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i_sfinance_2017a_2017-12-15t09:13:05z2 Hearing Summary

Date: 12/15/2017

Location: LSB A


State and Local Revenue Generation


Votes: View--> Action Taken:
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09:22 AM -- State and Local Revenue Generation

Consultants discussed constitutional provisions affecting school finance, beginning with a discussion of Amendment 23. (Attachment A) Consultants then moved to a discussion of TABOR and TABOR revenue limitations. Next was a discussion of the ratchet down of mill levies as a result of TABOR and other interacting constitutional provisions. Members discussed having the consultants create some cheat sheets to help understand these issues. Consultants continued with discussion of other revenue limitations in TABOR including the need for voter approval of new taxes and retaining new revenue. Senator Zenzinger asked for an explanation of the way mill levies historically used to float up or down, and asked if that dynamic can be explained more fully in materials prepared by consultants.

Attachment A.pdfAttachment A.pdf

09:34 AM

Discussion moved to Gallagher Amendment and impact on the assessment rate for residential and non-residential property. Consultants highlighted that maintaining a balance of assessed property value means that only the residential assessment rate will vary and can only be driven down by the formula. Increases require a vote. Senator Zenzinger asked about the disparity this causes in communities with relative mixes of residential and non-residential development. The members had some questions about how this works for the local mill levy for school finance. Craig Harper from the Joint Budget Committee clarified how Gallagher impacts the mill levy for school finance and the state's budget for equalizing the local share of school fiance. Members had a discussion concerning decreasing assessment rates over time and the range of state and local revenue impacts across school districts as a result.

09:54 AM

Discussion moved on to further consider the interaction of Gallagher & TABOR & Amendment 23 and the pressure these create on state funding for school finance. As a result of the constitutional provisions, we have a predominantly state funded school finance system when design was originally intended to place largest burden on local sources. This is somewhat unique to Colorado. Other states don't typically have this level of disparity between their state and local share. Representative Garnet asked if Larson Silbaugh, Legislative Council Staff, could clarify some of the issues raised by Representative Leonard, who links the disparity more to normal business cycle inflationary increases and less on these constitutional interactions.

10:11 AM

Larson Silbaugh, Economist with Legislative Council Staff, made some clarifying remarks about Gallagher. Senator Hill asked for some graphing of actual revenue for school finance in addition to the percentage graph prepared to compare state and local shares. Representative Hamner asked if Gallagher would have had same impact without interaction of TABOR? Larson Silbaugh explained that it is the interaction between these two provisions that prevents the mill levy from floating up or down to maintain Gallagher's proportional requirements. Mill levies would have floated without TABOR, allowing some to increase and some to decrease; Following TABOR, mill levies can only increase with a vote. Senator Zenzinger made the point that raising taxes for school districts by vote can compete with other property tax districts asking for mill levy increases.

10:23 AM

Representative Hamner discussed the proposal to set a statewide minimum mill levy for school finance as considered by the JBC staff. Craig Harper addressed the committee to continue discussing the interaction of constitutional provisions and the proposal considered in 2017 (but not introduced) to set a statewide minimum mill levy. Committee had a broad discussion on overall tax policy and tax equity across school districts and across state and local sources of school finance.

10:53 AM

Consultants continued with their presentation. Their discussion moved to the ways that school districts respond to funding issues with mill levy over-rides.

11:00 AM

Mike Goetz discussed revenue per pupil as a way to frame some of the impacts of state law, and compared this across the local and state shares of revenue, demonstrating the variation in state funding across districts. Some variation is expected and predictable but not all. When this is compared with over ride revenue, variation is further highlighted. Large difference between the over ride mill and the amount of revenue that can be generated.