You might not see the connection between the average Denver home price climbing to $500,000 and funding decreases for Grand Valley fire protection districts.
But the fire chiefs of Clifton and Central Orchard Mesa volunteer fire departments can tell you, skyrocketing real estate prices on the Front Range have inadvertently put the squeeze on their budgets through a property tax formula adopted by voters decades ago.
And that's why their departments in November will ask voters in their districts to let them keep the money they need to operate.
In 1982, voters passed the Gallagher Amendment, which dictated that property taxes on homes could not account for more than 45 percent of the total property taxes collected. The other 55 percent had to come from non-residential sources. The amendment also established statewide rates for residential property taxation. When the measure was approved back in the 1980s, the residential assessment rate was 21 percent, meaning the tax rates were assessed on 21 percent of a property's actual worth. By 2017, the rate had dropped to 7.2 percent.
Since then, Denver homeowners have seen increases in their property taxes even as rates have fallen, because their home values have inflated quickly. But here in the Grand Valley, residential real estate values haven't increased as fast, leaving special districts that depend on property taxes with decreased revenues as the assessment rates ratcheted downward.
According to the Colorado Fiscal Institute, more than one-quarter of Colorado's fire districts collected less revenue in 2017 than they did in the previous year. The problem is something districts call the "Gallagher drop."
Fire districts that rely wholly on property taxes are worried by estimates that the assessment rate could drop to 6.1 percent in 2019, leaving them with even less money to work with as their call volumes increase.
Clifton Fire Protection District Chief Chuck Balke said his department experienced a nearly 15 percent loss of funding in one year, from 2016 to 2017, even though voters approved a mill levy increase to replace aging equipment, fund training and pursue a new fire station. If the trend continues and the assessment rate drops to 6.1 percent next year, Balke predicts his district will lose approximately $204,000 more.
"In another two years, it could completely wipe out our revenue streams," Balke said.
Voters are being asked to let the fire districts keep the revenues that the Gallagher Amendment formula would have reduced.
"We're just asking them if we can keep what they already said we could have," Balke said.
"Realistically, if something doesn't happen on this, we're going to be out of business," said Central Orchard Mesa Volunteer Fire District Chief Dave Gitchell.
Gitchell admits he probably voted for the Gallagher Amendment because he's not in favor of paying more taxes, but "nobody realized what the final aspects of it would be."
The department, which covers about 8 square miles for fire protection and additional 18 square miles for ambulance services, doesn't have any paid employees and serves about 2,700 property owners.
Gitchell's district is also asking voters to approve a mill-levy increase from 4.035 mills to 10 mills, which amounts to about $90,000 in funding for the district for operations, administration and capital improvements. The increase would amount to $10.74 per month for a $300,000 home, according to the district. Central Orchard Mesa currently has the lowest fire district mill levy in the county, and Gitchell hopes voters will approve the increase and OK the "de-Gallagherizing" measure.
If voters don't approve the fix to the Gallagher funding, both chiefs said it would be devastating to their services.
"We'll keep the doors open as long as we can," Gitchell said. "But in three years we're going to be out of business."