FirstSB119_S_SA.001 RegularNOT SessionAMENDED Seventy-firstSENATE GeneralCOMMITTEE AssemblyOF STATEREFERENCE OFREPORT COLORADO_______________________________ INTRODUCEDFebruary LLS13, NO.2017 Chairman of Committee Date Committee on State, Veterans, & Military Affairs After consideration on the merits, the Committee recommends the following:

17-0701.01SB17-119 Juliebe Pelegrinpostponed x2700indefinitely. SENATE BILL 17-119 SENATE SPONSORSHIP Court, HOUSE SPONSORSHIP (None), Senate Committees House Committees State, Veterans, & Military Affairs A BILL FOR AN ACT C ONCERNING CALCULATING THE NUMBER OF PROPERTY TAX MILLS EACH SCHOOL DISTRICT IS REQUIRED TO LEVY FOR TOTAL PROGRAM FUNDING IN SCHOOL FINANCE .

Bill** Summary*** (Note:** *** ** *SB119_S_SA.001*

This summary applies to this bill as introduced and does notreflectanyamendmentsthatmaybesubsequentlyadopted.Ifthisbill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.) The bill requires each school district that has obtained voter approval to retain and spend revenues in excess of the property tax revenue limitation imposed on the school district bysection 20 of article X of the state constitution to restore the number of mills it levies for purposes of total programfunding under the "Public School Finance Act Shading denotes HOUSE amendment.

Double underlining denotes SENATE amendment.

Capital letters indicate new material to be added to existing statute.

Dashes through the words indicate deletions from existing statute.

of 1994" to the number of mills levied in the property tax year immediately preceding the year in which the school district received the voter approval.

The mill levies are restored in equal increments over 5 years.

A school district is not allowed to levy a number of mills that would exceed the school district's total program as calculated before application of the negative factor.

Be it enacted by the General Assembly of the State of Colorado:

SECTION1.

Legislativedeclaration.(1) Thegeneralassembly finds that:

(a) Due to the recent increase in residential property values in Colorado, the statewide assessment rate for residential properties is projected to decrease from 7.96 percent to 6.56 percent for the 2018 propertytaxyear.Thiswillresultinaprojectedreductionofonehundred seventymilliondollarsintheamountofpropertytaxrevenuecollectedby school districts and a concomitant increase in the pressure on the state budget to fund public schools to make up for this loss in local revenue.

(b) ThreeprovisionsoftheColoradoconstitution,section3(1)(b) of article X, known as the Gallagher amendment, section 20 of article X, known as the TABOR amendment, and section 17 of article IX, known as Amendment 23, in combination have created an untenable burden on the state budget for funding public schools;

(c) To decrease the burden and provide a higher level of sustainable funding for public schools, it is imperative that school districts take on a greater portion of the responsibility for funding themselves through the local share of total program funding under the "Public School Finance Act of 1994";

(d) Thepercentageoflocalfundingthatschooldistrictscontribute was lowered over the course of twelve years by a statutory requirement -2- SB17-119 that forced school districts to reduce the number of property tax mills levied even though the voters in those school districts authorized the school districtstoretainandspend propertytax revenues in excess of the limits imposed by the TABOR amendment;

(e) The decrease in mill levies has resulted in a significant inequity in the tax burden borne by school districts across the state;

property-rich school districts have low mill levies while property-poor school districts continue to experience relatively high mill levies;

(f) TheColoradoSupremeCourtinMesaCountyBoardofCounty Commissionersv.StateofColorado,203P.3d519(Colo.2009),heldthat legislation does not require voter approval if it is directing how a district must use revenue for which the district has already obtained voter approval to retain and spend in excess of the limits imposed by the TABOR amendment;

and (g) Legislation to reset the number of mills levied by a school district for total program to the number levied in the property tax year immediatelyprecedingtheyearinwhichtheschooldistrictreceivedvoter approval toretainandspend propertytax revenues in excess of the limits imposed by the TABOR amendment does not require voter approval because it directs the school district to use the revenue it could have collectedwhentheschooldistrictreceivedvoterapprovaltopaythelocal share of total program.

(2) The general assembly finds therefore, that it is imperative to restore balance to the funding of the state public school system and relieve the existing,untenableburdenonthestatebudgetbyresetting the local mill levies for school districts to the number of mills levied by the school districts in the property tax year immediately preceding the year -3- SB17-119 in which each school district received voter approval to retain and spend property tax revenues in excess of the limits imposed by the TABOR amendment.

SECTION 2.

In Colorado Revised Statutes, 22-54-106, amend (1)(a)(I), (2)(a) introductory portion, (2)(c)(I), and (2)(c)(II);

and add (2)(d) and (2)(e) as follows:

22-54-106.

Local and state shares of district total program.

(1) (a) (I) Every district shall levy the number of mills determined pursuanttoparagraph(a)ofsubsection(2)ofthissection,andtheamount ofpropertytaxrevenuewhich THAT thedistrictisentitledtoreceivefrom thelevy,assumingonehundredpercentcollection,alongwiththeamount ofspecificownershiptaxrevenuepaidtothedistrict,asdefinedinsection 22-54-103 (11), shall bethe district's share of its total program.

(2) (a) Except as provided in paragraph (c) of this subsection (2) SUBSECTION (2)(cOFTHISSECTION forreorganizeddistricts,forthe2007 property tax year and property tax years thereafterH THE 2017 PROPERTY TAX YEAR , each district shall levy the lesser of:

(c)(I) Notwithstandinganyotherprovisionofthissubsection(2), if there is a reorganization pursuant to article 30 of this title except for a detachment and annexation, and if such reorganization involves districts with differing mill levies, then in its first year of operation, the new district shall levy a number of mills that is based on the total property taxes collected in the preceding year from property included within the new district divided by the total valuation for assessment in the preceding year of property located within the new district but in no event more than 41.75 mills.

This paragraph (c) SUBSECTION (2)(c)shallnotapplytoanA newdistrictwhoselevywould -4- SB17-119 otherwisebe calculated pursuant to subparagraph(II)of paragraph(a)of thissubsection(2)UBSECTION (2)(a)(II),(2)(d)(OR)(2)(e)(IOFTHIS SECTION ,WHICHEVER APPLIES.

(II) If there is a detachment and annexation pursuant to article 30 of this titleTLE22 and if such detachment and annexation involves districts with differing mill levies, then in the first year after the detachment and annexation, the annexing district shall calculate its levy pursuanttoparagraph(a)ofthissubsection(2)UBSECTION (2)(a),(2)(d), OR (2)(e)OF THIS SECTIO,WHICHEVER APPLIES.

(d) FOR PROPERTY TAX YEARS 2017 THROUGH 2021,EACH DISTRICT SHALL LEVY THE LESSER O:

(I) THE NUMBER OF MILLS THE DISTRICT LEVIED FOR THE IMMEDIATELYPRECEDINGTAXYEAR PLUS ONE FIFTHOFTHE DIFFERENCE BETWEEN THE NUMBER OF MILLS THE DISTRICT LEVIED IN THE 2016 PROPERTY TAX YEAR AND THE NUMBER OFMILLS THE DISTRICT LEVIED IN THE PROPERTY TAX YEAR IMMEDIATELY PRECEDING THE PROPERTY TAX YEARINWHICHTHEDISTRICTRECEIVEDVOTERAPPROVALTORETAINAND SPEND REVENUES IN EXCESS OFTHE PROPERTYTAXREVENUE LIMITATION IMPOSED ON THE DISTRICT BY SECTION 20OF ARTICLE X OF THE STATE CONSTITUTION ;

(II)(A) SUBJECTTOTHEPROVISIONSOFSUBSECTION (2)(d)(II)(B) OFTHISSECTION ,THE NUMBEROFMILLSTHATWILLGENERATE PROPERTY TAX REVENUE IN AN AMOUNT EQUALTO THE DISTRICT S TOTAL PROGRAM FOR THE APPLICABLE BUDGET YEAR MINUS THE AMOUNT OF SPECIFIC OWNERSHIP TAX REVENUE PAID TO THE DISTRICT.

(B) R EGARDLESS OF THE APPLICABILITY OF SECTION22-54-104 (5)(g),FOR THE PURPOSES OF THIS SUBSECTION(2)(d)(IIA DISTRICTS -5- SB17-119 TOTAL PROGRAM SHALL BE THE AMOUNT CALCULATED PURSUANT TO SECTION 22-54-104 (2)OR (III) FR A DISTRICT THAT HAS NOT OBTAINED VOTER APPROVAL TO RETAIN AND SPEND REVENUES IN EXCESS OF THE PROPERTY TAX REVENUE LIMITATION IMPOSED ON THE DISTRICT BY SECTION 20 OF ARTICLE XOFTHESTATECONSTITUTION ,THENUMBEROFMILLSTHATTHE DISTRICT MAY LEVY UNDER THE PROPERTY TAX REVENUE LIMITATION IMPOSED ON THE DISTRICT BY SECTION20OF ARTICLE X OF THE STATE CONSTITUTION .

N CALCULATING LOCAL GROWTH FOR PURPOSES OF DETERMINING THE PROPERTY TAX REVENUE LIMITATION IMPOSED ON A DISTRICT UNDER THIS SUBSECTION (2)(d)(IIIA DISTRICTS STUDENT ENROLLMENT IS THE DISTRIC'S FUNDED PUPIL COUN.

(e) FRTHE 2022PROPERTYTAXYEARANDPROPERTYTAXYEARS THEREAFTER ,EACH DISTRICT SHALL LEVY THE LESSER :F (I) THE NUMBER OF MILLS THE DISTRICT LEVIED FOR THE IMMEDIATELY PRECEDING TAX YEAR ;

(II)(A) SBJECTTOTHEPROVISIONSOFSUBSECTION (2)(e)(II)(B) OFTHISSECTION ,THE NUMBEROFMILLSTHATWILLGENERATE PROPERTY TAX REVENUE IN AN AMOUNT EQUALTO THE DISTRICTS TOTAL PROGRAM FOR THE APPLICABLE BUDGET YEAR MINUS THE AMOUNT OF SPECIFIC OWNERSHIP TAX REVENUE PAID TO THE DISTRIC.

(B) R EGARDLESS OF THE APPLICABILITY OF SECTIO22-54-104 (5)(g),OR THE PURPOSES OF THIS SUBSECTION(2)(e)(IIA DISTRICTS TOTAL PROGRAM SHALL BE THE AMOUNT CALCULATED PURSUANT TO SECTION 22-54-104 (2)OR (III) FR A DISTRICT THAT HAS NOT OBTAINED VOTER APPROVAL TO RETAIN AND SPEND REVENUES IN EXCESS OF THE PROPERTY TAX -6- SB17-119 REVENUE LIMITATION IMPOSED ON THE DISTRICT BY SECTION 20 OF ARTICLE X OFTHESTATECONSTITUTION ,THENUMBEROFMILLSTHATTHE DISTRICT MAY LEVY UNDER THE PROPERTY TAX REVENUE LIMITATION IMPOSED ON THE DISTRICT BY SECTION 20OF ARTICLE X OF THE STATE CONSTITUTION .