City Council considers construction use tax | AspenTimes.com

City Council considers construction use tax

Janet Urquhart

A use tax on construction materials could tap Aspen’s booming development industry to help fund its struggling transportation system.A 2 percent use tax was but one scenario the City Council heard Monday in a discussion on how best to shore up the budget for Aspen’s bus system and parking garage, projected to start running in the red in 2009.Currently, costs are rising faster than projected revenues, and the expiration of a quarter-cent sales tax at the end of 2009 exacerbates the financial woes. Asking voters to simply extend the existing tax isn’t enough to solve the problem, according to the projections.Other options presented last night included asking voters to both extend the tax and increase it to .45 percent – an increase of two-tenths of a cent – or seek authorization to renew the quarter-cent tax and institute a 2 percent use tax, as well. The use tax could start boosting transportation revenues by a projected $1 million a year in 2007, if voters approve it in 2006.The question could be posed in November 2006 or during the city’s regular election in May 2007, said City Manager Steve Barwick.The use tax could be applied to half the cost of large construction projects – roughly the portion allocated to material purchases, while small remodeling projects and additions to homes would be exempt.Since the lumber and other construction materials used here aren’t generally purchased in Aspen, they escape the city’s sales tax, Barwick noted.”This is the roughly 25 percent of the economy in Aspen right now that is not taxed in any way,” he said.The council made no decisions, but some members were receptive to the idea.”It makes sense to, perhaps, tax that sector of the economy,” said Mayor Helen Klanderud. “I think it’s a reasonable tax.””I do, too,” said Councilman Jack Johnson.Whatever is decided, Councilwoman Rachel Richards urged the council to seek voter action before the existing quarter-cent tax expires.”I think any plan for extension of this [.25 percent tax] should come before 2010,” she said. “Waiting until it expires is almost putting yourself on the edge of a crisis.”Among the expenses facing the city is a $1.5 million repair of the parking garage roof, scheduled in 2008; the rising cost of fuel for its free in-town bus system; the addition of a new bus route to serve Burlingame Ranch and other housing complexes on the Highway 82 corridor west of town; and the higher cost of purchasing hybrid diesel-electric buses, which the council wants to incorporate into the city fleet.Janet Urquhart’s e-mail address is janet@aspentimes.com

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