Ouray County Sends Leaner, Meaner Sales Tax Question to November’s Ballot
by Samantha Wright
Aug 30, 2013 | 1569 views | 0 0 comments | 28 28 recommendations | email to a friend | print

OURAY COUNTY – Despite opposition from both the Town of Ridgway and the City of Ouray, the Ouray County Commissioners voted 2-1 on Tuesday to send a county-wide .75 percent sales tax question to the voters this November, with Commissioner Mike Fedel opposed.

If the referendum passes, the new tax will bring in a projected $386,000 annually to the county coffers for the next 10 years.

As spelled out in the ballot language of the referendum, these proceeds would be specifically used “for the purpose of the certainty of being able to provide adequate public health and safety services in Ouray County,” replenishing funds lost due to declining property values.  

To make the question more palatable to county voters, commissioners agreed to ratchet the sales tax hike down to .75 percent from the 1 percent they were previously considering (which would have brought in half a million dollars annually), and also added sunsetting language that would kill the tax after 10 years.

Ouray County experienced a $300,000 decrease in revenues two years ago, and projects a $400,000 decrease next year. According to data just released by County Assessor Susie Mayfield this week, the county’s assessed value has plummeted from $183 million to $154 million in the most recent assessment cycle.

A quartet of elected county officials including Mayfield and her colleagues Ouray County Clerk Michelle Nauer, Treasurer Jeanne Casolari and Sheriff Dominic “Junior” Mattivi presented a formal plan regarding the sales tax question to the commissioners in July, arguing that if the county does not pursue a new revenue stream, it will have to start severely cutting back on the services it offers. 

They presented a carefully laid-out argument for why the proposed sales tax is the best option for raising new revenues (primarily because unlike a property tax or use tax, it spreads the burden to visitors as well as residents), and also presented options for how to scale back on county services if the proposal fails. Among the options: shifting to a four-day workweek for most county employees and closing the courthouse on Fridays.

Voters would be asked to approve the proposed sales tax hike in this November’s election. Funds raised would be earmarked to create a new “Public Health and Safety Fund,” which could be used to cover expenses from budget line items including the public health nurse, coroner, dispatch, fire, telecommunications, animal control and more. 

The county commissioners have been discussing the ballot question ever since it was first proposed in July, first sparring over the merits of the proposal, then grappling with the ballot language and lately, conducting discussions with the Town of Ridgway and the City of Ouray about why the new tax is needed. 

Both municipalities oppose the ballot question, arguing that sales tax is not an appropriate revenue stream for the county to tap into since it is also the municipalities’ primary revenue source. As a concession to these concerns, the newest version of the ballot question that was on the table for consideration this week proposed a revenue-sharing scheme, levying a 1 percent countywide sales tax, 25 percent of which would be split equally between the City of Ouray and the Town of Ridgway. 

Neither municipality was too crazy about that idea, however. 

In a special meeting held by the Ouray City Council on Monday night, Aug. 26, council universally eschewed the concept, instead urging county officials to consider the merits of a 3 percent county-wide use tax on new motor vehicle purchases and building materials, which would raise about the same amount of money (about half a million dollars annually) as a 1 percent countywide sales tax hike.

Ouray County is one of the few counties in the state that does not levy such a use tax, pointed out Ouray City Councilor Michael Underwood. County officials responded that they had, and failed, several times in the past to get such a tax passed.  

“There wasn’t a warm fuzzy reception or even significant dialogue on cost sharing nor any substantial dialogue on whether the tax should or shouldn’t sunset,” said Commissioner Lynn Padgett, who attended Monday’s special council meeting. Padgett noted that on the sidewalk after the official meeting broke up, the real discussion was whether the county sales tax hike may interfere with the city’s intention to go after a citywide sales tax hike in the near future to help shore up its own budget woes. 

As for the Town of Ridgway’s concerns, Mayor John Clark laid them out starkly. “It’s pretty simple from our standpoint,” he said. “We’ve got a [Streetscape] bond issue we are considering. I think if you put a 1 percent sales tax on the ballot it will guarantee that everything on the ballot fails. A use tax makes a lot more sense.” 

Clark added that for Ridgway, the county-wide sales tax hike would have the impact of “making an already dicey business climate even dicier. Maybe it is better than a use tax because it spreads the burden out, but I think the overall business climate for retail commercial is more important to maintain. No one will build homes here if there is no climate for successful business. It’s a Catch 22.”

“The whole discussion is a Catch 22,” Fedel said, stating that he “has not received any positive feedback” on the sales tax proposal. “I got an earful on Saturday [while attending two community events in Ouray] and none of it was positive,” he said. “People want to know, ‘Why aren’t you guys sucking it up like we did?’ That’s the perception we are dealing with right now. We are talking about a lot of money, again. and this conversation has occurred in the past. This sales tax will just become part of the system. Where does it end?” 

“The real problem is the county needs to find a way to provide public health and safety with certainty, in an era of declining revenues and we don’t think we can successfully weather it out anymore,” Padgett countered. 

Commissioners and town officials went around in circles for some time, arguing the merits of various means of raising new revenues, and whether it was proper for the county to pursue them. 

Commissioner Don Batchelder finally cut to the chase. “We can make arguments forever about the need for money, and it is up to the voters whether the county toughs it out or maintains,” he said. “We need to give people the opportunity to vote for it.”

However, Batchelder added, “I don’t think a ballot question with that kind of money stands a chance of passing. [Adding a] sunset is the only way it could pass.” Batchelder also suggested ratcheting down the amount of the proposed sales tax hike to .75 percent. With the money raised, “We would basically have a situation where the county is revenue neutral,” he observed. 

Padgett worried that a .75 percent sales tax hike would not bring in enough money for the county to maintain services, let alone adequately address the increasing need for emergency response in the county – particularly in regard to forest fires like the one this summer near Ironton Park, which required a powerful multi-agency response that included helicopters and over 40 firefighters. Padgett warned that projected drought and beetle kill will only make the forest fire hazard in the county worse in coming years. 

“We are one lightning strike away,” from entirely depleting the county’s reserves, Padgett warned.

Padgett also raised the alarm that the county may face even steeper revenue shortfalls next year, if the federal government pulls the plug on PILT (Payment in Lieu of Taxes – Federal payments to local governments that help offset losses in property taxes due to non-taxable Federal lands within their jurisdiction). Each year, Ouray County gets about half a million dollars’ worth of PILT funding which helps sustain county operations on many levels.

As the writing on the wall regarding the commissioners inclination to support the sales tax initiative became clearer, officials from the Town of Ridgway made a last-gasp effort to at least postpone the sales tax initiative by one year, to give their own Streetscape bond question a better shot at passing, and to take time to better inform the electorate about the county’s need for a new revenue stream. 

“It’s all about showing good faith and presenting information on how it will be used and how we got where we are,” Ridgway Town Manager Jen Coates said. “The general public doesn’t know about PILT and the harsh realities at the federal government level. They just want to see us tighten our belts like they are having to.”

But in the end, Padgett aligned with Batchelder’s proposal, seconding his motion to send the sales tax initiative to the voters, with amended ballot language ratcheting the proposed sales tax hike down from 1 percent to .75 percent and adding a 10-year sunset provision. 

“I am very sorry, and I hope the citizens understand it,” she said. “We are at too narrow of a margin to be responsible without doing this and putting it to the voters.” 

Fedel voted against the motion, stating he’d rather take the opportunity to “wait a year, hone our message, while acknowledging we have a need right now. We will have a better chance if we waited and honed the message.”  

 

swright@watchnewspapers.com or Tweet @iamsamwright

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