A majority of city council on Tuesday night backed a resolution calling for the repeal of the 38-year-old Gallagher Amendment, which critics say chokes revenue sources for local governments and schools.
Councilmember Marcia Martin, who lobbied for the council resolution, said all indications are that some rural school districts will fail within the next few months if voters don’t pass Amendment B.
“This is serious stuff,” Martin said. “This is not tax ideology. We need this (repeal) to hold things together in this very difficult time.”
Councilmembers Joan Peck and Polly Christensen voted against the resolution. Both said they support the repeal of Gallagher, but added the city should not take an official position on Amendment B.
“I just don’t think we should be telling our residents how to vote on this issue,” Peck said. “We can personally and individually speak out but we cannot ask them as a group to support something.”
Christensen said, “I don’t want to tell our residents how to vote on this issue. They are capable on their own to decide how they want to vote.”
Councilmember Susie Hildalgo-Fahring, however, said voters should know the city recognizes a problem with Gallagher and advocates a way to fix it.
“This is a powerful message for us to come together as a collective to push for a repeal of the Gallagher Amendment, so (voters) understand how this will impact our public institutions,” Hidalgo-Fahring said.
The city’s resolution states the Gallagher Amendment, which voters approved in 1982, mandates that property taxes assessed on personal residences can only make up 45% of the total property taxes the state collects, with business property taxes making up the remaining 55%.
The residential assessment rate dropped from 21% in 1982 to 7.15% in 2020, while the non-residential rate has stayed at 29%.
Every time the residential assessment rate drops, the state must subsidize the loss in local revenue for schools, the resolution states.
A decline in assessment rates also means municipalities must cut services or find other revenue sources, such as grant funding, and it increases the need for towns and cities to increase fees for services, according to the resolution. Cities also have the inability to pay competitive wages for local government employees, the resolution states.
The COVID-19 crisis has put more stress on city budgets while analysts forecast shortfalls in the next two budget years because of the Gallagher Amendment, according to the resolution.
“... Repealing the Gallagher Amendment will prevent a loss in desperately needed funding for schools and municipal governments as they manage the economic toll of the global pandemic,” the resolution states.