This week’s editorial marks the last of a series explaining Colorado’s 2020 ballot measures. And though I am ready to retire my blue book for the season, writing about state government was a fascinating change of pace. I hope the series helped Herald readers vote with knowledge and fervor.
As of Oct. 26, just a week before the general election, the Lake County Clerk and Recorder’s Office had processed 1,821 early voting ballots.
Up this week are Amendment B and Proposition EE — concerning property and nicotine taxes.
Amendment B would repeal the Gallagher Amendment, a complex tax policy adopted in 1982, that requires residential and nonresidential property taxes to make up the same proportion of Colorado’s taxes year after year.
Under Gallagher, residential property taxes cannot account for more than 45% of the state’s overall property tax base. This leaves nonresidential property taxes to make up the remaining 55%.
Since 1982, growth in Colorado’s housing market has outpaced growth in the commercial property market. This reality has lead the state to slash the residential assessment rate (from 21% in 1982 to 7.15% in 2020) to maintain the ratio required by Gallagher, leaving the bulk of the state’s property tax burden on businesses. In 2020, nonresidential property accounted for just 20% of the property value in Colorado — yet business owners were responsible for 55% of the property tax base.
In rural areas like Lake County that have a smaller commercial tax base than urban communities, this imbalance can lead to funding issues for local governments, emergency response agencies and school districts.
If Amendment B passes, the state would freeze the current assessment rates for residential and nonresidential property. Any future increases to assessment rates would require a statewide vote.
A “yes” vote on Amendment B is a vote to repeal Gallagher’s fixed property tax ratio. Supporters believe the tax policy places an undue burden on small businesses and constrains funding for local governments, particularly in rural and low-income communities. State legislators voted to place the referendum on the ballot by a 79-20 margin, a showing of bipartisan support.
A “no” vote on Amendment B is a vote to leave the Gallagher Amendment intact. Opponents believe Gallagher protects property owners against Colorado’s rising housing costs in a time of financial insecurity.
Proposition EE would create a new tax on nicotine products and gradually raise taxes on tobacco products over the next seven years.
Under Proposition EE, nicotine products like vapes, which are not currently taxed in Colorado, would see a 62% tax increase by 2027. Additionally, tobacco products would face tax increases, a minimum after-tax price would be set on cigarette packs, and tobacco and nicotine distributors would see a reduction in the portion of taxes they may retain for filing expenses.
Tax revenue generated from Proposition EE would fund preschools, K-12 education, affordable housing, healthcare and tobacco education. If Proposition EE passes, it would be the first tobacco tax increase in Colorado since 2004.
A “yes” vote on Proposition EE is a vote to increase taxation on tobacco and nicotine products. Supporters believe increased prices on such products will decrease use while creating new funding for schools and other public services.
A “no” vote on Proposition EE is a vote to maintain current tax rates on tobacco and nicotine products. Opponents believe the tax increase would impose a financial burden on consumers who are addicted to these substances, and to businesses which sell them.