020 when
voters approved Amendment B.
While the Gallagher Amendment was in the constitution, residential market values (“actual
values”) increased more quickly than nonresidential actual values. In order to hold constant, the
share of statewide assessed values attributable to residential property, the Gallagher
Amendment directed periodic decreases in the residential assessment rate from 21 percent in
1982 to 7.15 percent in 2020. The amendment occasionally directed increases in the residential
assessment rate in years when nonresidential actual values increased more quickly than
residential actual values. Until 1992, increases could be accomplished in legislation. With the
addition of the TABOR Amendment in 1992, increases required voter approval, and the General
Assembly never referred a measure to voters to increase the residential assessment rate.
Figure 1 presents histories of the residential and nonresidential assessment rates under the
Gallagher Amendment.
Figure 1
Assessment Rates under the Gallagher Amendment
1983-2021
0%
5%
10%
15%
20%
25%
30%
Property Tax Year
NonresidentialAssessment Rate
29.0%
Residential
Assessment Rate
21.0%
7.15% Page 3
September 3, 2024 HCR 24B-1002
Assumptions
Conditional impacts. All fiscal impacts of the resolution are conditional upon voter approval of
the referred constitutional amendment.
Senate Bill 24-233. This bill was passed by the General Assembly in 2024 and signed by the
Governor. It sets assessment rates for 2024 and future property tax years. The bill becomes law
only if voters do not approve a measure at the 2024 general election that lowers assessment
rates. It is assumed that this resolution does not stop SB 24-233 from becoming law. Fiscal
impacts are presented relative to current law, which is assumed to include SB 24-233.
Nonresidential assessment rates. This fiscal note assumes that nonresidential assessment rates
will remain at the level established in current law under SB 24-233 for 2026:
25.0 percent for improved commercial property;
25.0 percent for agricultural property;
29.0 percent for vacant land, industrial property, natural resources, state assessed property,
and personal property classes; and
87.5 percent for oil and gas and producing mines (established in the Colorado Constitution).
Under the resolution, these rates would be added to the constitution. Since these are the
long-term rates in current state law, the concurrent resolution is assumed to have no impact on
nonresidential assessments.
Target percentage. For property tax year 2027, the resolution requires that residential
assessment rates be adjusted so that the residential share of statewide assessed value is held
constant relative to property tax year 2026.
Under current law enacted in SB 24-233, there are different residential assessment rates that
apply in property tax year 2026 for school district assessments and non-school district
assessments:
for school districts, residential assessed value is estimated at $107.1 billion of $199.2 billion
in total assessed value, or 53.8 percent;
for non-school districts, residential assessed value is estimated at $97.2 billion of
$189.2 billion in total assessed value, or 51.4 percent.
The resolution does not specify which 2026 residential share should be used as the 2027 target
percentage. This fiscal note assumes that the non-school district share, 51.4 percent, will be
used.
Residential assessment rate. For property tax year 2027, this fiscal note assumes that the
residential assessment rate will be set so that residential assessments make up 51.4 percent of
total assessed values. A forecast of assessed value is not yet available for property tax year 2027.
Therefore, the impacts below are presented qualitatively, since a quantitative estimate cannot be
produced without a forecast. Since residential actual values usually increase more quickly than Page 4
September 3, 2024 HCR 24B-1002
nonresidential market values, it is assumed that the resolution will most likely decrease
residential assessments in 2027 relative to what would otherwise be expected. Any reduction
would reduce school district assessed values by more than non-school district assessed values,
since school district assessed values will be higher under the assessment rates in current law.
Local Government Impact
The resolution conditionally decreases local government revenue and expenditures as discussed
below.
Local government revenue. Assuming that the resolution would cause a decrease in the
residential assessment rate for property tax year 2027 and later years, the resolution is expected
to conditionally decrease assessed values and property tax revenue beginning in FY 2027-28.
Reduced property tax revenue collected as part of the local share of total program funding for
school finance would be partially offset by increased state aid payments to school districts.
Depending on the amount of the decrease, the resolution may stop implementation of the new
school finance formula in HB 24-1448, which would decrease total program funding and cause
state aid payments to school districts to decrease, or to increase by less, relative to current law.
Local government expenditures. The resolution is assumed to cause the residential property
actual value subtractions in SB 24-233 not to apply beginning in property tax year 2027. This is
expected to conditionally decrease county assessors’ property tax administrative costs by an
indeterminate amount beginning in tax year 2027.
State Expenditures
The resolution conditionally increases state workload for property tax administration beginning
in FY 2026-27 and conditionally increases state expenditures for school finance beginning in
FY 2027-28.
Department of Local Affairs. Workload in the Division of Property Taxation will increase to
perform calculations and reporting associated with annual calculations of the residential
assessment rate. This workload can be accomplished within existing appropriations.
School finance. The resolution conditionally increases state aid expenditures for school finance
beginning in FY 2027-28. Increases will depend on relative growth in residential and
nonresidential values, and any decreased state aid requirement as a result of stopping
HB 24-1448 implementation. School finance expenditures may be paid from the General Fund,
the State Education Fund, the State Public School Fund, or a combination of these sources.
Election expenditure impact — existing appropriations. This resolution includes a referred
measure that will appear before voters at the November 2024 general election. While no
additional appropriation is required, certain election costs are incurred by the state when ballot
measures are referred. These include reimbursing counties for certain election costs; publishing
the text and title of the measure in newspapers across the state; and preparing and mailing the
ballot information booklet. Page 5
September 3, 2024 HCR 24B-1002
Technical Note
Under current law with SB 24-233, there are different residential assessed values that apply to
school districts and non-school districts in property tax year 2026. The resolution does not
specify which of these should be used to calculate the residential assessment rate for property
tax year 2027. The fiscal note assumes that the non-school district assessed value is used.
Under current law with SB 24-233, there are subtractions from actual value that apply for
residential property in determining assessed values for non-school districts. It is unclear if these
subtractions would be constitutional if voters approve the referred measure in the resolution.
This fiscal note assumes that they would not apply for property tax year 2027.
Effective Date
If approved by 55 percent of voters at the November 2024 election, the constitutional
amendment in the resolution takes effect upon proclamation of the Governor.
State and Local Government Contacts
Local Affairs Property Tax Division
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit the General Assembly website.