Basalt council favors property tax refund, mill levy ballot question
Current property tax payers in Basalt will get a refund for overcharges made by the town government.
The Basalt Town Council voted 5-1 Tuesday night to direct their staff to work on issuing the refunds as well as prepare a question for the November ballot asking voters to endorse a proposed property tax mill levy.
“We continue with a very transparent approach — sort of the sausage-making of a resolution of this (issue),” Town Manager Ryan Mahoney said.
The town provided information earlier this year that estimated residential refunds will be $99 per $100,000 of actual value. So a house valued at $1 million would be eligible for a refund of $990.
Commercial property owners would get a refund estimated at $399 per $100,000 of actual value. A commercial property valued at $1 million would be eligible for a refund of about $3,990.
Only current taxpayers would be eligible, according to town officials.
The town staff discovered while working on the 2019 budget last fall that the town’s mill levy had been increased 10 times out of 13 years since 2006. New staff members suspected that was a violation of the Colorado Taxpayers’ Bill of Rights, an amendment to the state Constitution that was approved in 1992.
The town consulted with government associations, attorneys and its new auditor to confirm its suspicions.
“All of those folks were in agreement that we have an issue and it violated TABOR,” Mahoney said. The mill levy couldn’t be raised without a vote of citizens, he said.
That created two issues for the town. First was how to handle the overcharges. TABOR has a four-year statute of limitations. Even though there were 10 overcharges, the government is only liable for the latest four years. In Basalt’s case that means it is liable for about $2 million in overcharges.
The second issue was the property tax mill levy. The town either has to go back to the lowest mill levy it has charged since TABOR went into effect or it must ask voters to set a new ceiling for the mill levy.
Mayor Jacque Whitsitt opened the council discussion by lobbying to endorse the staff recommendation of giving a refund and going to election for a mill levy.
“As some people have said, that really isn’t our money anyway. It belongs to the citizens and I would love to see us refund it,” Whitsitt said.
In earlier debates, Councilman Auden Schendler suggested the town could keep the money and see if there was a legal challenge. The council also has debated asking a second ballot question to keep the refund.
Council members Katie Schwoerer, Ryan Slack, Gary Tennenbaum and Jennifer Riffle voted with Whitsitt to support issuing a refund and asking just the mill levy question on the ballot.
“I think it’s ludicrous and crazy to do nothing and keep the money,” Riffle said. We live in a litigious society and there were definitely be a challenge, she said.
Tennenbaum said the staff recommendation was the best option in a tough situation.
“The reality is this is going to hurt the town’s financial position no matter what,” he said.
Tennenbaum said he strongly considered asking voters two questions — one on whether the refunds should be given and a second on setting the mill levy.
“Trying to do both questions is a huge political lift for the community,” he said. “It’s a huge political lift to get both of them passed.”
Therefore, he said it is best if the town admits it made a mistake with the overcharges, issues refunds and makes the case that voters must set a mill levy that lets the town maintain the services its citizens expect.
Councilman Bill Infante dissented. He said he didn’t see a problem asking voters if the refund should be issued or the money kept by the town. The funds were spent in the best interests of the community, he said.
“The funds were not spent frivolously,” Infante said.
If voters agree, it would eliminate a big liability for the town, he said.
Infante also challenged the assertion by Whitsitt that giving the refund would create goodwill and increase the chances of the mill levy question passing in November.
“I do not see that having two questions threatens one or the other,” Infante said.
Whitsitt responded: “For me, there is such a thing as right and wrong here, too, and not necessarily what you can get done on a ballot question but what’s just the plain-old right thing to do.”
Schendler is traveling out of town and couldn’t attend the meeting.
Mahoney said Wednesday the staff will likely advise the council to seek November approval of a mill levy rate of 5.957, the same level as for the 2019 budget.
Refund checks could be issued prior to the election.
“We would like to issue checks this fall, certainly this fiscal year,” Mahoney said.
The council majority gave direction for the staff to pursue its recommendation for the town to issue certificates of participation, also known as COP, to pay off the refund rather than using reserves and other town assets. COP is a form of financing where investors purchase a share of lease revenues of a program. It isn’t considered a new tax. It would spread out the town government’s burden of having to cough up $2 million in unbudgeted refunds.