The Gallagher Amendment and Its Implications for Saddle Rock Ranches and the EAMD

Understanding the Gallagher Amendment

Enacted in 1982, the Gallagher Amendment was a constitutional provision designed to maintain a fixed statewide ratio between residential and non-residential property tax contributions. Specifically, it mandated that residential properties contribute no more than 45% of the total property tax base, with commercial and other non-residential properties responsible for the remaining 55%. To maintain this balance amid rising residential property values, the Colorado legislature regularly adjusted the residential assessment rate downward.

While this approach provided statewide tax equity, it imposed financial constraints on residential-heavy communities such as Saddle Rock Ranches. These areas, lacking commercial property to offset tax burdens, experienced diminishing revenues despite increasing property valuations. As a result, the East Arapahoe Metropolitan District (EAMD) faced growing challenges in funding essential services and infrastructure.

What Is the EAMD and How It Serves Saddle Rock Ranches

The East Arapahoe Metropolitan District (EAMD) is a special taxing district established under Colorado law to finance and manage infrastructure and community services for Saddle Rock Ranches. As a metropolitan district, the EAMD has the authority to levy property taxes on homeowners within its boundaries. These annual taxes are collected by Arapahoe County and then allocated to the EAMD, which uses the funds to support and maintain local assets such as equestrian trails, open spaces, and the neighborhood park. Because Saddle Rock Ranches consists solely of residential properties and lacks commercial tax contributors, the district is highly sensitive to changes in residential assessment rates. Under the Gallagher Amendment, declining assessment rates directly limited the EAMD's ability to raise sufficient revenue for community upkeep, making it a central case study in the policy’s disproportionate impact on residential-only districts.

Repeal of Gallagher in 2020

In November 2020, Colorado voters approved Amendment B, repealing the Gallagher Amendment. This legislative change eliminated the requirement to adjust the residential assessment rate in response to property value increases. Consequently, assessment rates were frozen, marking a significant policy shift with direct implications for municipalities and taxpayers alike.

Localized Effects in Saddle Rock Ranches

Saddle Rock Ranches is composed entirely of residential parcels and lacks a commercial property base. Under Gallagher's constraints, the residential assessment rate declined to 7.15% by 2020, down from 21% in the 1980s. This reduction curtailed the EAMD's capacity to collect sufficient tax revenue without raising the mill levy, straining its ability to maintain neighborhood amenities.

The EAMD is responsible for key community assets such as equestrian trails, open spaces, and the neighborhood park. Decreasing revenues threatened the district's ability to deliver these services at expected standards.

EAMD Revenue Trends

Review of EAMD financial data illustrates the fiscal impact:

• 2019 Property Tax Revenue: $63,194

• 2020 Revenue: Declined to $59,522 due to continued assessment reductions under Gallagher

• 2021 Revenue: Stabilized at $62,891 following the repeal and rate freeze

These modest shifts have significant ramifications, as property taxes constitute nearly all of the EAMD's funding. Revenue volatility hampers long-term planning, particularly for infrastructure upkeep and capital projects.

Policy Relevance and Community Stability

For residential-only districts like Saddle Rock Ranches, the repeal of Gallagher restored revenue predictability and eliminated artificial downward pressure on residential tax contributions. This change supports more consistent fiscal planning, sustains property-related services, and preserves community amenities without requiring dramatic mill levy increases.

Conclusion

The Gallagher Amendment’s repeal represents a pivotal reform in Colorado’s property tax structure. For Saddle Rock Ranches and the EAMD, this transition ensures a more stable and equitable funding mechanism. It enhances the district’s capacity to manage and maintain community infrastructure while preserving the semi-rural character and quality of life valued by residents.