Supreme Court Upholds Mill Levy Freeze

A controversial law that froze mill levies in almost all of the state's 178 public school districts, which allowed the districts to retain about $117 million in property tax revenues that would otherwise have been refunded to taxpayers, was upheld Monday by the state supreme court.

In a 6-1 decision the justices ruled that the 2007 statute, which froze mill levies only in those school districts in which residents had already voted to exempt the district from the revenue limits imposed by the 1992 Taxpayer Bill of Rights, did not contradict TABOR.

The court said that school districts are the government bodies that are assessing the property tax levies at issue, that no second election allowing use of the revenue gained as a result of the first public decision to exempt the districts from TABOR's revenue limits was necessary, and that in any case the mill levy freeze did not amount to a tax increase.

Gov. Bill Ritter welcomed the decision as an affirmation of the Democratic General Assembly's determination to reverse the impacts of a 1994 change to the state's School Finance Act, which limited the amount of money school districts could spend on local schools and raised the percentage of public school budgets paid for by the state.

“The real winners today are Colorado’s children, families and schools," Ritter said. "We took up this fight two years ago because it was the right thing to do for the right reasons: We were leading Colorado forward by removing an obstacle that hurt students, families and this state’s future."

The 1994 change to the School Finance Act forced mill levies downward in school districts with rising property values. As a result, and in order to maintain funding stability, the state's contribution to many school districts' budgets rose.

HB 07-1099 did not have the effect of raising any school district mill levies. The law simply told the districts that, if the voters within their boundaries had agreed to "de-BRUCE," or exempt the district from TABOR revenue limits, that existing mill levies could remain in place even if the revenue they produced rose. The 2007 statute also did not change the statewide maximum mill levy of 27 mills.

The amount of revenue a property tax assessed on a particular parcel of real estate generates for a taxing authority such as a school district is determined by multiplying three factors: the property value, the assessment rate and the mill levy.

House speaker Terrance Carroll, D-Denver, said the legislature's majority considered constitutional objections to the law when it was considered in 2007 and had been confident that TABOR posed no obstacles to it.

"We knew this would pass constitutional muster or we wouldn’t have done it," Carroll said. "The legislation simply stabilizes funding for our kids’ schools so they can get the quality of education they deserve."

Republican critics of the decision, and of the 2007 law, said the supreme court's action was driven by partisan sympathy for the Democratic party.

“It’s fitting that the most partisan court in the land rubber stamped the governor’s property tax increase on exactly the same day Senate Democrats are poised to repeal Colorado’s landmark spending limits, and exactly two weeks after the Governor signed the largest increase in car taxes in a generation," Senate minority leader Josh Penry, R-Fruita, said. "With loyalist Democrats in charge of the Governor’s mansion, the state House, the state Senate, and the Supreme Court, the Taxpayers Bill of Rights is on life support and the principle of fiscal restraint is in full retreat."