Glenwood considers elimination of vendor’s fee to increase revenue
October 8, 2009
GLENWOOD SPRINGS – The City of Glenwood Springs is considering whether or not to eliminate a vendor’s fee which could create some much needed revenue during tough economic times.
While the city has seen close to a 17 percent decrease in sales tax revenues through August 2009, elimination of the vendor’s fee would benefit the city’s general fund.
The city’s vendor’s fee allows merchants to keep 2 percent, or $50 per month, whichever is less, of the sales tax collected each month. The maximum amount any business located within Glenwood Springs city limits is allowed to keep is $600 per year, according to City Finance Director Mike Harman.
Harman stated in a memo to City Manager Jeff Hecksel in August that elimination of the fee would have amounted to $100,685, based on the sales tax collected in 2008.
Earlier this year, the state of Colorado eliminated its vendor’s fee of 3.3 percent without a cap, which could potentially result in millions of dollars in added revenues for the state.
Harman said the state currently has 66 home-rule cities that collect their own sales tax, 21 of which do not allow a vendor’s fee.
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Harman recommended Glenwood follow the state’s lead and eliminate the fee completely starting in January 2010.
But there is a bit of a time crunch. The sales tax booklets go to print in November and the change would need to make its way to the City Council for a final decision on whether or not to eliminate the tax before the booklets are printed.
Hecksel asked the council for its position on the issue at a budget meeting on Oct. 1, and council agreed to include the issue on its Nov. 5 agenda for further discussion.