Voters approve city sales tax increase by narrow margin
November 7, 2017
Tuesday's election ended jubilantly for Craig city officials with the passage of a proposed 1.75-percent city sales tax increase. The measure passed by a narrow margin of 4 points or 88 votes.
A total of 2,327 votes were cast in the city election with 1,198 votes, or 52 percent, in favor of the city's Measure 2A, which also exempts Craig's lodging industry from the increase and eliminates sales tax on motor vehicles altogether. 1,110 voters, or 48 percent, said “no” to the measure.
“I’m excited and relieved,” said Craig Mayor John Ponikvar. “The City of Craig can move forward with being able to maintain and even enhance the services that are vital for a healthy community.”
Craig's local sales tax will increase from 2.25 percent to 4 percent under the measure. The lodging industry's tax rates will remain at 13.05 percent, which includes a 1.9-percent lodging tax and 4-percent Local Marketing District tax.
The tax increase, which will generate an additional $2.1 million in annual revenue, was proposed to resolve a growing budget deficit as the city's revenues dipped $2 million below what they were 10 years ago. A sharp decline in oil and gas production and exploration in Moffat County are largely to blame for the loss of revenue, and sales tax revenue has remained flat as the city's population has gradually shrunk.
The additional revenues will allow the city to maintain services and tackle a list of deferred capital projects and equipment replacements totaling more than $2.4 million during the past several years.
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“The goal for council and myself was to create more economic development and diversify the economy,” said City Manager Mike Foreman. “We’d love to become a city that attracts new businesses… and the only we could really do that was for this to pass.”
If the measure failed, the city would have faced a budget deficit that would have gobbled up the rest of its reserves by 2020 at current spending and revenue levels.
The city already cut 12 full-time positions in the past four years and made a fresh round of cuts to personnel, capital and operating budgets this summer in anticipation of tough budget times ahead, preserving a $700,000 surplus to carry into 2018.
“Now we'll be able to continue the services we're providing, plus we'll be able to catch up on some of our capital and equipment that we've put off for the past few years,” said Bruce Nelson, city finance director.
Ponikvar promised the funds would be used carefully and thanked city employees for their service through challenging economic times.
“This council will make sure that the money that has been entrusted to them will be spent wisely and with the greatest impact for every person that we serve,” he said.