- Associated Press - Wednesday, January 18, 2017

DENVER (AP) - Faced with complex rules on state spending, the governor of Colorado is proposing higher taxes on marijuana sales and on some homes owned by seniors to fully fund public schools.

Democratic Gov. John Hickenlooper’s administration says the moves are needed to close an anticipated $106 million deficit in K-12 funding in the fiscal year that begins July 1.

In a letter sent late Tuesday to lawmakers, Henry Sobanet, director of the Office of State Planning and Budgeting, said raising the recreational pot special sales tax from 10 percent to 12 percent and reducing a senior homestead exemption on property taxes from $200,000 to $100,000 would close the schools deficit.

The exemption applies to people 65 and older who have lived in their home for at least 10 years.

“We really have to fix school funding in the big picture. We just can’t throw senior tax exemption money at the problem and expect it to make a difference,” Republican Rep. Bob Rankin said Wednesday.

The proposals stem in part from a 1982 amendment to the state Constitution that requires that non-residential property taxes provide a greater share of the state budget than residential property taxes.

Residential taxes help fund public schools but are expected to drop by $135 million in fiscal 2017-18, as the state shifts funding to comply with the rule known as the Gallagher Amendment.

The move became necessary because residential property values have grown faster in recent years than non-residential values,

It’s just one spending rule - in addition to the Taxpayer’s Bill of Rights that limits what the state government can collect in taxes - that led Hickenlooper to urge lawmakers to seriously address chronically underfunded schools.

Voters in 2015 approved the 10 percent sales tax on recreational pot - a rate set to drop to 8 percent on July 1. The money has gone to schools, anti-drug efforts and pot regulation.

Former Democratic Sen. Pat Steadman, main author of the 2015 measure, said he worried that a higher tax could fuel the illegal pot market at a time when Hickenlooper wants to crack down on illegal sales.

The pot sales tax plus a regular state sales tax generated more than $48 million between July and December, according to the Colorado Department of Revenue.

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AP writer Kristen Wyatt contributed to this report.

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