Faced with budget crisis, Pitco mulls tax increase | AspenTimes.com

Faced with budget crisis, Pitco mulls tax increase

Allyn Harvey
Aspen Times Staff Writer

Some of the most familiar names in the county gathered yesterday to discuss what has historically proven to be impossible: increasing property taxes to fund county government.

Pitkin County’s top managers said yesterday if something isn’t done to stabilize the county’s $17.4 million general fund, major cuts will be needed in every department to stem a burgeoning fiscal crisis.

Voters have twice declined to approve a property-tax increase for general use by the county government, according to Tom Oken, first in 1984 and again in 1998.

“The question is, how do we fund basic services?” asked Oken, who is in his 24th year as county finance director. “It’s the same question we were struggling with four years ago, and we still haven’t really answered it.”

The Capital Replacement and Improvements Funding Committee, the citizen group that helped write the 1998 property-tax question, was reconvened yesterday for the first time in nearly four years to help answer that question.

County officials told the committee it has been a struggle make ends meet since the 1998 property-tax question failed by just 83 votes. Although the ballot language required that the money be spent on the road and bridge program, it would have freed up $1.5 million for other general fund expenditures if it had passed.

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And they say the fiscal picture has worsened dramatically since the onset of the national recession and the Sept. 11 terrorist attacks.

The general fund – $17.4 million this year – pays for the sheriff’s department, the county jail, public works, road and building maintenance, the clerk and recorder, the assessor, the treasurer, the district attorney’s office, the community development office, the county attorney and general administration, among other things. General fund money does not go toward programs with dedicated funding sources, such as the open space and trails program and the county airport.

Already this year the county has eliminated six positions, or 3 percent of its work force, and implemented an across-the-board 5 percent cut in operating expenses. Oken said more cuts are on the way unless the economy improves dramatically.

The cutbacks made so far were based on the relatively optimistic projection that sales-tax revenues would fall by just 5 percent and then rebound sharply at the end of this year. In fact, sales-tax collections have fallen about 7 percent, and many locals, including members of the committee, believe the next year or two will be equally bleak.

County officials said, at the end of yesterday’s meeting, committee members had raised a number questions they need to answer before asking voters to support three separate ballot questions relating to property taxes.

The first ballot question asks if the county can amend a section of the home-rule charter that limits the increase in property-tax revenues each year.

The home-rule charter is even more restrictive on the subject of annual tax increases than the state constitution, which has some of the strictest limits on taxing and spending in the nation. The amendment the county wants to propose would allow it to collect the amount of taxes permitted by the state constitution, adding about $170,000 a year to the county coffers.

The second question under consideration would ask if the county can keep $800,000 in property taxes collected this year. The money is surplus revenues, over and above the limit set in the constitution.

The extra money was collected because the county commissioners did not lower the property-tax levy last winter by an amount that reflected the increase in the assessed value of property throughout the county. But the state constitution requires governments to refund excess revenues unless the voters say the government can keep it.

The third question would ask voters to approve a permanent property-tax increase for the general fund. The amount that would be asked for has yet to be determined, Oken said.

The committee members – Tom McCabe, Peg McGavock, King Woodward, David Hyman, Ron Sorter, Jeff Kremer, John Doremus, Georgia Hanson and Meg Haynes – were generally supportive of the county’s goal to stabilize its finances, but they had few answers about what to do.

“I think you’re running a pretty tight ship, it’s just convincing voters of that,” Hanson said.

There was no real opposition among committee members to the home-rule charter amendment, and they recommended that it be placed on the August primary ballot. But they expressed anger and confusion with the extra $800,000 that was collected this year.

County Manager Hilary Smith pointed out that the county commissioners purposefully decided not to lower the property-tax levy as much as they could have, because they recognized that financial problems were on the way. The commissioners figured it would be easier to ask voters to let them keep money that voters have already paid than to seek a new tax increase. Smith added that the practice of retaining funds is a relatively common one in Colorado.

$800,000 in property taxes amounts to $41 for each $1 million in assessed property value. So if voters decline to let the county keep the money, the owner of a $1 million home would receive a refund of $41 next year.

But even if the amounts are relatively small, the committee members were dismayed that the county kept the money without first asking them. The committee members did finally agree that the county should ask to keep the money it has collected, but could not make a recommendation on whether it should be dedicated funding for roads, for example, or general funding to help stem the bleeding in the general fund.

The committee members remained confused and generally hostile over the county’s proposal to make the $800,000 surplus a permanent part of the budget, however.

As for the third question, a general property-tax increase, the committee made it very clear that the county had a lot of work to do. A straw poll of the people in the room indicated that half would vote for the tax increase if it was on the ballot today, and half would not.

What they did agree on was that the county had to explain its situation extremely well if it hoped to see any more money next year.

“If the citizens are going to have any confidence in government, you have to be straightforward and put everything out on the table,” said McCabe, a member of the Aspen City Council.