Note to Reporters: A copy of the full report is available with the news release at http://www.news.colostate.edu/.
The state’s Gallagher Amendment may need to be reviewed now that the economic conditions that led to its creation no longer exist, say Colorado State University business researchers.
Because of that change in landscape, the Constitutional amendment may have unintended negative economic consequences that are hurting the state’s ability to compete in the region, according to the analysis, conducted by Steve Laposa, director of the Colorado State University Everitt Real Estate Center in the College of Business.
Laposa revealed the research at the Everitt Center’s forum today at the Embassy Suites in Loveland. Among the panelists featured were Dennis Gallagher, author of the amendment, and Susan Kirkpatrick, executive director of the Colorado Department of Local Affairs.
The Gallagher Amendment requires that the portion of residential property subject to taxation – known as assessed value – declines when home values rise faster than business property values. According to the State of Colorado website, the assessment rate on residential properties has dropped from 21 percent in 1982 to 7.96 percent. The assessment rate on Colorado businesses is 29 percent.
“Our evaluation shows that, since 1982, the economic base of many Colorado counties has changed, impacting demand and valuations of residential and non-residential assets,” Laposa said. “Residential actual values account for 77 percent and non-residential 23 percent as of 2008, a significant change from 55 percent residential and 45 percent non-residential actual valuations in 1983.”
Laposa stressed that the analysis simply provides data and does not address property tax legislation for the state of Colorado or any other state, nor does it represent any legal expertise.
“We focus our data collection and analysis on regional economics at the state and county levels, and specifically on residential and commercial real estate,” he said. “All we’re saying is that recent trends challenge the original economic underpinnings and worldviews of Gallagher.”
Laposa also said he would incorporate comments from Wednesday’s panelists into his final report.