County faces hurdles if tax-hike plan goes forward | AspenTimes.com

County faces hurdles if tax-hike plan goes forward

Allyn Harvey
Aspen Times Staff Writer

If Pitkin County is going to convince voters to approve two significant tax increases, it is going to have to overcome history and a healthy dose of resentment.

There is in fact a long history of resistance to property tax increases in Pitkin County. Voters have never endorsed a property tax increase to pay for general county services, though they have been generous with programs like open space and trails, the hospital and the school district.

And there is a bit of resentment, and confusion, over the county collecting more taxes than it is allowed to spend this year and then asking voters for permission to keep the money.

County officials say it is a relatively common tactic among counties and cities, and that worsening financial circumstances forced them to do the same. But even some of the county’s strongest supporters feel it is a deceptive way of raising taxes.

“It makes me very uncomfortable,” Georgia Hanson said of the county’s desire to keep the “excess” $800,000 collected last year. “It feels like a shell game.”

After a four-year hiatus, the county reconvened the Capital Replacement and Improvements Funding Committee last week. The citizen group, which helped write the 1998 property tax question, met to discuss the county’s budget crisis and possible tax increases.

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By the end of last Thursday’s meeting, the nine citizens who showed up for the meeting – Peg McGavock, Tom McCabe, David Hyman, Meg Haynes, Ron Sorter, Jeff Kremer, King Woodward, John Doremus and Hanson – understood the problem, but they were split over the solution.

The money in the county’s general fund, $17.4 million this year, pays for everything from the district attorney and the sheriff to community development, public works and road improvements. Three revenue sources – sales taxes, property taxes and fees – feed the fund.

Two of those sources, sales taxes, which are tourist-dependent, and fees, which are tied to the construction industry, have been consistently less than forecast over the past four years. Only property taxes have remained stable, but they cannot be raised without voter approval. County number crunchers are struggling to make ends meet, even after delaying or scraping some capital expenditures, cutting operating expenses by 5 percent and eliminating six positions.

This year’s budget was set in anticipation of a 5 percent dip in sales taxes, but they have actually fallen by about 7 percent. The recently adopted road fee, levied on new construction, is proving much less lucrative than originally anticipated, bringing in about $200,000 instead of $500,000 annually.

Much of Thursday’s meeting was spent grappling with the $800,000 in excess taxes. Every other year, the county readjusts its property tax levy downward to reflect the latest assessment, thereby keeping revenues in line with spending and taxing limits set by the state constitution. Last fall, however, the county commissioners made only a partial adjustment to the levy, creating an $800,000 surplus.

County finance director Tom Oken said the county would like the voters to do two things with the money. First, allow the county to keep this year’s surplus. And second, make the $800,000 a permanent part of the county’s property tax revenue base. Essentially, it would be a one-time, but permanent, increase of $800,000.

“That $800,000 in the ballot question is the real sticker,” said Sorter, a Redstone resident. “That’s the real hurdle we’ll have to get over.”

Sorter suggested that the county commit the money to a specific use – such as roads – and about half the room agreed.

Aspen City Councilman McCabe said instead of making the increase permanent, the county should set a time limit on how long the $800,000 in excess taxes would be levied. McCabe’s suggestion is actually a strategy the city uses on an almost annual basis to convince voters to let it keep the excess taxes it collects every year.

“You might ask voters to let you keep the money in the budget while we see how things in the world shake out,” McCabe said.

Not everyone in the room thought the county should be limited in how it spends the $800,000, however. Hanson said she thinks voters might let the county keep the money for the general fund, as long as they understand why it is needed.

“You’ve told us some very compelling things the county has done,” Hyman said in support of Hanson’s point. “I think voters would have much more confidence about what’s being done if you let them know, too.”

Hanson also said the county should get rid of the word “excess” when it’s talking about the $800,000. Otherwise voters will probably vote it down and the county will have to refund it next year. If the money is refunded, property owners will receive about $41 for each $1 million in property value.

After more than an hour of discussion, most of the finance committee members concluded the county should be allowed to keep the $800,000. The unanimity disappeared, however, when they got to talking about a general tax increase.

County Manager Hilary Smith told the committee that in addition to the the $800,000, the county would like to stabilize its revenue base with a general property tax increase of approximately $1 million.

A property tax increase that gives the county another $1 million to spend would cost the owner of a $500,000 home about $25, according to county figures.

Sorter, Haynes, McCabe and Doremus all said they would vote against a general tax increase based on the information they were given at Thursday’s meeting. But then they all made suggestions about how to pass it.

Sorter said the county could argue that the property tax increase is needed to diversify its revenue base away from too much dependence on sales taxes.

Doremus said the county could make the case that sales tax revenues will never be what they were in the late 1990s because of shifts in both the national and local economies.

Haynes, a homeowner in Starwood and a longtime member of the Aspen Valley Hospital board, said that to get her vote, the county will need to be very clear about both the cuts it has already made and the cuts that would be made if taxes aren’t increased.

She said one strategy that worked well for the hospital a few years ago when it was campaigning to renew its property tax levy was to outline the cuts that would be coming if the measure failed. Some committee members thought that sounded like a threat, however, and they weren’t sure how voters would react to a list of cutbacks.

When McCabe suggested the county put a list of services that will be cut on the ballot question, Doremus, a real estate broker, replied, “Doesn’t that sound like a threat?”

“It is,” McCabe said, “but it’s reality.”

Hyman thought the county could list the likely cutbacks and say to the voters, “As administrators, this is where we’ll cut our costs if the tax increase fails – and that’s just the way it is.”