This election could be very expensive for taxpayers. Not in terms of the cost of mailing ballots but in terms of what the cost to the taxpayers will be if every measure asking for more tax dollars is passed by voters. The bottom line for Littleton residents is an increase in taxes of almost $900 a year.
There are statewide issues, special district issues and a bond issue for the school districts and mill levy overrides for Douglas County and Jefferson County schools. Trying to understand the ballot questions is one thing – trying to determine just how much impact they will have on our tax burden is another. While this article concentrates just on the financial impact to taxpayers in the City of Littleton, Littleton spreads over three counties and across three school districts; where you live in Littleton determines how much you will be impacted in new taxes.
We summarize each ballot issue with tax implications, itemizing the cost for each issue based on a home valued at $400,000. Our income tax estimates come straight from the Colorado Legislative Council, i.e. the “Blue Book” mailed with the ballots. At the end of the article a table summarizes each issue and totals all costs for a total impact amount – to see that total cost, jump to the end. But first we provide some background that is helpful in understanding how the taxes are calculated and how we arrive at our figures.
Understanding Property Tax
The amount you pay in property tax on your home is determined by three factors: 1) the value of your home, 2) the assessment rate (or ratio), and 3) the total number of mills from all taxing entities.
The formula is:
home value x assessment rate= assessed value
assessed value x total mills = property tax.
The home value is determined by the County Assessor by comparing actual sales of similar size properties in the same area with similar features or amenities. Homes are revalued in odd years.
The assessment rate is set by the State legislature in odd years. The legislature is required by the Gallagher Amendment to hold the total value of residential property state wide at the same percentage relative to the total of all other classes of property the previous year. Since the assessment rate is fixed for all non-residential property, the legislature adjusts the residential assessment rate every two years to maintain that overall state wide relationship between residential and other properties. Previously the residential assessment rate was 7.96%, currently it is 7.2%, and the Legislative Council (the people who write the “Blue Book”) projects it will lower to 6.1% next year. To use the assessment rate in a calculation, you move the decimal point 2 places to the left, adding zeros to the left as needed. So 7.2% becomes .072
So for our $400,000 home the assessed value is $28,800.
$400,000 x .072 = $28,800
Total mills. Each taxing entity that collects property tax sets its mill levy on an annual basis, on or before December 15. Where you live in Littleton determines the total mills you have to pay in property tax; the city of Littleton covers three counties, three school districts, and multiple smaller taxing entities such as sewer districts and metro districts – each of which sets its own mill levies. A mill is 1/1000 of a dollar. To use mills in a calculation you move the decimal point 3 places to the left, adding zeros to the left as necessary. So a mill levy of 9.25 mills becomes .00925. Putting this all together, for a home valued at $400,000 the amount of property tax you would pay for 9.25 mills is $266.40
$400,000 x .072 = $28,8000
$28,800 x .00925 = $266.40
Understanding Income Tax.
Colorado is one of 43 states that levy individual income tax. Colorado moved to a single rate of 5% for individuals in 1987 and the current rate of 4.63% was set in 2000. TABOR, passed in 1992, requires that all taxable income be taxed at one rate. Colorado uses federal taxable income as the tax base to determine state taxable income.
Understanding School District Mill Levy Override.
Funding for school districts is based on a per pupil amount set by the State, $6,769 for the 2018-2019 school year. That amount is adjusted up for the number of at-risk students, cost of living, on-line students and other factors to arrive at a final amount per pupil. The average across all school districts in the state is $7,662 per pupil. The per pupil amount times the number of pupils in a school district equals Total Program Funding. The number of pupils are counted on the school day nearest October 1. Funding for the Total Program Funding comes first from local property taxes and specific ownership taxes. If those sources are insufficient to fund the Total Program amount the State supplies the remaining amount. A school district may spend more than the Total Program amount by asking the voters to approve an additional property tax mill levy, called a mill levy override. That additional amount is limited by the State to a maximum of 25% of the Total Program funding.
$300,000,000 Bond Issue for Littleton Public Schools (4A)
Littleton Public Schools is asking for a $298,870,000 bond (repayment of up to $584,690,150) to replace and rebuild schools, build a new stadium, and build a Tech school. The ballot language authorizes the district to borrow up to $298,870,000 and to collect up to $29,992,100 annually. The mill levy can be adjusted by the District annually to ensure it can borrow and repay the amounts specified. The district offers two best-case scenarios for what the mill levy increase will actually be: either an additional 8.468 mills or an additional 10.228 mills, depending on how it chooses to issue the bonds. We note that neither of those best-case mill increases will get to the $29,992,100 annual amount the ballot measure would authorize the District to collect. Therefore, it is very possible the actual cost will be higher. Using the 10.228 mill increase amount results in an increase of $294.57 for our reference $400,000 home.
$567,000,000 Bond Issue for Jefferson Public Schools (5B)
Jefferson Public Schools is asking for a $998 million bond to repair and renovate schools, add and expand technical education facilities, and purchase furnishings. The ballot language allows for collecting up to $67.4 million annually to pay the bonds. The district’s projected increase is $21.72 a year for a $100,000 home (3.0166 mills), or $86.88 a year for our $400,000 reference home. We note, once again, that the district’s estimated increase doesn’t match the maximum amount allowed in the ballot language and that the district can adjust the mill levy as needed to obtain $67.4 million a year.
$33,000,000 Annual Mill Levy Override for Jefferson Public Schools (5A)
Jefferson Public Schools is asking for a $33 million increase annually in property taxes – a mill levy override – to expand programs in science, technology, engineering, and math, increase student mental health services and update aged and outdated instructional materials and technology. The $33 million is to be adjusted annually according to inflation. The district’s projected increase is $25.20 a year for a $100,000 home (3.5 mills), or $100.80 a year for our $400,000 reference home. As we noted above, these estimates are from the school district and the district is not bound by those estimates; only the language in the ballot is binding.
$250,000,000 Bond Issue for Douglas County Public Schools (5B)
Douglas County Public Schools is asking for a $249,975,000 bond issue for building upgrades including new roofs, information technology, beefed up security, classroom materials and technology. The ballot language allows the district to collect up to $34,440,150 annually and a maximum repayment cost of $399,000,700. The school district has not bothered to separate estimated costs for the bond issue from the mill levy override
$40,000,000 Annual Mill Levy Override for Douglas County Public Schools (5A)
Douglas County Public Schools is asking for a $40 million increase annually in property taxes – a mill levy override – to increase teacher salaries and provide addition mental health support and prevention programming for students. The school district did not release an estimate of the increase for the mill levy itself, only for the combination of 5A and 5B. The combined increase for both 5A and 5B according to the school district for our reference home value of $400,000 is an increase of $177.02 a year.
South Metro Fire Rescue Inclusion (7B)
South Metro Fire Rescue (SMFR) is under contract with the City of Littleton to start providing fire service to Littleton January 2019. South Metro Fire Rescue wants to cancel that contract and include Littleton into its fire district. Inclusion (a yes vote) will add a new property tax of 9.25 mills, amounting to $266.40 for a $400,000 home.
Littleton’s City Council has “promised” to reduce the city’s mill levy by 4.662 mills if 7B passes, which amounts to $134.27 for our $400,000 home. South Metro Fire Rescue (SMFR) has also made that reduction a condition of the inclusion. But since SMFR is planning to have inclusion certified before the city passes its 2020 budget. The “promise” is that the City Manager will submit a budget with that reduction in the mill levy, not that the Council will actually pass the reduction, and given the City’s history of not living up to its promises, it is possible that reduction will not happen. However if the reduction happens the net increase for a $400,000 home would be $132.13. ($266.40 – $134.27 = $132.13).
Proposition 110 for Transportation
Propostition 110 is a large transportation plan which would increase state sales tax and divide that tax revenue between the state highway fund (45%), cities (20%), counties (20%) and multimodal (15%); multimodal is defined as “transportation options that decrease traffic congestion and protect our air quality. This funding could be used to support urban and rural bus service, large scale bike lanes and paths, and improvements for pedestrians.”
If passed this measure will be funded by a 21% increase in the sales tax rate, from 2.9% to 3.52% for 20 years. The Legislative Council estimates the increase to be $131 for a Colorado family with an average annual income of $74,374.
Amendment 73 is a massive, complicated education funding measure. Income tax rates would increase for individuals (or couples filling jointly) with a taxable income over $150,000 a year.
In addition, property taxes would also increase by freezing the assessment rate for residential property at 7.0% for school taxes. The Legislative Council is projecting the residential assessment rate to decrease next year to 6.1%, so freezing the residential assessment rate at 7% for school property taxes represents a property tax increase. If all the tax increases on the ballot passed and the City of Littleton actually reduced its mill levy, this 7% freeze in residential assessment rate for a $400,000 home would represent an increase in Jefferson County (e.g. Trailmark) of $188.66, an increase in Douglas County $163.19, and an increase in Arapahoe County (central Littleton) of $225.13.
Urban Drainage (7G)
Urban Drainage wants us to approve an increase to one mill. Their projection is $1.97 per $100,000, or $7.88 for our reference $400,000 home.
The question is: how much will it cost me if everything passes in November. The answer depends on where you live in Littleton, since part of Littleton is in Jefferson County (Trailmark) and in Jefferson County Public School District, part of Littleton is in Douglas County (Wolhurst) and in Douglas County Public School District, and the rest of Littleton is in Arapahoe County and in Littleton Public School District. So we have broken out the total impact by county for the City of Littleton. Here’s the tally:
Dollars & Cents of Tax Increases on 2018 Ballot
|Ballot Measure||Arapahoe County||Douglas County||Jefferson County|
|School Bond Issue||$294.57||$86.88|
|School Mill Levy Override||$0||$177.02 (*)||$100.80|
|South Metro Fire Inclusion (7B)||$266.40||$266.40||$266.40|
|Urban Drainage (7G)||$7.88||$7.88||$7.88|
For the owner of a $400,000 property with an average family income of $74,374 a year the total impact ranges between $716 to $884 more each year depending on where you live in Littleton. If the City of Littleton does reduce its property tax next year with the passage of 7B then the totals are $581 for Douglas County, $613 for Trailmark and Jefferson County, and $750 for Arapahoe County.
Keep in mind there is also talk about eliminating the Homestead Tax Exemption for senior citizens in the upcoming legislative session. If that happens that will add approximately another $500 to the total for seniors.
Finally your state taxes will be going up because of the Trump tax cut. That tax cut results in adjusted gross income being higher on federal tax returns. While the feds adjusted the federal tax rate to compensate, the state has not. Since state income tax is calculated based on the federal adjusted gross amount state income taxes will be higher, even without the passage of Amendment 73.