BOARD00489

• Board Meeting Date: 7/24/2000
• Description: Impacts of Initiative 205 on Water Districts
• Board Meetings - Doc Type: Memo

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Question 3. What taxes are impacted by the Amendment?

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The Amendment will cut the following taxes for the State and each local government
which imposes such taxes:

(a) utility customer tax, utility occupation tax and utility franchise charge;

(b) vehicle sales, use and ownership taxes;

(c) the State income tax; and

(d) the property tax.

Question 4. When does the Amendment take effect?

The Amendment, by its terms, is effective for each tax bill for each district existing
in 2001 or later. (TABOR already defines "district" to mean "the state or any local government,
excluding enterprises.") Accordingly, for each of the taxes listed in (a) and (b) of Question 3, the
fIrst year of the tax cut will be 2001. With respect to property taxes, state law provides that bills for
property taxes due for "2001 districts" will be sent in 2002. Accordingly, with respect to property
taxes the first year of the tax cut should be 2002. With respect to the income tax, the proponent's
testimony before the State Title Board indicated that the first year of the income tax cut also would
be 2002, presumably because income taxes for 2001 will be paid in 2002.

However, it is possible that future judicial, administrative or legislative
interpretations could focus on the year in which the property tax bill is sent, rather than the year to
which the tax bill relates. Should.that occur, the fIrst year of the property tax cut could be 2001.
Similar interpretations could be implemented for the income tax cut.

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QuestionS. What is the amount of the tax cut?

Generally, the reduction in the first year is $25 per tax (or for each taxing entity with
respectto property taxes), increasing $25 yearly. Accordingly, the tax cut would be $50 in year two,
and $75 in year three. In year twenty, each tax cut will be $500 and will continue to increase $25
per year. There is no termination date in the Amendment.

Question 6. How does the Amendment impact the property tax?

General. For the first year, the property tax revenue for each government which
levies a property tax will be reduced $25 per property tax bill. Currently, each county sends a single
property tax bill to the owner of each parcel within the county. Ownership of property in joint
tenancy does not double the tax cut; only one tax bill is issued per parcel. However, a person who
owns multiple properties within the county will receive a tax cut for each of those properties. Listed
on the bill for each parcel is the property tax levied by each local government. In the first year, $25
will be subtracted from the amount to be received by each taxing government. For example, a fire

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