During the past several years, a disturbing trend has emerged in property tax - that of approving small mill levies for specific charitable purposes. While the specific charitable purpose may be a good cause, and the dedicated mill levy is normally tiny - generally amounting to less than $10 in taxes for the typical house - it is still bad tax policy. Here's why:
Property tax is local in nature and is primarily intended to support schools and civic infrastructure, county government, roads and water and sewer services, to name a few. All of which need a stable source of funding. Property tax historically weathers economic downturns better than sales tax, making it a good match for education and civic infrastructure which require continuity even during lean years.
Property tax has a very real threshold and is the least popular form of taxation. It directly affects the affordability of housing and property ownership. Because it affects the cost of property ownership, it increases rental costs even for residents who are not homeowners. This is true in triplicate for businesses; commercial real estate pays three and a half times more tax for every dollar of market value than residential real estate. If too many small mill levies dedicated to charitable purposes are approved, the affordability of housing will be more and more adversely affected, and operating costs for small businesses will continue to escalate. The effect on the survivablility of small business is of particular concern since, under our current system, the brunt of the property tax burden is borne by business.
The proliferation of these "charitable" property taxes also will adversely affect the ability to receive voter approval for bonding and general funding increases for the primary property tax recipients. Civic infrastructure and schools are the basis for healthy commerce, and adequate funding benefits every citizen. It is important to leave room for growth on our property tax plate for the meat and potatoes of local government services.
These small mill levies dedicated to charitable purposes are locked in, reducing a citizenry's ability to respond to changing priorities. Some have been approved with a sunset clause which allows for review by vote periodically. However, it still undermines our representative form of government. Frustration with government performance at all levels has drawn voters to approve very specific funding requests, as opposed to general tax increase requests. While ear-marking property tax might feel like government control, it actually offers less control. Once approved, it cannot be modified; yet government spending through our government representatives can be influenced through citizen participation annually, or through the election process every four years.
These views are not intended as opposition to Historic Routt County, Horizon's for the Handicap or the Preservation of Development Rights programs; all of which have been successful in passing small dedicated mill levies. My views are intended as a caution to voters in response to future mill levy requests of this nature. We are all quite capable of deciding to make any charitable contributions we think are wise and feasible in light of our respective budgets. Charitable purposes are best supported out of self-interest (i.e. donations, volunteers), and/or through our representative government budget process, rather than the forcible and rigid collection of "donations" through property taxation.
Amy Williams is an appraiser and real estate professional residing in Hayden. She is the former Routt County Assessor and is a member of the Conservative Leadership Council of Northwest Colorado.