TABOR and Gallagher Amendments
The TABOR (Tax Payer’s Bill of Rights (PDF)) Amendment controls the amount of tax revenue that local governments can collect and spend, and also requires local governments to obtain voter approval in advance for any increase in levy, or to take on new debt. Generally, property tax revenues may not increase from one year to the next by more than inflation plus local growth; however, this restriction can be waived by local ballot initiative (a process referred to as "debrucing”). The state does not have any role in enforcing TABOR; the sole remedy for violation is through individual or class action enforcement suits.
Additionally, state statute sets a separate revenue limit of 5.5% plus local growth that applies to most local governments (not home-rule municipalities or school districts). As with TABOR, this limit can be waived with voter approval. The Department of Local Affairs is charged with enforcement, and it maintains a website that tracks the limit for every local government: https://dola.colorado.gov/lgis/dlg53EntityCounty.jsf. If a local government is subject to both the TABOR limit and the statutory limit, whichever is more restrictive applies in any given year.
Historically, most classes of property in Colorado have been assessed at 29% of their actual value. The significantly lower assessment rate applied to residential property is the result of the Gallagher Amendment. Passed by voters in 1982, Gallagher made a number of significant changes to property tax laws, one of which was to peg the contribution of residential assessed value at 45% of the statewide total. This was achieved by adjusting the residential assessment rate down over time, gradually dropping it from 21% in 1986 to 7.15% in 2020.
This provision in Gallagher was repealed by voters in 2020, and the authority to set individual assessment rates now rests with the state legislature. In reality the legislature can only reduce assessment rates; to increase them would constitute “raising taxes” under the terms of TABOR, and would therefore require statewide voter approval. The legislature has voted to temporarily lower assessment rates (residential and non-residential) for tax years 2022, 2023, and 2024.