CREEDE— What is Amendment 73? Amendment 73 (A73) is the result of the citizen’s ballot initiative #93, known as Great Schools, Thriving Communities (GSTC). A73 is a statewide school funding initiative that will increase income taxes for 8 percent of tax filers and for C Corporations, while decreasing property taxes for business property owners, farmers and ranchers.
It will stabilize and increase funding statewide for preschool through 12th grade (P-12) public education and create the Quality Public Education Fund that can only be used for public education, is exempt from the TABOR revenue limit, must be used to supplement General Fund appropriations for preschool through 12 grade public education, and is adjusted each year for inflation up to 5 percent.
How would it impact funding for Creede School District?
Based on the most recent Colorado Department of Education estimates for 2018-2019, Creede School District would receive $0.3 million in additional ongoing revenue if the initiative were implemented for the 2018-2019 school year. The 2018-2019 Per Pupil Budget Stabilization Factor for Creede School District (the reduction in state funding to the local district in order to achieve budget savings) 2018-2019 is a negative $1,498 compared to the additional $3,259 per pupil budget presented by A73.
The A73 estimate is based on current student count and demographics that are subject to change. Funding estimates will be revised when updated data is released.
How is funding stabilized and raised?
A73 is a property tax decrease for nonresidential property owners and it stabilizes the local share of school funding by permanently setting property tax assessment rates. A73 will prevent future reductions to the residential assessment rate (RAR) as currently required by the Gallagher Amendment. It permanently sets the RAR at seven percent (currently 7.2 percent) and decreases and permanently sets the assessment rate at 24 percent (currently at 29 percent) for business property owners, farmers and ranchers — for property taxes levied by school districts. A73 is an income tax increase for eight percent of Colorado tax filers with taxable income (income after exemptions and deductions) over $150,000. In addition, A73 increases the state corporate income tax rate by 1.37 percent for “C” Corporations (does not include LLCs, sole proprietorships and S corporations). A73 raises $1.6 billion in revenue that is deposited in the Quality Public Education Fund.
How will the revenue be spent?
The initiative allows school districts to make local decisions about the best use of new funds that reflect local community priorities and needs — examples of how funding could be used include programs supporting mental health, safety and security, career and technical education, school maintenance and repair needs, reducing class size, etc.
How are property taxes for other local governments impacted?
A73 cuts property tax assessment rates only for property taxes levied by school districts. Property taxes levied by other local governments are unaffected by A73.
Will the drop in property tax rates hurt school funding?
No. Setting the residential assessment rate at seven percent and the nonresidential assessment rate at 24 percent for mills levied by school districts, the measure decreases local property tax revenue to fund P-12 public schools in FY2019-2020. However, under the School Finance Act, each district’s local share is calculated first, and state aid makes up the difference between the local portion and the total funding need identified through the formula.
What percentage of tax filers will be impacted in Mineral County and by how much?
The income tax change will impact tax filers with taxable income over $150,000. Income of $180,000 is estimated to equate to $150,000 in taxable income (income after deductions and exemptions). According to the US Census Bureau data, Mineral County tax filers fit this profile: average income of $66,321, percent of taxpayers with income between $150,000 and $200,000 is one percent and percent of taxpayers with income over $200,000 is three percent.
Arguments for A73
• The state needs a sustainable source of revenue to adequately and equitably fund public education.
• The measure provides property tax relief for business property owners, farmers, and ranchers who have paid an increasingly higher proportion of property taxes compared to residential property owners.
• One of government’s most important functions is to provide children with a high-quality education.
• Stabilizing the local share of required school formula funding and creating a dedicated source of state revenue for education provide additional flexibility for the state to use more of its general operating budget on other core programs, such as transportation, public safety, and health care.
Arguments against A73
• The measure imposes a tax increase without any guarantee of increased academic achievement.
• Increasing the state income tax rate could negatively impact the state’s economy. Businesses will have less money to invest in their workers and individuals will have less money to spend, save, and invest.
• The measure complicates an already complicated property tax system. By creating one assessed value for school districts and another assessed value for all other local taxing entities, the measure will lead to confusion among taxpayers and further complicate tax administration for state and local governments.
• The measure does not allow the state legislature to adjust the income tax thresholds to account for inflation.