Budget shortfalls have led county officials to ask for a portion of what a citizen-based steering committee thought to be potential revenue for the construction of a recreation center -- a use tax.
At a city and county workshop Tuesday night, Moffat County Commissioner Darryl Steele said Moffat County has some needs other than a recreation center. He proposed splitting a use tax with the city and suggested a portion of the revenue from a 4 percent use tax on automobiles -- $250,000 -- be used to construct a recreation center and the remainder -- $500,000 -- go into the county's capital construction fund.
Voters must approve a use tax.
To offset the shortfall in funds needed for a recreation center, he said the city should also ask voters for a 0.7 of a cent increase to the city's sales tax.
The suggestion would mean three separate tax questions would have to go before voters on at least two separate elections to raise enough money to construct a recreation center.
According to county Administrative Services Director Debra Murray, state statute prevents the city and county from asking for a tax increase in the same election. It is not yet clear whether the city can ask for two tax increases in the same election, but it cannot ask for both in the same question.
Recreation center steering committee members have consistently avoided using a sales tax increase as a funding mechanism because nearly any increase would put Craig in the top 30 percent of Colorado cities for sales tax rates. A 0.7 of a cent increase would bring the city's sales tax to 2.95 percent, bringing the total city, county and state sales tax to 7.85 percent.
According to the Colorado Municipal League, 119 of the 214 cities tracked have a higher sales tax than the city of Craig.
City officials were concerned that a tax increase question would not pass if used for unspecified purposes.
"I don't think a use tax will come back here for anything but a recreation center," City Councilor Tom Gilchrist said. "I don't think it would fly if it's just going into a government fund."
Of the 48 counties listed by the Colorado Municipal League, 10 have a higher sales tax rate than Moffat County. Eight have the same rate.
The county's dilemma, according to Murray, is that it has reached the maximum sales tax it can collect -- 2 percent -- and property tax questions have a high failure rate. County officials believe a use tax is the only option for establishing a fund for any capital projects or expenditures. The county has put a freeze on any capital expenditures this year and expects to do the same next year.
"I don't think the public would vote on a tax to buy motor graders," Mayor Dave DeRose said.
The county could specify some of the projects it would use the money for, Commissioner Marianna Raftopoulos said. The money could be used to pave Moffat County Road 4, to remodel the courthouse or for improvements to the Moffat County Fairgrounds.
"Two questions (a recreation center and fairgrounds improvements) gets a broader spectrum of voters -- some who support the fairgrounds and some recreation center users," Commissioner Les Hampton said.
Another problem with splitting the revenue, city Parks and Recreation Director Dave Pike said, is that a 4 percent use tax will barely generate enough to pay for the recreation center and its operational costs -- that's with reducing the $11 million project to $8 million and that move eliminates some of the center's big draws -- a lap pool, racquetball courts and community rooms.
"I don't think you could combine the revenue for the two, you'll have to do either or," City Councilor Don Jones said.
Nearly a decade ago, the economy was good and the Moffat County Board of Commissioners reduced property taxes by two mills. One mill is one-thousandth of one penny and generates, now, about $313,000 a year for the county.
Continuing that tax, Raftopoulos said, would have meant the county would now have a capital improvement fund and, likely, have no need for a use tax.
County revenues have declined steadily as the assessed valuation of Tri-State Generation and Transmission dropped.
Gilchrist, also a Tri-State employee, said revenues for the company are rising steadily and 2002 was a record year for energy sales that followed two rate increases, meaning its assessed valuation is expected to rise.
When it does, city officials asked what the county would do having that revenue and a use tax.
Murray and County Attorney Kathleen Taylor will do some research on the revenue a use tax could generate and the issues that surround tax increase ballot questions.
The two groups will meet again in June.
Christina M. Currie can be reached at 824-7031, Ext. 210 or by e-mail at email@example.com.
Currently, residents who purchase a vehicle within the city of Craig pay a 7.15 percent combined city, county and state sales tax. Those who purchase vehicles out of the county pay only state sales tax for that vehicle. The theory behind a use tax is those who do not pay sales tax on a purchase are getting the benefits -- driving on maintained roads -- without paying for those benefits.
By implementing a use tax, anyone who purchases a vehicle outside of Moffat County but registers a vehicle here would have to pay a comparable tax rate to those who purchase vehicles locally.
If a 4 percent use tax passes, those who purchase vehicles out of the county would have to pay a 6.9 percent tax. Officials are still searching for ways to equalize that number with what local purchasers pay.
Ninety-eight Colorado cities have a use tax.