Moffat County schools may benefit from taxes on marijuana
General Assembly to consider changes to Colorado’s marijuana tax in March
March 4, 2017
Craig — Moffat County School District needs millions of dollars to address facility maintenance needs, and state marijuana taxes could help, even though retail pot is not legalized in Craig or Moffat County.
The first $40 million dollars of the 15-percent state excise tax on retail marijuana is given to schools for construction and renovation through competitive grants administered by the Building Excellent Schools Today program.
Moffat County School District has applied for a BEST grant to help cover 35 to 50 percent of the approximate $470,000 needed to bring its facilities into compliance with the Federal Office of Civil Rights, said Moffat County Superintendent of Schools Dave Ulrich.
"The BEST program doesn't discriminate between those school districts in or out of areas with legalization of marijuana," said state Rep. Jonathan Singer, D-Longmont.
Singer was one of only two representatives to publicly support the legalization of retail marijuana when voters approved Amendment 64 in 2012.
How pot helps and doesn't help schools
When Colorado voters legalized retail marijuana sales, proponents claimed taxes would help fund primary education. Three years later, experts are weighing in on where the money goes and how it is benefiting schools.
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"The number one question is, what about all that pot money; doesn't that go to schools?" said Joe Watt, Colorado Association of School Boards communications director. "The one-word answer is “no.” It helps education in a broad sense, but it does not go to schools. It does not hire teachers or pay for expenses."
Instead, marijuana tax money flows to schools through competitive grant funding programs, such as BEST.
"The money that goes to schools goes to the BEST program that does incredible work for schools, especially rural schools that can't afford to pay for improvements like new roofs," Watt said.
Grant dollars from BEST require a local match, but those dollars are often leveraged to bring in additional federal and local money. However, not all school districts qualify for the BEST program, including Denver public schools.
"Denver is upset that almost zero excise dollars have been realized in Denver public schools," Singer said.
This year, taxes are projected at $57 million, and if accurate, that projection would send $17 million to the Public School Fund. In 2018, the projection is $66 million, which would send $26 million to the fund.
"I don't have a lot of faith in our forecasts after other states have passed recreational marijuana laws. I would say our forecasts are very uncertain," said state Rep. Bob Rankin, R-Carbondale.
Rankin sits on the Joint Budget Committee, which is responsible for drafting the state budget bill.
In terms of funding for education, Rankin said the subject is “a $130 million problem," as contributions from residential property taxes have decreased by that amount.
This is the result of a reset of residential property tax contributions required by the state constitution’s Gallagher Amendment, made worse by the Taxpayer Bill Of Rights (TABOR), which limits the options for rebalancing the property tax formula.
As a result, the state is considering raising the negative factor. Since 2009, the state has applied the negative factor to uniformly cut funding for kindergarten through 12th-grade education in an effort to balance the budget.
Gov. John Hickenlooper has proposed changes to the allocation of marijuana tax revenue to backfill some of the deficit in public school funding.
Pot to bail out budget?
"Our balancing plan would transfer $15 million from the existing fund balance in the BEST Program's Capital Assistance Fund into the Public School Fund, reducing the need for general fund appropriations to support K-12 Total Program funding by $15 million," reads Hickenlooper’s letter to the Colorado General Assembly.
Legislators are uncertain if the governor's proposal complies with marijuana tax laws.
"It (the governor's proposal) would be a tenuous argument, at best, but you could certainly draw that line by saying that education is a preventative to (drug) use and abuse. It has been a very contentious and nervous conversation at the General Assembly," Singer said.
An assessment of Moffat County school facilities by BEST is underway, but early estimates put the amount at $17 million in the next four years to address maintenance needs.
"Any efforts the legislature takes to offset the impact of the negative factor would be welcome. In our current budget, the negative factor impacts our budget by approximately $1.9 million," Ulrich said.
As the school board starts the process of setting next year's budget, members are considering a four-day school week and ballot measures to move the district forward.
Sales tax: the other pots of pot money
Colorado also collects a 2.9 percent state sales tax on medical and retail marijuana sales and an additional 10 percent special sales tax on retail marijuana. The state has the ability to raise the special sales tax.
"We could go up another 15 percent … The problem with doing that is that it would push more people onto the black market, because it would be so much cheaper. We want people who buy marijuana to buy it on the legal market," Rankin said.
Of the special sales tax, 15 percent of revenues flow back to communities that have legalized marijuana. The rest flows into the Marijuana Cash Fund.
The cash fund is broadly used for health care, monitoring the health effects of the drug, substance abuse prevention programs and law enforcement.
Similar to the BEST process, communities that have not legalized the drug may benefit from marijuana sales taxes through grants from various agencies and programs.
As an example, Singer pointed to Longmont — a city that has not legalized marijuana, yet has received cash fund dollars to build a youth center to help keep adolescents busy and lessen the likelihood of their using drugs.
"Ultimately, it depends on how the General Assembly wants to spend that money," Singer said.
Decisions made by the Colorado General Assembly this year may impact the amount and how schools — including those in Moffat County — receive funds from sales taxes on marijuana.
"We are pioneers on this, and we don't have all the data that we would like to help make decisions," Rankin said.
Moffat County already receives a small amount from one medical marijuana dispensary that pays state taxes on medical sales, as well as the same local taxes other Craig merchants contribute.
The county also receives a small amount of the special sales tax returned to local governments, according to the Colorado Department of Revenue Marijuana Tax Data available at colorado.gov/pacific/revenue/colorado-marijuana-tax-data.
State statute requires there be at least three marijuana taxpayers for it to report the amount of taxes received from these sources, so with only one dispensary, the specific amount of tax received from Craig is not available to the public.
Putting pot into perspective
Taxes from marijuana raise millions of dollars for Colorado, but "the amount of tax revenue that comes from marijuana sales is minimal — around 1 percent of the state’s total education budget," according to the Colorado Department of Education Marijuana Tax Revenue and Education webpage.
Further, the money needed by schools across the state to address old and failing infrastructure is greater than revenues raised for that purpose.
"A statewide facility assessment determined a need of nearly $18 billion in capital construction projected through 2018," according to CDE's Marijuana Tax Revenue and Education webpage.
The Joint Budget Committee will consider recommendations for the Department of Education March 9 and recommendations for the Marijuana Tax Cash Fund on March 20.
To fully address budget problems, Colorado will have to confront two conflicting constitutional amendments — TABOR and Gallagher.
"It (marijuana) isn't a long-term solution to our budget problems," Singer said.