A tax cut offered, but at what cost?
Imagine paying the fire department $20,000 to come douse a fire in your kitchen.
Such a scenario isn’t too far-fetched if tax-cut crusader Douglas Bruce’s latest ballot initiative, Taxcut 2000, wins statewide voter approval in November, according to local officials.
The impacts of the tax cut plan would be enormous, siphoning away crucial funding for a range of services that residents take for granted, according to Tom Isaac, Pitkin County assessor.
The proposed measure would erode property tax rates at an exponential rate, starting with a $25 cut the first year, $50 the second year, $75 the third year, and so on indefinitely, until revenues for various entities that depend on property taxes dry up completely.
“This is so insidious,” said Isaac. “When you hear about it, you think, `Oh, I get $25 off the tax bill for each district, and next year it’s $50 off.’ But what the taxpayer doesn’t realize is in a couple of years, all the districts will receive no tax money and go out of existence.”
Taxcut 2000 will also hit some sales tax revenues, including those tacked on to utility bills and food. That means the city of Aspen will see a loss of both sales and property tax revenue, according to Tabatha Miller, city finance director.
She outlined the impacts of the initiative for the City Council this week.
The council, in a move likely to be followed by virtually every municipal taxing entity that hasn’t already done so, adopted a resolution opposing the measure.
According to Miller’s calculations, the city would lose $558,571 in tax revenue in 2001 if the initiative passes. In 2002, the hit to sales and property tax revenue would amount to $858,326 and by 2003, the city would lose $1.14 million. In succeeding years, the loss in revenue would continue to spiral upward.
“Eventually, in almost every case where the revenue source is in place, it will go down to almost zero,” Miller said. “It’ll whittle my property tax bill until I pay nothing.”
You’ll get nothing either, said Isaac. The money that funds libraries, ambulance service and sewer service, for example, will disappear. “This is not a small deal,” he said.
“This is a nightmare. I can’t think of any other way to describe it,” said Councilman Tom McCabe.
The property tax cut would be applied to each taxing entity on a property tax bill, like school districts, the city and county, ambulance and fire districts, library districts, water districts, etc.
There are 31 different taxing districts in Pitkin County. Property taxpayers will find several, but not all of them, listed on their tax bill, depending upon where they live. Each district will be affected to varying degrees. Some will see virtually all their revenue wiped out after the first year. Others will see it chopped in half.
The Aspen Ambulance District, for example, collected $226,583 in 2000 property tax revenue. If the initiative passes, it will lose $105,785 in tax revenue in the first year, according to Isaac’s calculations.
“In the first year, half the money for the Aspen Ambulance District will be gone,” Isaac said. “They can do bake sales or charge everybody $1,000 for a ride.”
Pitkin County collected $8.2 million in property taxes this year. Those monies run county government, keep the roads plowed, pay for police protection, etc. In its first year, Taxcut 2000 would cut county funding by $337,280, according to Isaac.
The Aspen School District would lose $60,847 in the first year and the Roaring Fork School District would lose $62,690 in the taxes it collects within Pitkin County, in addition to the losses it would incur within the downvalley counties that make up the district.
The Aspen Valley Hospital District would lose $284,355 in the first year and the Aspen Fire Protection District would lose $170,959 in 2001, according to Isaac. The tiny Basalt Water Conservation District, which collected $4,772 in 2000, would lose $4,108 of its property tax revenue in 2001 if the initiative passes.
The city of Aspen, which will see a hit on only a portion of its sales tax revenues – those collected on food and utilities – will fare better than municipalities that are solely dependent on property taxes, according to Miller.
And, high property values here will help cushion the blow, at least initially, compared to impacts in other, poorer municipalities.
Eventually, she predicted, taxing entities would be forced to ask voters for a new tax. Then the initiative would slowly erode the revenues of that new tax, and yet another tax hike would be needed.
“If the voters say no, then you’d either cut service, or you’d fold,” she said.
The Aspen City Council voted 4-1 to adopt the resolution denouncing the initiative, with Councilman Tony Hershey voting against the measure.
Hershey explained that he doesn’t support the initiative, but feels the public should make up its own mind.
“I don’t see why the city of Aspen is interjecting itself into something that is up to the public,” he said.
Mayor Rachel Richards blasted the initiative as a blanket measure that would allow voters elsewhere in the state to undo local programs that local voters have agreed to fund, like the county’s open space tax.
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