The Colorado Senate recently passed a bill to repeal the Gallagher Amendment. The Gallagher Amendment was passed in 1982 as a way to keep residential property tax rates lower than rates paid by commercial property owners. Currently under this amendment, residential properties pay 45% of the share of taxes and commercial properties pay 55% of the share. The Gallagher Amendment set the assessment rate for all commercial properties at 29% and originally set residential assessment rates at 21%. As of 2020, the assessment rate for residential properties has dropped to 7.15% due to increasing home values and more supply, whereas the assessment rate on businesses has remained at 29%.

With many businesses struggling to remain open during COVID-19, the 29% assessment rate has businesses concerned. Commercial properties are valued based on the income of the business and the shutdowns due to COVID-19 have resulted in significant loss of income. Colorado has one of the highest property tax rates for non-residential property owners and one of the lowest rates for residential properties.

Supporters of the appeal argue that by “freezing” assessment rates this will provide stability for taxing jurisdictions such as schools and emergency services. Those against the repeal of the Gallagher Amendment state that by freezing the rates, this will result in higher taxes for residential properties over time and businesses will not see a break in taxes. The bill will head to the House for debate this summer and if approved, Colorado voters would see this on the ballot in November.

Sources: Colorado Department of Treasury , The Denver Channel , Building a Better Colorado

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