Cedaredge eyes another bid for sales tax increase

By Hank Lohmeyer


After voters rejected the Town of Cedaredge's proposal for a 1/2 cent increase in sales tax just over a year ago, officials are once again discussing a bid to hike the sales tax.

In a report to trustees on March 16, town staff noted efforts under way at "organizing for a second attempt at sales tax increase."

One element in a pitch for increasing the town's sales tax this time could be to allocate at least some of the increased tax revenue to a specific purpose -- transportation or street maintenance. The staff report states it is "important for the town to be specific about the benefits and how it would improve 17 miles of streets."

Streets are expensive. But town spending on other things has gotten higher priority than streets have in recent town budgets.

Beginning with last fall's budget hearings, the mayor, trustees and public works managers have pointed out that town streets are a priority with the public, but they are not a priority for spending in annual budgets. There was no money at all in the town's 2016 budget for asphalt maintenance, public works reported, while noting that the asphalt maintenance line item is the first one cut every year. It was only after insistence last fall from elected officials, including the mayor, that money for asphalt maintenance was put in the 2017 budget, but the amount was later cut back by almost half.

The staff's report to trustees noted that efforts toward crafting a sales tax proposal are trying to steer clear of pitfalls that doomed other recent tax increase proposals. The report noted that a sunset provision might be part of a town sales tax increase proposal.

The town's "healthy lifestyles" sales tax hike proposal was soundly defeated by Cedaredge voters in 2015. While pitched to voters as a tax to provide healthy living amenities, the actual ballot question was non-specific and would have diverted almost half of the expected $90,000 per year directly into the town general fund for unrestricted spending on anything deemed to promote healthy lifestyles. The town's tax increase proposal sidestepped taxpayer protections under TABOR (the Taxpayers' Bill of Rights); provided no specific spending plan; and, it would have never sunset.

There were 671 votes cast on the town's healthy lifestyles tax proposal to increase the town's sales tax from 2 to 2.5 percent. The question lost with 56.18 percent voting against.

Another recent tax increase proposal would have more than doubled property tax assessments in the Delta County Ambulance District but it, too, was defeated at the polls. That tax increase proposal provided voters with no spending plan to consider; had no meaningful restrictions on use of the money raised; eliminated TABOR protections for the entire DCAD budget; and, had no sunset provision.

The last sales tax increase that Cedaredge voters approved, in 2007, was allocated totally to "major street improvements." The tax passed by the thinnest of margins - 12 votes out of 728 cast. The tax raises over $90,000 per year. The money is kept in a separate fund restricted to street improvements so the money cannot be transferred to any other town budget fund or used for any purpose other than streets.

The major street improvement fund is doing well. The town treasurer's report for March noted that there is currently $214,235 in the major street improvements account. Of the more than $90,000 raised annually by the tax, $62,000 per year is being used to pay off bonds for the Main Street improvements. The bonds will be fully paid off in five years, and the entire $90,000 per year will be available for street work at that time.

The topic of a sales tax hike proposal has brought mixed reaction from trustees in recent discussions. The idea for a 50 percent increase drew strong opposition from Dayton Myers at a March work session. Bob and Patty Michael who own a local retail business noted that any sales tax increase would be felt by business, especially ones that compete with Orchard City which has no sales tax at all.

The Cedaredge Town Board went on record last month opposing the idea of a sales tax increase by the state. That was in part because a state sales tax increase proposal would compete with a town sales tax increase proposal. "The Town would like the opportunity to go to the voters in the future for local needs," stated trustees in letter opposing the state sales tax hike idea. Trustees believe the state has other means besides a sales tax for raising revenue while a sales tax increase is the town's best option despite the sales tax defeat in 2015.

Cedaredge also has a property tax. Convincing voters to increase it would likely face strong push back from fixed income retirees whose major financial asset is a paid-for home. Also, the state's high assessment rate on commercial property would be felt by retail and other businesses.