Amendment U would eliminate a property tax that provides little revenue

Colorado’s Amendment U aims to lessen the government’s administrative burdens, save taxpayers money and cause some taxes to go up.

Currently, individuals and businesses using government-owned property for their own financial benefit, known as a possessory interest, pay a property tax, according to the 2016 State Ballot Information Booklet. Amendment U, which was referred to voters by the state legislature, would eliminate that tax for those who use government land with a market value of $6,000 or less.

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There are about 7,000 possessory interests statewide. These include ranchers who lease land from the government for cattle grazing and businesses who use government land for skiing or rafting. Amendment U would exempt about 5,100 of possessory interests from taxation, which pay about $125,000 in property taxes every year, or about $24 each.

The argument for Amendment U in the State Ballot Information Booklet, commonly known as the Blue Book, states that since the payments are so low, often less than $10 for agricultural leases, it often costs more to collect and enforce the tax than it brings in. This results in local governments receiving little or no revenue from the tax.

According to the argument in the Blue Book, mailing notices, maintaining tax rolls and collecting the tax contribute to the cost.

“In the interest of more efficient government and reducing bureaucratic processes, I support Amendment U,” wrote Chris Stein, a Colorado State University finance and real estate professor in an email to the Collegian.

The argument against Amendment U in the Blue Book states that it would provide an unfair tax break to some and put a greater tax burden on others to pay for local government.

“There’s an element of unfairness to (Amendment U),” said Colorado Sen. John Kefalas, D-Fort Collins. “But, I think the dollar amounts are small and I think ultimately we’re saving the taxpayers money.”

Amendment U would result in taxpayers no longer having to pay for the government to administer and collect the tax on possessory interests worth less than $6,000, possibly saving them money. In addition, minor cost savings would occur in some counties, according to a fiscal impact statement by the Colorado Legislative Council staff.

However, in other counties some of the money that currently comes from those possessory interests would instead come from higher property taxes of other types, according to the fiscal impact statement.

Amendment U, which had significant bipartisan support, is one of only two items on the ballot to be referred to voters by the state legislature, passing by at least two-thirds majority vote in the Senate and House of Representatives. The other is Amendment T.

If passed, Amendment U would go into effect in 2018. Beginning in 2019, the $6,000 threshold would be adjusted for inflation every two years.

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Kefalas said that it is important for voters to do research on Amendment U and on the other ballot measures.

“I’m concerned that when people look at (Amendment U) they’re going to be like, ‘What’s this all about?’’’ Kefalas said. “If people don’t do their homework they’re going to either just check a box or leave it blank.”

Collegian reporter MQ Borocz can be reached at news@collegian.com or on Twitter @MQBorocz22.