Basalt sales taxes dwarf property taxes, but town says possible refund would still hurt
Basalt is divided into Pitkin and Eagle counties. Here are the number of taxpayers within Basalt in each county.
Eagle County: 1,276 residential property taxpayers, 274 commercial
Pitkin County: 455 residential property taxpayers, 130 commercial, industrial and vacant land
Basalt has a cloud of uncertainty hanging over its property tax collections that might have to be resolved by voters in November, but at least its sales tax is currently producing revenue like Old Faithful.
An exam of the town’s budgets over the past three years and the projection for 2019 shows property tax revenue typically accounts for about 12 percent of all tax revenue for the town’s general operating fund. Sales tax collections dwarf that amount and comprise about 56 percent of the total taxes for the general fund.
In 2019, the town projects collecting $965,000 in property tax revenue. Sales tax is projected to raise about $4.57 million for the general fund. (Additional sales tax is restricted specifically for the open space and trails fund.)
Basalt’s property tax collections came under scrutiny last month when the town staff reported to the council that the property tax rate might have been adjusted in violation of Colorado’s Taxpayers Bill of Rights, or TABOR, on several occasions.
TABOR, approved by Colorado voters in 1992, placed limits on governments’ revenue growth and prohibited new taxes without a vote. Basalt raised its general operating fund property tax mill levy 10 times between 2005 and 2018.
Town residents voted in 1994 to allow the town to keep revenue growth in some cases, essentially weakening TABOR’s effect, but it isn’t known yet if the ballot wording was sufficient to allow the mill levy increases, according to Town Manager Ryan Mahoney. The town has hired outside legal and accounting experts to investigate the issue.
If it determines that TABOR was violated or if its practices fall in a gray area, the town might approach voters in November to ask to keep all property tax revenue that was collected. A ballot question would have to be set by Sept. 6.
If voters reject the request, the town would have to figure out how to refund the excess property tax revenue that was collected. TABOR holds the town accountable for only the past four years of excess collections. The town’s preliminary estimate is that would be about $2 million.
While property taxes might account for only 12 percent of total tax revenue each year, that’s “real money” that is vital for the budget, Mahoney said Tuesday. Services would have to be cut if the town had to refund $2 million and rely less on property taxes in the future, he said.
“We’re fortunate with our sales tax, but we can’t just rely on sales tax,” Mahoney said. “It’s volatile.”
For example, the development of a new City Market in Carbondale could siphon revenue from Basalt’s grocery stores, he said. Retail foods sales in Basalt accounted for $2.26 million in sales tax revenue in 2018.
The town has held two meetings to try to explain the property tax situation to residents. The most frequently asked question has been how big of a refund would taxpayers receive. The town hasn’t been able to answer that question yet, in large part because it’s extremely complicated. Commercial property is taxed at a higher rate than residential property. Plus there is a broad range of values ranging from mobile homes to Roaring Fork Club luxury cabins. That results in large differences in property taxes.
Responding to inquiries from The Aspen Times on Tuesday, the Eagle County Assessor’s Office determined there are 1,276 residential and 274 commercial property owners and taxpayers in the Eagle County portion of Basalt. The Pitkin County Assessor’s Office said there are 455 residential and 102 commercial property owners plus 27 vacant landowners and one industrial parcel in the Pitkin County portion of Basalt.
All told, there are 2,135 property taxpayers in Basalt. In the simplest terms, that would work out to a refund of about $937 per taxpayer. Of course, it wouldn’t be that simple. A possible refund would have to take account of different tax rates and values. Some potential refunds would be bigger and some smaller than $937.
Mahoney said the town is working on information to present to people about the potential refunds.