Think you hated your assessment in May?  Just wait for your tax bill in January

We just published a Labor Day commentary by Larimer County Assessor Steve Miller.   Read it here first.

Read commentary by Steve Miller 

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16 Responses to Think you hated your assessment in May?  Just wait for your tax bill in January

  1. Admin says:

    Assessor Miller,

    Isn’t it true the County Commissioners triggered Gallagher this year? That results in only a 10% increase over two years instead of 20% this year?

  2. Steve Miller says:

    No. Gallagher is triggered at the state level (the legislature sets the rate every reappraisal) and, while the reduction in the residential rate was nominally 10% (from 7.96% down to 7.2%), the effect on taxes is slightly greater. This was the topic of my piece last April to which you have kindly provided a link on the right side of the latest piece. There are examples of tax calculations in the April piece. Even better than just reading those examples would be for property owners to use those examples as templates to guide them through calculations of changes in their own property taxes. As for “… only a 10% increase over two years instead of 20% this year?” That’s not right, either. The 2017 property tax paid in 2018 will be the same (except for changes in the property or in the mill levy) as the 2018 property tax paid 2019. That’s because we only do reappraisals on a two-year schedule.

  3. Steve Miller says:

    One more thing regarding, “… only a 10% increase over two years instead of 20% this year?”: that was similar to the case in 2015 when the commissioners included a temporary mill levy credit in their 2015 levy and took that credit off in their 2016 levy. That’s discussed in this piece. The commissioners were the only taxing authority to do so then, and I am not aware if they have discussed that mill levy credit option this year. I hope they will consider it again for this year, and I hope other taxing authorities will consider something similar, as well.

  4. Steve Miller says:

    You’re welcome.

  5. John Fogle says:

    When the Gallagher residential limits kick in — does it transfer the tax load to commercial property? How do the limitations effect commercial property?

  6. Steve Miller says:

    Before Gallagher passed, all property was assessed at 30%. After Gallagher passed in 1982, residential property was assessed at 21% and all nonresidential property (commercial, industrial, oil & gas, etc.) was assessed at 29%; so, commercial property then paid a premium of 38% on the basis of per-dollar actual value (29% / 21%). Plus, personal property used in the production of income is taxed whereas residential personal property is not. Today, commercial property pays a premium of 303% (29% / 7.2%) on the basis of per-dollar actual value, plus the tax on personal property. The original idea behind Gallagher was to maintain a 45% – 55% split between the property taxes paid statewide by residential properties (45%) and nonresidential properties (55%). In order to maintain that proportion over time, the residential rate had to be incrementally dropped from 21% to 7.2%.

  7. John Fogle says:

    Thank you sir!

  8. Ed Klen says:

    Good morning Steve.
    You make the comment that the Gallagher amendment looks to balance the taxes at 45% residential and 55% commercial state wide. I have a significant amount of commercial property and the tax rate is far greater than this 45/55 split you talk about, is this because state wide the total amount of taxes taken in is supposed to be a TOTAL of 45/55? Meaning that because there are fewer commercial businesses, they pay more per rooftop or square foot? I hope this makes sense, and thank you for your discussion on this topic.

  9. Steve Miller says:

    Exactly. The 45% to 55%, residential to nonresidential split, is maintained on a statewide basis. Gallagher was intended to lessen property taxes on homeowners, and it has done that like gangbusters although homeowners don’t always agree. The 45% to 55% proportion is not a tax rate in itself, but a benchmark that the total statewide property tax burden must meet every year. Since we only reappraise one year in two, the residential rate only changes in reappraisal years. It is the residential rate applied to statewide residential actual values that must balance the amount of property tax paid on nonresidential properties (total statewide nonresidential actual value X 29%). The residential assessment rate has dropped from 29% to 7.2% for that reason: to maintain the Gallagher proportion. Because the proportion is statewide, the actual proportion within individual taxing jurisdictions will differ because of the mix of residential and nonresidential properties within a jurisdiction. For example, Larimer County has historically had a proportion closer to 50-50 because one of our major employers is tax-exempt (CSU) so our proportion is weighted toward residential. Douglas County, which has far more residential property that nonresidential would have a proportion weighted even more heavily on residential than ours. The proportion doesn’t hold for individual property owners, either. For example, you may own a $1M home and $10M in commercial property. So, your proportion would be $72K to $2.9M. That is the effect of the different assessment rates. It is worth noting that soon after Gallagher passed in 1982, the commercial property values in metro Denver tanked. That was when the commercial vacancy rate in Denver was second only to Houston’s. All the Canadian and Texas oil money left town. It was that precipitous drop in commercial property values (and in oil and gas production) that caused the residential rate to drop. As commercial properties fall in value compared to residential property values, the residential assessment rate has to drop to maintain the 45-55 split. Technically, the Gallagher Amendment maintains a proportion of assessed value, not taxes per se. But we only really care about the taxes, right?

  10. Ed Klen says:

    Great answer Steve, thank you.
    Now let’s work on the logic of the business personal property tax.
    This to me seems like a money grab, could you tell me the basis for this before I go off on a tangent that may be mis-guided?
    Thanks, Ed

    • Steve Miller says:

      Way back in the day (long before my time), household furnishings, livestock, and inventories were also subject to property tax. Today, small businesses pay personal property tax because taxing the big businesses on their personal property is so lucrative. The biggest personal property tax payers in Larimer County (not in order, just off the top of my head) are A-B InBev, Woodward, Agilent, Walmart (including Sam’s Clubs and the distribution warehouse), and King Soopers. I may have missed a couple. Currently, the taxable floor is $7,400 in actual (depreciated) value. Below that amount, you’re good. In the 1990s, there was no floor and personal property tax was even more reviled than it is today. Not to toot my own horn, but sometime in the 1990s the Boulder County assessor (Terry Phillips) and I had conniption fits about having to find all the houses that rented out rooms to college students so that we could inventory junk furnishings and put them on the tax rolls. See? Even assessors have limits when it comes to pettiness. In any case, a value floor was established at some point and that floor has gone up now and then. It’s also true that nearly every year, new bills are introduced to raise the floor even more. If memory serves, there were two bills introduced in the last session: one to raise the minimum to $25,000 and one to raise it about half that much. They both died. Other bills are certain to be introduced in coming sessions. Legislators who have been around for a while, like Kevin Lundberg, have better recall of that sort of thing than I. Your turn to go off! Guided, misguided, or ballistic, your opinion will strike nerves amongst this blog’s readership, I’m sure.

  11. Liz says:

    The commercial rate of 29% is also applied to vacant land, including land zoned as residential.

  12. Greg Snyder says:

    Liz is correct, those vacant building lots are paying about three times what will be collected when they have a home constructed upon them, how is that for giving favors to those greedy developers?

    John: I am stunned that you had to ask that question; I am only a gnat compared to the commercial property you owned or controlled in the past but I know how punitive and damaging the Gallagher Amendment has been to my business. In my opinion that is a severe liability for you to have your hands on the levers of the public purse.

  13. John Fogle says:

    Greg —
    Sometimes I find it easiest to ask questions and let the expert like Steve tell the story, rather than trying to impress others with what I know.
    Steve is our expert – let’s leave it to him.

  14. Greg Snyder says:

    Laws do not “kick in”, they apply on a constant basis if the elected officials know the law and apply it as intended. Steve Miller definitely knows and understands the laws pertaining to property taxation and carries through with the actual application in an even handed and fair manner. The problem with Gallagher is Gallagher itself. It was crafted as a sop to voters to allow bureaucrats to spend at maximum levels while minimizing the taxation to those who vote. Unfortunately, commercial property owners are small in number compared to residential property owners and far too many people have spent more than they can afford on housing and believe they are paying too much tax on their property right now. With that unrealistic view the politicians will NEVER even try to amend or explain why Gallagher is harmful to the state in the long term.

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