Repeal of Colorado’s Gallagher Amendment
In 1982, Colorado State Senator Dennis J. Gallagher introduced legislation that would restrict residential property taxes in proportion to total property taxes. The measure passed and later became known as the “Gallagher Amendment.”
Under the Gallagher Amendment, properties were split into two categories: residential property and nonresidential property. Residential property constituted approximately 45% of the property tax base and nonresidential property accounted for about 55% of the property tax base. The residential assessment rate, which was initially set at 21%, has been adjusted for each two-year assessment period since 1982, all the way down to 7.15%. The nonresidential assessment rate has been fixed at 29%.
The Colorado Sun’s Brian Eason explained the Gallagher Amendment as such: “Think of Colorado’s statewide property tax base as a balancing scale. On one side are residential properties; on the other is everything else. […] Under [the] Gallagher [Amendment], residential property can’t make up any more than 45% of the overall tax base, with nonresidential properties making up the remaining 55%.”
Almost forty years later, voters have repealed the Gallagher Amendment (Amendment B). The formulaic reduction of the residential assessment rate has been eliminated and assessment ratios will be frozen at their current levels.
According to Katherine Loughead of the Tax Foundation, “because [the] assessment rate freezes would be written in statute rather than in the constitution, changing or repealing those rates would require a simple majority vote in the House and Senate and the governor’s signature, but it would no longer require a constitutional amendment.”
Sources: The Colorado Sun, Brian Eason, “Amendment B explained […],” published September 29, 2020; Tax Foundation, Katherine Loughead, “Colorado Voters to Decide Fate of Longstanding Property Tax Limit,” published September 30, 2020; Colorado Legislative Council Staff, Final Fiscal Note, SCR 20-001 dated August 31, 2020; Bloomberg Tax
- Carey M. Heyman, CPA
- Managing Principal of Industry - Real Estate
- CliftonLarsonAllen LLP
- Century City (Los Angeles)
Carey is the Managing Principal of the Real Estate Industry at CLA. He is a trusted advisor with close to 20 years of experience providing accounting, assurance, tax, and consulting services to real estate industry owners, operators, family offices, developers and syndicators. Carey has a strong track record of helping clients build and retain capital by leveraging tax- and cost-saving strategies and employing tax credits and incentives. He also consults with high net worth individuals, large family groups, and owners of closely-held businesses on all aspects of tax planning, estate planning, and retirement planning.
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