Aspen to ask voters this fall to keep excess tobacco tax revenue

The city of Aspen will ask voters this fall to authorize keeping excess tax revenue on tobacco products that the government collected last year.

That was the direction Aspen City Council gave during a work session Tuesday when faced with what to do with an extra $111,622 that was collected over and above what was estimated as $325,000 in tax revenue for 2018.

A new $3 tax was placed on a pack of cigarettes bought in Aspen — with a 10-cent increase annually until the tax reaches $4 — on Jan. 1, 2018. The tax also included a 40 percent hike on all other tobacco products including snuff, chewing tobacco, e-cigarettes and cigars.

Because the tobacco tax revenue exceeded city projections by more than 33 percent, the state’s Taxpayer Bill of Rights, which Coloradans approved in 1992, takes effect.

City Finance Director Pete Strecker had originally suggested that the excess tobacco revenue be given back to residents via the city’s food tax refund, which is available to Aspen residents if they apply for it by April 15.

But after researching TABOR restrictions, Strecker said the food tax refund isn’t an option and would’ve required the tax rate to be brought down.

“This wasn’t a money grab but to discourage use, so under that premise we should be giving that money back,” Strecker told council.

But he added that refunding the money requires that the tax rate be reduced and that doesn’t meet the city’s goal of curbing tobacco use.

Mayor Steve Skadron, along with his four fellow elected officials, said he supports asking voters to allow the city to spend the money on education for addiction and other health and human services causes.

“I support going to the voters and explain why we are doing it,” he said.

The tax on tobacco was approved by voters in 2017 on the condition that the maximum revenue collected — $325,000 — be used for financing health and human services, tobacco-related health issues and addiction and substance abuse education.

The purpose of the tax was to push the price of tobacco products by a substantial amount so it would be too costly for younger consumers to obtain.

Council in 2017 also changed the legal age to buy cigarettes from 18 to 21 years old. The consumption age remains 18 in Aspen.

Interim City Manager Sara Ott said staff will develop ballot language that includes a specific spending plan.

Staff will begin an outreach process to seek recommendations for the best application of the tax proceeds this spring and summer.