Gallagher and TABOR

In 1982, Colorado voters added the Gallagher Amendment to Colorado’s Constitution to limit increases in residential property taxes. A decade later, voters added the Taxpayers Bill of Rights (TABOR) to limit state and local taxes and revenues and to impose a broad array of additional limits on government and elections. The specific requirements of Gallagher and TABOR are too lengthy and too complex for this workbook, but here are some of the key effects of these two constitutional provisions on the funding of school finance:

  • Since 1992, the interaction of these two constitutional provisions has sharply eroded the local property tax base of school finance. As a result of the unintended effects of this interaction, the state’s local taxpayers now pay about 33 percent of the tab for school finance and the state’s general fund pays about 64 percent. At the time TABOR was passed, the local contribution and the state contribution were roughly equal at 50 percent each. This shift has required the state to make up for lost local revenues and has put additional strains on the state’s general operating budget.
  • The mill levies paid by different school districts had been standardized to be the same in nearly every school district in Colorado at the time TABOR was passed in 1992. Since 1992, the combined effects of TABOR and Gallagher have caused mill levies to fall in wealthy and rapidly growing school districts and to remain high in school districts with low growth and low property values. There is no longer a standard mill levy for school districts.
  • The total revenues collected by the state and local governments could not keep pace with the growth of the economy throughout the 1990s as a result of the restrictions in TABOR and Gallagher. Accordingly, the level of funding for school finance declined in inflation-adjusted dollars, all during the 1990s.