Gail Lindley and Cheri Walsh both have deep roots in north Denver, but they hold very different views when it comes to Amendment B, the Nov. 3 ballot measure that seeks to repeal the Gallagher Amendment.

Lindley, a small business owner, is concerned the crushing weight of increasing commercial property taxes in Colorado could force the closure of her 91-year-old bookbinding business. She moved the Denver Bookbinding Co. from central Denver to Sunnyside in 2013 to escape high property taxes, only to see them escalate again.

“When we moved the business here, property taxes were $13,000 a year. They are now at $54,000. It is robbery by the people who are supposed to support small business,” said Lindley.

Walsh, a retiree on a fixed income, worries Colorado will follow the path of states where residential property taxes soak up a large share of household budgets every year. If it weren’t for Gallagher, she said, her mother would have had to sell the north Denver home that’s been in her family for nearly a century.

Denver resident Cheri Walsh is concerned about the impact higher property taxes will have if Amendment B passes.

“On the East Coast people are forced out of their homes because they can’t afford property taxes. In New Jersey they average $8,500 a year,” said Walsh, who put up a website opposing Amendment B. She argues that backers of the measure aren’t being honest with voters — residential property taxes will rise more than would have otherwise been the case if it passes.

Amendment B seeks to repeal the Gallagher Amendment and stabilize the ratio that residential and commercial property owners pay in taxes. It’s one of several state tax measures on the ballot, leaving voters to decide what they want their tax burden to look like and what they’re willing to pay for. The decisions weigh especially heavily during a pandemic, with unemployment up and governments trying to figure out how to avoid cutting essential services.

Overall, Colorado’s tax burden runs in the middle of the pack. Colorado residents on average spent 8.4% of the income they made on state and local government taxes last year, below Pennsylvania and ahead of Nevada, according to a study from the financial website WalletHub, which used data collected by the Tax Policy Center. Colorado ranked 26th for its state and local tax burden, 27th for its sales and excise tax burden, and 28th for its income tax burden.

The middle isn’t a bad place for Colorado to be, said Christopher Johns, portfolio manager of the Aquila Tax-Free Fund of Colorado. The state’s problem is more about the complexity of its tax system, and the unintended consequences that conflicting measures have generated.

The tax burden isn’t spread evenly. Colorado had the third-lowest residential property taxes of any state last year, measured as a share of taxes paid compared to average home values. And while a comparable measure isn’t available on commercial property taxes, businesses contribute 58.3% of local government taxes in Colorado. That’s above the U.S. average of 51.6% nationally and the 11th-highest share among states.

Colorado’s commercial property values are taxed at four times the rate of residential properties, which critics say has put a disproportionate burden on businesses to fund local government and could stunt economic growth by making it too expensive to own or lease commercial space.

Gallagher meets TABOR

Gallagher’s passage in 1982 locked in the ratio of the taxable property base at 45% residential and 55% nonresidential. Residential property’s actual value, however, has grown over the years to about 80% of the state’s total. The proposed repeal is not a tax increase, proponents stress, but a way to provide more stability.

Property taxes are calculated by taking the market value of a property, multiplying it by the assessment rate and multiplying that by the local mill levy — the tax rate approved by local voters. The assessment rate through Gallagher has been fixed at 29% on nonresidential. The residential assessment rate fluctuates, but it has only moved lower because the Taxpayer Bill of Rights prevents the rate from rising without voter approval.

In the years before voters approved Gallagher, homeowners faced an assessment rate of 30% on their properties. Over the years, Gallagher has lowered that rate to 7.15%, and it’s expected to sink even lower because of the recession. The 29% assessment ratio charged to commercial properties has remained constant.

“There has been a real benefit to homeowners,” Johns said of Gallagher. “It has also pressured the revenue available to local governments.”

Colorado homeowners, on average, paid 0.52% of their home’s value or $2,390 in property tax in 2019, according to a study from ATTOM Data Solution. That ranked 47th lightest of the 49 states studied, behind only Hawaii and Alabama. Nationally, homeowners paid on average $3,561 in property taxes, which worked out to a rate of 1.14% of a home’s value.


In Jefferson County, about 61% of the total property tax base is made up of residential properties, but commercial properties pay about 67% of the property taxes.

“2022 would be a problem for all of the special districts and the county if Amendment B fails because what’s going to happen is the residential rate is going to go down potentially, which means businesses are going to be paying more to make up the difference,” said Jerry DiTullio, Jefferson County treasurer.

In Denver and counties where local governments can adjust the mill levy to achieve revenue targets, services funded by property taxes won’t necessarily face cuts. But commercial properties will face a bigger bill.

if Amendment B passes, residential property owners will end up picking up “a little bit more” of the tab over time because the residential rate won’t automatically be going down, said Keith Erffmeyer, Denver’s assessor.

But if it fails, counties, school districts, fire departments and other special districts say the decline in revenue means they won’t be able to meet demands for services, and businesses already dealing with COVID-19 constraints will be burdened further.

“Amendment B is actually a pretty good solution to a longstanding problem on keeping revenues consistent,” DiTullio said.

Its failure could be “catastrophic,” said Ann Terry, executive director of the Special District Association of Colorado. In areas with fewer commercial properties and minimal growth in home values, less revenue comes in.

“We could see a reduction in services and responses by our fire districts, services by parks and recreation districts and other types of districts, such as water, sanitation, libraries, because they won’t have as much revenue in two years as they have today,” Terry said.

Additionally, about 50% of property tax revenues are used to fund local K-12 school districts, according to nonprofit Building a Better Colorado. The state supplements funding for schools from local governments, based on a formula.

“The system for how we pay for K-12 education relies on consistent and predictable local property tax revenue,” said Henry Sobanet, a state economist and now a chief financial officer of the Colorado State University system. “As the residential assessment rate drops, it’s now turning into hundreds of millions of dollars of state money that needs to go through to school finance.”

The rural vs. urban divide

Rising home values along the northern Front Range heavily influence the formula used under Gallagher to determine the residential assessment rate, while also cushioning the blow to government revenue that comes with that lower rate.

Not so in rural areas where home values aren’t rising and there isn’t much of a commercial property base. Downward adjustments in the residential rate can mean lower tax collections.

“My biggest complaint about Gallagher is that it was a one-size-fits-all approach. They used the entire state to determine the ratios,” said Dick Eisner, a Park County commissioner. Park County doesn’t have the strip malls and industrial warehouses that metro Denver has. Home values there have risen but not at the pace seen along the Front Range.

Routt County has a more diverse property tax base, which has held up relatively well during the pandemic, but the gap between commercial and residential property tax bills is widening.

“Commercial properties are looking at paying five times the tax rate as a house with the same value,” said Gary Peterson, Routt County assessor.

Particularly in towns and counties on the Eastern Plains without a large commercial base, that could really affect businesses.

“It is easy for people to understand they don’t want their taxes increased. It is more complex to explain to voters how things like TABOR and in this case Gallagher affect our ability to deliver the essential services,” said Hilary Cooper, a San Miguel County commissioner.


Amendment B freezes the assessment ratios where they are now, but it doesn’t guarantee they will stay there. TABOR limits prevent them from going higher without a vote. But some county commissioners worry the legislature won’t be able to resist the urge to lower them in the future.

Businesses will likely demand a lower assessment ratio on commercial property. Over time, homeowners upset with rising property taxes may do the same. And what happens along the Front Range will drive what happens statewide, replicating the problems Gallagher created.

If Gallagher is repealed by voters, Sen. Chris Hansen, a sponsor of the repeal bill to get it on the ballot, said, “absolutely we will need to come back next January and start to think about a property tax reform package.” That could include how to help low-income homeowners with their share, reduce the commercial burden on small businesses and provide more assistance to fixed-income seniors.

“It’s all available for reform and discussion if we can get Gallagher out of the Constitution,” the Denver Democrat said. But that’s a scenario some counties fear, especially because it’s less predictable.

To better protect themselves for whatever comes, Alamosa, Eagle, Grand, Park, San Miguel, Summit and Broomfield counties are asking their voters to provide them with floating mill levies in this election. Dozens of districts and counties across the state have asked their voters for similar approvals over the years to offset the effects of Gallagher.

“We are not looking to increase taxes. We are simply looking to stabilize revenue if the state takes action that reduces the assessment rate,” Cooper said. “We would like the ability to float the mill levy only that year so that we can collect the same amount of taxes that we collected in the previous year.”

Bad for business

Business groups are among some of the strongest supporters of repealing the Gallagher Amendment, which they argue is needed to restore balance.