HB21-1164: (Esgar & Garnett/Zenzinger & Fenberg) Total Program Mill Levy Tax Credit
Summary
The bill forms the basis of a constitutional question that was sent to the Colorado Supreme Court in March as an interrogatory. The purpose is to align our property tax system with original voter intent in “de-Brucing” elections, without requiring additional local elections. The bill directs the Colorado Department of Education to implement a correction plan for the erroneous reductions in total program mill levies by beginning to incrementally phase out mill levy credits starting in FY 2021-22. The correction schedule must apply consistently to each affected school district; must require each district’s credit to phase out “as quickly as possible but by no more than one mill each property tax year” until the district’s mill levy reaches the level set forth in the 2020 School Finance Act; and must ensure that the credits are fully phased out by 2040.
Position
The Children’s Campaign strongly supports the bill because of its potential to correct a long-standing error in our property tax system that funds school finance. Historically, local property tax rates to support education were consistent across districts, but today they vary widely across the state, forming the foundation of our inequitable school finance system. This structural problem in our K-12 revenue system is not a result of intentional policy choices, and rather is the result of an error made in TABOR’s application by the Colorado Department of Education. This error means some property owners pay tax rates that are 16 times higher than that of taxpayers in neighboring school districts, on properties of the same value. Tax rates to support K-12 education range from 1.68 mills (in one school district) to 27 mills (in 39 school districts). In every case, the state backfills the difference between revenue raised locally and what is needed to educate students. The error forces the state to backfill disproportionately more to our wealthiest districts, subtracting from what would otherwise be distributed to all districts. House Bill-1164 suggests a remedy to this problem, and an accompanying resolution (SJR-006) asked the Supreme Court to affirm that the remedy is constitutional.
Current Status
On Monday of this week, the Supreme Court issued a 6-1 opinion, agreeing that the General Assembly’s proposed correction plan is constitutional. The same day, HB-1164 passed Senate third reading. The bill now awaits the governor’s signature.
Previous Statuses
March 19, 2021
Passed both the Senate Education and Senate Appropriations committees with bipartisan votes of 5-2. It also passed the Senate on second reading and awaits a final Senate vote. The accompanying interrogatory resolution, SJR21-006, was also considered by the full Senate on Friday morning and passed 20-12. Leslie Colwell, Vice President of Education Initiatives, testified in support of the bill in the Senate Education committee. The joint resolution will be introduced and debated in the House next week.
March 12, 2021
Passed the House Education Committee on a vote of 6-3 and now heads to the House Appropriations Committee. Leslie Colwell, our Vice President of Education Initiatives, testified in support of the bill.
