A correction to a mill levy that is expected to generate more school funding, but raise property taxes without voter approval will impact those living in the Boulder Valley and St. Vrain Valley school districts.
The St. Vrain Valley School District sent a letter to property owners at the beginning of the month to explain the increase, which is due to the passage of House Bill 21-1164 in June. The law begins this year and will be reflected on property taxes due in 2022.
According to the letter, the mill levy correction will fix a Colorado Department of Education error made about 20 years ago. The letter said the Colorado Department of Education “incorrectly” instructed some school districts to lower total mill levy program rates under the Taxpayer’s Bill of Rights, also known as TABOR. This advice was made despite voters’ approval of an exemption from TABOR limitations in those districts.
In a Colorado Supreme Court opinion on the case, justices said “per the erroneous advice of the Colorado Department of Education, the school districts did not implement those waivers.” And, “as a result of TABOR’s above-referenced revenue limits, school districts found themselves unable to retain all of the revenue that would otherwise be due (to) them,” the opinion read. Out of 178 districts, 174 decided to waive the revenue limit that was imposed by TABOR, and allow districts to retain excess revenue, the opinion said.
The St. Vrain Valley School District’s letter emphasized that “neither the district nor our Board of Education have any discretion on whether to implement this change,” and that the district “was not in support of this bill,” and shared concerns with legislators.
“A key reason that our district lobbied against this bill is that our community has always been very supportive regarding investments in our schools,” the letter read. “This legislation is a requirement that is being imposed on St. Vrain taxpayers by the Colorado Department of Education and the State Legislature.”
Districts could be penalized for not complying. Kerri McDermid, St. Vrain Valley School District spokesperson, said the Colorado Department of Education will reduce total program funding by the equivalent of the local property taxes that weren’t levied, and a proportionate amount of state equalization funding, if there isn’t compliance.
Bill Sutter, Boulder Valley School District Chief Financial Officer, also emphasized that districts “are required to implement the mill levy correction.”
“CDE will set the mills, which the department had incorrectly set since 1999, when BVSD did receive voter approval to maintain the current tax rate,” Sutter wrote in an email. “This change that will be implemented is a delayed implementation of that approval from 1999, thus why it is called a ‘mill levy correction.’”
When asked about how property owners in the Boulder Valley district were notified about the change, Sutter said property owners received a temporary tax credit applied to their 2020 bill, which was “likely the first indication of the change outside of various news reports.”
In the letter to property owners, St. Vrain Valley School said voters in 1998 approved a ballot measure that exempted schools from TABOR requirements to reduce mill levy rates as property values increased. The district’s mill levy at that time was 35.552 mills.
But, a Colorado Department of Education error instructed the district to reduce its total program mill levy rate until it was frozen in 2007 to 24.995 mills, the letter said.
TABOR, which was adopted in 1992 says: “The maximum annual percentage change in each district’s property tax revenue equals inflation in the prior calendar year plus annual local growth, adjusted for property tax revenue changes approved by voters after 1991 and (certain reductions not pertinent here).”
Boulder Valley School District’s current mill levy is 25.032. Sutter said it will take two years to reach 27 mills, with a 1 mill increase in 2021 and collected in 2022 and an increase of 0.977 mills in 2022, collected in 2023.
One mill for the Boulder Valley School District generates roughly $8 million in revenue, Sutter said. Once the change is “fully implemented,” Sutter said the change is expected to generate about $16 million, though, that doesn’t mean the district will see that full amount.
“We’ll collect about $16M locally, which will reduce the state funding we get, which in turn reduces the burden on the state and frees up resources that will be redistributed to districts, but that exact distribution methodology is subject to legislative implementation,” Sutter wrote.
Property owners in the St. Vrain Valley School District will see a rate increase from 24.995 to 27 mills, with the mill increasing by one this year and in 2022 and 0.005 mills in 2023. The increase will generate about $4.1 million in 2022 and $8.2 million annually thereafter, McDermid said. But, like Sutter, she noted the revenue goes to the state, not directly to the district. McDermid said that, at this time, it isn’t known how much funding would be increased for the district.
The Denver Post reported that the change is projected to create roughly $91 million extra next fiscal year for school districts.
The St. Vrain Valley and Boulder Valley school districts are among 127 districts across the state that will be impacted by the law.
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