NOTE: What follows is a factual explanation of the proposed tax increase. I’ve posted my opinions on this tax increase in another post.
As most of you know by now, Colorado Springs will be voting on November 3 about a proposed property tax increase. (The last to register is today, Monday, October 5 and the ballots will be mailed out around October 16.)
Many people are confused about just what this tax increase means, and given the apparently contradictory information that I keep hearing this is no surprise. On the one hand, we hear that they are going to increases the city property tax by 3 times the current rate, and on the other hand they claim it will affect the average homeowner by “only” $200 a year.
It doesn’t even sound like we’re talking about the same tax increase here – so what is the deal? First, let’s see the actual wording from the upcoming ballot – then I’ll explain some key points that will help us make sense of the issue. Your ballot will read:
Shall City taxes be increased (final year $46,000,000) annually by increasing 2009 general property tax 6.00 mills, 1.00 additional mill per year for four years, constituting voter approved revenue change.
1. The Tax Increase is 10 Mills over 5 Years
The above ballot text essentially states that they will raise taxes by 10 mills over 5 years. It is jump-started with a 6 mill increase right away, and followed by 4 years of 1 mill per year increases.
2. Market Value vs. Assessed Value
I’ll use an actual Colorado Springs home located near Tutt and Stetson Hills as an example for the sake of discussion; the county puts the market value of this home at $211,296 which is fairly typical for the area. However, we must multiply this number by the assessment rate of 7.96% to reach the assessed value of $16,320. This is the number we then use to calculate taxes.
3. The Mill Levy – The city property tax is just one portion of your overall tax bill
Next, we take the assessed value and multiply it by the total mill levy. In this case, the mill levy is 0.066542 (or approximately 66 mills) which results in a current tax bill of $1085.96. However, of this $1,085.96 only $80.69 actually goes to directly to the city. The remainder in our example goes to El Paso county, a library district, a water district, school district 49, etc. You can see a breakdown of the mill levy here:
4. The City Portion Would More Than Triple; Your Total Bill Will Not
Since the city only accounts for a portion of the total tax bill, the percentage increase on your total bill will tend to fall somewhere around 15% for most neighborhoods even though the cities portion will more than triple. Using the same home as an example, the tax increase would change the cities portion from $80.69 (4.944 Mills) to $243.89 (14.944 Mills). The total tax bill in our example would increase from $1,085.96 to $1,249.16.
5. Commercial Property Taxes are Affected More than Residential
Of significance, though mostly overlooked, is the affect this will have on commercial property taxes as well. Because of how property taxes are assessed, commercial property taxes will be affected to a much greater extent than residential properties. This is because while the assessment rate for residential is 7.96% the rate for commercial property is 29%. This means the assessed value used for computing taxes is almost 4 times higher for a $200,000 commercial property vs. an identical value residential property.
What do you think? Does the city really need more money? Should they make do with what they have? Will this tax make a tangible impact on quality of like in Colorado Springs for the better? Or for the worse if it doesn’t pass? The city makes their case for the tax hike here. Many sites make a counter argument. The opposing sides have corresponding Facebook fan pages “for” and “against” as well. You can see the mill levy, market value, and assessed value for your property at the El Paso county assessors website.
I’ll share my personal thoughts in another post; for now, the above information is just the facts, and is true and accurate to the best of my knowledge. Still have questions? Leave a comment below and I’ll try to answer it.