Paonia looking closer at sales tax allocation

By Tamie Meck


The amount Paonia trustees must cut from the 2018 draft budget increased from $83,000 to $165,800 during last week's budget meeting. The deficit increase resulted from trustees' decisions to eliminate a proposed impact fee on enterprise funds and to restrict $40,000 in Samuel Wade Bridge reserve funds to bridge repairs.

The board is already facing a tight budget. Similar to a franchise fee, the proposed impact fee would have assessed a three-percent charge on the town's water, trash and sewer revenues for their impacts on streets and alleyways. Fees collected would be allocated to the general fund for street repairs, and costs would likely be passed on to consumers. Impact fee revenues would have also freed up money from other areas of the budget, explained town administrator Ken Knight. As a result, equal cuts must be made throughout the budget.

The decision to strike the fee reflects a reluctance to assess additional costs on citizens, said mayor Charles Stewart. Regarding the setting aside money for future repairs to the Sam Wade Bridge, that decision reflects fiscal responsibility by the board, said Stewart.

The option to return the money into the general fund remains an option. As the board works through the budget process, "It may very be well be the reality that we can't do without those revenue sources," said Stewart.

That impact fees would have gone to street repairs is significant. Streets have been pushed to the back burner for many years, said mayor pro tem David Bradford. He questioned whether the current two-percent sales tax is being properly allocated. One percent of sales tax collected now goes to the general fund for administration, police, streets and parks, and one percent goes to capital improvements for a variety of capital expenditures.

Bradford researched the origin of the sales tax and found that a 1977 ordinance approved 50 percent of one percent of tax dollars approved by voters is for water, sewer, trash and street funds. All of a one-percent sales tax passed in 1992 was intended to generate revenues for capital improvements for streets, said Bradford. "Somehow we've lost that."

Trustees voted to direct town attorney Bo Nerlin to review the history and language of the two tax ordinances to determine if the town is following them.

If the town is not in compliance with the law, "We need to know," said Stewart.

The changes also force the town to continue looking at all options for increasing revenues and cutting expenditures. There is nothing in the pipeline that will bring more revenue than is already reflected in the 2018 draft budget, said Knight. The Silver Leaf co-housing development, currently under construction, provided additional revenue for 2017. But revenue from any new development coming before the town in 2018 would not be realized until at least 2019. A sales tax or mill levy increase can't go to voters until April, and also would not immediately be realized.

The town is also considering its options for annexation of properties.

The next budget meeting is scheduled for 5 p.m. Tuesday, Oct. 24. The meeting starts at 5 p.m. to allow the regularly-scheduled bi-monthly board meeting to begin at 6:30 p.m.