At their June 23 meeting in Glenwood Springs, the Colorado Mountain College Board of Trustees voted to approve a 2017-18 general operating fund budget of $65.5 million. This balanced budget reflects an increase over 2016-17 of 1.2 percent, which is well below inflation.

Projected revenues reflect a $79,000 decline in property tax revenues, with a slight increase in state revenues and motor vehicle ownership taxes. The budget includes cost-of-living salary increases of 2.5 percent for full-time and part-time employees, as well as significant cost savings through efficiencies in the structure of retirement plans and salary savings via the college’s voluntary early retirement plan and other staff turnover. The budget is based on an expectation of flat enrollment for the 2017-18 year.

In the morning’s work session, trustees heard about potential options in order to mitigate the negative impact on property tax revenues triggered by the Gallagher amendment. The amendment requires the Colorado legislature to periodically rebalance residential and commercial property taxes by lowering statewide residential assessment rates while commercial assessment rates remain fixed. (See additional information, below.)

As a result of recent skyrocketing growth on the Front Range, the college and other rural districts that rely on property taxes have already experienced a negative impact on revenues. For instance, the college had been expecting an increase in revenues from rising local property values; instead not only have those increases been eliminated, there will be an actual cut in tax revenues in the 2017-18 year.

The Colorado Legislative Council forecasts that in future years this loss could mean a ratcheting down of property tax revenues for the college in the millions of dollars.

Trustees heard that options available to the college to mitigate this impact in future years could include increasing tuition substantially, cutting services or issuing a ballot measure. Trustees declined from taking any action on the issue during the meeting, and requested more information on potential ballot language from college staff.

Trustees also authorized college staff to continue negotiations and finalize an easement with Cedar Networks, a Colorado telecommunications carrier and internet provider that has been installing broadband fiber along SH82 from Aspen to Glenwood Springs. To complete the connection to the Spring Valley campus, Cedar Networks has requested an easement along existing utility lines so that it can install the fiber on overhead lines.

Also at the meeting, trustees approved a master lease agreement (with option to purchase) of two Denison Placer apartment buildings from the Town of Breckenridge, adjacent to the college’s campus in Breckenridge, for rental to students and employees.

On the consent agenda, the trustees approved:

  • A resolution to hold an election in November; three trustee seats are up for election (Pitkin County plus the Basalt part of Roaring Fork Re-1 School district, West Garfield County and Eagle County)
  • Ongoing contracts for such things as food service, computer replacement, HVAC service, student textbook provider, insurance broker and software.

On June 15 the college received an application for annexation from the Telluride R-1 School District. Colorado law permits school districts to seek annexation into existing local college tax districts. The annexation process requires the petitioning of the electorates in the existing tax district and the district seeking annexation.

Local leaders from Telluride made a presentation at the meeting. Trustees then directed management to accept their application, approach the Colorado Commission on Higher Education about adding the Telluride School District to the college’s service area and conduct a feasibility study about potentially adding Telluride to the CMC district.

The Gallagher amendment impacts on CMC and rural Colorado

What is the Gallagher amendment?

  • Added to the Colorado constitution in 1982
  • It requires the Colorado legislature to periodically rebalance residential and commercial property taxes by lowering statewide residential assessment rates while commercial assessment rates remain fixed.
  • The goal of the Gallagher amendment is to maintain the mix within the overall property tax base at 55 percent commercial/45 percent residential.
  • The assessment rate is applied by the State to arrive at assessed valuation, or property tax base.
  • Residential assessment rates have dropped substantially since Gallagher was introduced. (21% in 1986; 7.2% in 2017; 6.2% projected by Legislative Council in 2019 – Source: Colorado Department of Local Affairs)
  • Local mill levy rates are applied by local governments, such as Colorado Mountain College, to the property tax base to generate tax revenues
  • A two-part formula determines property taxes:
    • The actual property value is multiplied by the assessment rate. When you multiply these two numbers, you get what is called the assessed value.
    • Then this assessed value is multiplied by the mill levy, to come up with the taxes owed.

Why is CMC looking at this now?

  • The Colorado Legislative Council projects that a Gallagher adjustment will occur again in 2019 and possibly every two years thereafter while the Front Range’s population continues to grow.
  • Because the legislature can only recalibrate residential assessment levels downward and cannot change Colorado’s constitution, local taxing entities are largely on their own in seeking solutions.
  • All taxing districts that rely on property taxes — sanitation, water, fire and others — are affected by the Gallagher adjustment. In the current environment, rural taxing districts will be affected most.
  • CMC has only three ways to counteract the effect of the Gallagher amendment: cut services, increase tuition (dramatically) or issue a ballot measure.

Impact on Colorado Mountain College

  • The most recent Gallagher adjustment in 2017 reduced CMC’s revenues by 9.5 percent compared to projections before the adjustment.
  • CMC was created by way of a local mill levy, but Front Range growth is lowering the district’s capacity to maintain the services expected in the communities that built the college.
  • If the assessment rate is lowered to 6.2 percent, as the Colorado Legislative Council projects, and rural property values stagnate in the future, the result would be a $5.9 million reduction in residential property tax revenues — nearly 10 percent of the college’s operating budget.
    • $5.9 million is the approximate budget necessary to operate the college’s Vail Valley campus in Edwards or the Summit campuses (Breckenridge and Dillon combined)
    • $5.9 million is also roughly equal to half of the college’s net annual tuition revenue.