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<br />~ <br />. <br /> <br />With a steady 5% annually compounded increase in the property's value, the net tax bill,' <br />after the TABOR 205 tax cut, reaches zero at seven years. At a very robust 10% annually <br />compounded rate of increase in the property's value, the net t<LX bill declines for eight e <br />years and th~n slowly begins to rise. At an unrealistic 20% growth rate, the net tax bill <br />does increase every year despite the TABOR 205 tax cuts. For comparison, the 1993-99 <br />average annual rate of increase in assessed values for Summit County was 10%, for <br />Arapahoe County it was 5%, and for Mesa County-7%, but for Dolores County it was <br />only 3% and for Conejos County, only 1.5%. <br /> <br />Of course, this example is only one particular hypothetical property. Actual outcomes <br />will vary depending upon the value of a particular property, the actual mill levy, the <br />actual increase in market value, and whether the property is residential or business. . <br />Clearly, any broad assertion that no property tax will be eliminated because of the <br />proposed tax cut schedule is without foundation. <br /> <br />In General- Some Thoughts <br /> <br />Even with this analysis of only a limited part ofT ABOR 205, some results are apparent. <br />The shift of property tax burdens from residenlial to business property owners mandated <br />by the Gallagher amendment will be accelerated should the proposed amendment be <br />adopted by voters. For many smaller, rural districts, in the near future business owners <br />may be the only property taxpayers, if there are any taxpayers at all. <br /> <br />Because the proposed amendment is intimately connected with property values, the <br />impacts will be felt by small, rural governments most drastically and quickly. It seems <br />likely that conlinued financial viability of some of these goverrunents, particularly those <br />that rely heavily on property taxes rather than other revenue streams, will be questionable. <br /> <br />e <br /> <br />The issue of continued financial viability is highlighted by looking at the levies dedicated <br />to bond and other debt repayments. This study considered 43 bond levies by an <br />assortment of governments. The average mill levy for these was 8.667, generating a total <br />of $11 ,247,617 in property tax revenue. During 200 I, the first year of the proposed <br />TABOR 205, the average loss would be 34%, of their dedicated revenue. Some would <br />lose more and some less. The minimum percentage loss would be only 0.3% and the <br />maximum 100%. Perhaps a loss of less than one percent could be overcome, but the <br />average loss of 34% and the maximum of 100% bodes financial disaster. Chapter 9 <br />bankruptcies for governments may become a new growth industry in Colorado. <br /> <br />Postscript <br /> <br />The CU Policy Collaborative was conceived by the Graduate School of Public Affairs <br />(GSPA) to be a part of the University of Colorado at Denver's commitment to the Total <br />Leaming Environment initiative of the University of Colorado. The initiative seeks to <br />foster practical partnerships between CU and statewide leadership in the public, private, <br />and nonprofit sectors. The Collaborative's goal is to produce sound, impartial analysis of e <br />important issues facing the state so that leaders and citizens are afforded the best possible <br />information and analysis tools for their policy making decisions. <br /> <br />Page 7 <br />