Routt County Assessor Amy Williams predicted in June 2003 that residential property taxpayers in Routt County would not see a painful increase in taxes when their notices arrived in early 2004. In many cases, she was correct.
The owners of a single-family home in Steamboat Springs who saw the assessed valuation of their property boosted by $36,000 when assessment notices went out last June also saw an $82 reduction in the property taxes due in April. Their tax bill went down from $1,415 to $1,343.
The owner of a mixed-use commercial building on Lincoln Avenue in downtown Steamboat had a different experience. The building had a market value of just more than $2 million in 2002, but that number went up to $2.4 million, an increase of 18 percent, when the new assessment was conducted last year. The owner saw his property taxes go up by 15 percent, from $29,000 in 2002 to $33,800 this year.
"He doesn't have any buffer like residential property owners have," Williams said. "He's very much at the mercy of increasing value and the mill levy."
The buffer Williams referred to is an amendment to the state constitution that ensures homeowners will be assigned no more than 45 percent of the overall statewide tax burden.
The Gallagher Amendment was intended to provide a buffer for homeowners; in Colorado, that buffer is big and cushy because the value of residential property is increasing at a disproportionately greater rate than that of commercial property.
"The growth of residential property is outpacing the growth of property in other categories," Williams said.
Simply put, every year, there are an increasing number of residential property taxpayers to pay a share of overall tax. It also means taxpayers such as the owner of the downtown commercial building take on a greater share of the overall tax burden. That's because the portion of the state's overall commercial-property tax base isn't growing as rapidly as the residential tax base.
To preserve the 45 to 55 ratio, county assessors apply a ratio that effectively reduces the taxable value of homes in their jurisdiction.
Last year, the assessment ratio went down by 13 percent, from 9.15 to 7.96. Another way to look at it, Williams, said is to say that the value of a home could have increased by 13 percent before the owners saw an increase in taxes, assuming there was no increase in the mill levy.
The tax mill levy in Steamboat didn't go up very much last year -- from .049079 to .050238. The Steamboat Springs School District even adjusted its mill levy downward.
When county voters approved a modest tax to benefit historic preservation and historical museums throughout the county, residential taxes went up by $2.38 per $100,000 of valuation. In most cases, that amount was more than offset by the reduction in the assessment ratio.
Some of the highest taxing districts in the county are in areas where homeowners live in small water districts, Williams observed. Also, some of the smaller towns in the county have municipal property taxes. Oak Creek, Hayden, Yampa and Stagecoach taxpayers have relatively high property tax bills.
Although Gallagher has accomplished what its original proponents intended, it's tough on some property owners, Williams said, and it extends beyond owners of high-dollar commercial property.
The Gallagher buffer also does not apply to owners of undeveloped building lots, even when they are zoned residential.
"I think people forget it's not just big business (that misses the tax buffer), it's vacant building land, too," Williams said.
Williams said the owner of a building lot in Stagecoach valued at about $150,000 came to her to discuss her property tax bill of $3,600. She complained that her boss, who owns a valuable home in Steamboat, was paying about the same in taxes.
Williams' research determined the property tax on the $1 million home in a different tax district in the city of Steamboat (which has no municipal property tax) was comparable to the tax on the $150,000 lot in Stagecoach.
"It's really a product of value and category" of property Williams said.
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