OURAY – As Ouray County officials continue to discuss ballot language for a proposed county-wide 1 percent sales tax hike to fund emergency services, their counterparts from the City of Ouray are saying “Not so fast.”
The problem, argued City Administrator Patrick Rondinelli in a lengthy memo to the Ouray City Council distributed in council meeting packets late last week, is that sales tax is the city’s main source of revenue, and should not be poached by the county, which traditionally has raised revenues through mil levy increases.
“This action by the county would be looking to take from opportunities to the city and earmarking the revenues specifically for the county,” he asserted.
In early July, a quartet of county elected officials presented a formal plan to the Board of County Commissioners to increase county revenues by about half a million dollars annually, through a proposed 1 percent boost to the county sales tax, to offset a steep decline in county revenues over the past two years. The decline stems from a downward trend in assessed property values which has hit Ouray County’s coffers like a slow-moving tsunami over the past two years, threatening the county’s ability to continue offering the services it is mandated to provide.
Funds raised through the sales tax hike would be used to create a new “Public Health and Safety Fund” to cover county expenses from budget line items including the public health nurse, emergency manager/coordinator, coroner, dispatch, search and rescue, fire, telecommunications, animal control and more.
Over the past month, the Ouray County Commissioners have held some spirited debate about the merits of asking the county’s electorate for a permanent sales tax increase, versus one that would sunset in a decade or less, or simply asking for a temporary mil levy override instead.
But this week was the first time that elected officials and staff from the City of Ouray publicly discussed the matter. Discussion took place at a Ouray City Council meeting on Monday, Aug. 6, that was flavored by Rondinelli’s opposition, as laid out in his strongly worded memo.
Commissioner Mike Fedel, present at the council meeting, outlined two main reasons the county decided to pursue the sales tax question: a 30 percent reduction in property tax revenues over each of the past two years, coupled with the fact that “staff [i.e. elected officials Ouray County Clerk Michelle Nauer, Assessor Susie Mayfield, Treasurer Jeanne Casolari and Sheriff Junior Mattivi who together pitched the sales tax question] felt they did not want to burden taxpayers with another mil levy increase.”
“All of us are hurting from [declining] property taxes; it has hurt the city too,” Rondinelli said, referring to an email exchange between himself and County Administrator Connie Hunt, in which Hunt outlined justifications for the county to dip into sales tax revenues to make up for its shortfall, and asserted the county’s right to access that funding stream, since the county provides services to all of its residents, including those that live within its municipalities.
“I take exception to some of these points,” Rondinelli said. “When you look at the services the county and city provide, it’s like comparing apples and oranges. County citizens are also city citizens. County residents come and enjoy the services offered by the City of Ouray. This needs deeper analysis. What, if any, position would the city like to take?”
Councilor Pam Larson, newly sworn in as an interim councilor at the beginning of Monday’s meeting, weighed in first, pointing out that a 1 percent hike in the county sales tax would send the City of Ouray’s total sales tax to 8.9 percent, and Ridgway’s to 9.5 percent. “It’s pushing the limit, and leaves very little room for anyone else [to take advantage of a sales tax hike],” she said.
“This is typically a municipality’s go-to type of funding,” Councilor Richard Kersen agreed.
Councilor Michael Underwood wondered why the information about the county’s proposed sales tax hike had come before council so late in the game. “Generally, a mil levy is how a county raises money and I would like to see that as a first option,” he said.
“I’m not sure how easy [the County’s sales tax question] will be to sell, but it will be a lot easier if all of us are behind it,” Mayor Bob Risch said.
Earlier this year, faced with its own looming budget crisis, council held a special work session to discuss potential new revenue-generating options – including a sales tax hike, use tax, resort tax, and another effort to “de-bruce” property tax revenues. Property tax currently offers a limited tax revenue to the city, due to the fact that the city’s electorate declined to “de-bruce” several years ago in a very close election.
The work session was exploratory in nature, and no action was taken to pursue any of those avenues, although there was a consensus that something has to be done, soon, to boost the city’s bottom line.
“It would be hard to convey the bind this would put the city in,” Councilor Ferguson said of the county’s proposed sales tax question.
One solution for sweetening the deal, laid out by Rondinelli in his memo to council, was a proposal for the county to proportionally share the sales tax revenues it would collect with its two municipalities.
Council agreed to pursue a work session with the county commissioners to discuss the matter. The Commissioners, meeting the following day, agreed to the work session, which will be held in conjunction with an already scheduled executive session between the two bodies to discuss matters pertaining to water rights on Tuesday, Aug. 13.
The Town of Ridgway has not yet officially weighed in on the sales tax matter, but with its own Streetscape bond issue scheduled to appear on the ballot this fall, Fedel speculated that the additional sales tax would be a hard sell for Ridgway residents. Ridgway officials will also be invited to the work session next week.
At Tuesday’s commissioner meeting, meanwhile, discussion steamed ahead regarding the proposed ballot language for the sales tax question, regardless of the City of Ouray’s concerns.
Commissioner Lynn Padgett said she had spent quite a bit of time conducting a broad-based, informal survey to assess the general willingness of county residents to support a sales tax question, and reported that most of those she spoke with indicated a willingness to support it.
Commissioners Fedel and Don Batchelder, meanwhile, said they had had the opposite experience. Fedel stated that feedback from his circle of friends and acquaintances was “mostly negative on a tax increase, period,” while Batchelder said that based on the input he’s received, “This has very little chance of passing, absent the sunset.”
“In my poll, I was surprised to hear that people who are small business owners and families struggling to make it here say that they would support this and didn’t need a sunset,” Padgett countered. “I’m hearing people understand the need for adequate public health and safety, and they are willing to vote for it.”
Padgett continued to advocate for a permanent new source of revenues for the county, rather than opting for a sunset provision. “Even in the very best of times, we were not funding ourselves adequately to take care of our county facilities,” she argued, pointing out that the county’s mil levy used to be 30 percent higher but had been reduced after TABOR. “Even when property valuations were at their highest levels in 2007, the county was unable to meet obligations like painting the courthouse or factoring in a cost of living adjustment for our employees.”
Nauer, the primary architect of the sales tax question, said that the question of whether or not to include a sunset provision in the ballot question has still not been settled. “We are all conflicted because we don’t see property values coming back up any time really soon,” she said.
The ballot language deadline is Friday, Sept. 6.
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