Colorado’s 2017 legislative session has barely begun and lawmakers are already proposing diverse solutions for funding the state’s public schools. Most plans involve a new tax or a tax increase, meaning voters will likely get the chance to weigh in down the road.
Colorado chronically lags behind most of the nation in per-pupil funding, and also falls below the funding levels required in the School Finance Act. This year, an $876 million shortfall is expected according to projections from the governor's office, up from $830 million last year. This marks the 7th year in a row where the state's schools are funded at recession levels.
The lion’s share of Colorado’s public school districts have turned to the voters for help. On Nov. 8, voters said yes to 46 out of 65 school funding measures on local ballots. The initiatives range from mill levy overrides — local property tax hikes — to bond sales and to local sales taxes. While many districts are able to maintain the status quo, districts whose measures failed are weighing cutbacks and possible changes to district boundaries to reduce student populations.
For many lawmakers, education funding is at the top of their to-do list. But due to certain laws and constitutional amendments already in place — like Colorado’s Taxpayer Bill of Rights and the Gallagher Amendment — solutions aren’t easy to come by. Many of those on the table right now involve hitting voters up for more cash.
A universal mill levy. The Joint Budget Committee debated this idea brought by Rep. Bob Rankin (R-Carbondale) and Rep. Millie Hamner (D-Frisco). The proposal would alter the Gallagher Amendment, passed by voters in 1982, which restricts the amount of the state’s property tax burden that falls on homeowners, by reinstating a universal mill levy.
Currently, Gallagher requires that 55 percent of the tax burden fall on commercial properties by fixing the assessment rate for commercial properties, but allowing the residential rate to fluctuate. However, several changes since the inception of Gallagher — population growth, increased home values, increased commercial property values — have led to property taxes fluctuating wildly from one area to another. This would return more of the tax burden to local property taxes.
The state Department of Local Affairs projects that next year will see the first decrease in assessment rates under Gallagher since 2003. With the rate set to fall to 6.56 percent from 7.96 percent, that means the state will have fewer local property tax dollars to count on for education funding to the tune of about $135 million.
This proposal hasn’t been put to paper yet. Chalkbeat reported some lawmakers on the Joint Budget Committee were skeptical.
More pot taxes. Wednesday morning, Gov. John Hickenlooper proposed a 50 percent hike in the state’s recreational pot taxes. The move would raise the taxes to 12 percent, instead of allowing them to fall from 10 percent to 8 percent. Hickenlooper said the hike would fund schools with another $42 million.
The means of distribution for those funds is unclear. If this revenue is distributed the same way pot tax revenue is currently meted out to schools, it may not be a total solution.
Right now, schools can apply for grants through the state’s Build Excellent Schools Today (BEST) program. The grant is funded largely by pot tax revenue and requires schools to come up with a certain percentage of matching funds in addition to competing with other districts for the cash. The money also has strings: It can only be used for school construction or renovation, behavioral health staff or drug prevention programs.
Scaling back the senior homestead property tax exemption. The second half of Hickenlooper’s plan to fund education focuses on property taxes. Currently, those over 65 who have owned and lived in their homes for more than 10 years are exempted from half of all property taxes on the first $200,000 of the value of their home. Hickenlooper is proposing to roll that back to the first $100,000. If the proposal becomes reality, many seniors could see a higher property tax bill next year. Hickenlooper projects this could raise $68 million for schools.
The hospital provider fee. This is a complex, ongoing debate that could possibly be resurrected once again this year. KUNC’s Jackie Fortier has explained the fee and how it could impact the state budget. Republicans — who maintain control of the Senate this year — largely disapprove of the plan.
And one proposal to keep an eye on…
Equalizing funding for charter schools. A bill that would require school districts to equally fund charter schools is stoking controversy. Currently, operating expenses for charters are covered by the same state dollars that fund traditional schools, with many also receiving state-funded Colorado Charter School Grants. Individual charters can get financial help from their authorizers, or borrow money from the school district they’re in, but schools are not required to fund charters to the same extent that they fund traditional schools.
The state’s largest teacher’s union — Colorado Education Association — has condemned the bill. Kerrie Dallman, president of CEA, called the bill a “direct attack on a community’s power to raise and spend money for its students as the people desire,” noting that the bill doesn’t require charters to account for how taxpayer money is spent.