Basalt town government has it wrong in TABOR snafu, former mayors say
Two former mayors of Basalt disagree with the current administration’s assertion that the town government probably violated the Colorado Taxpayers’ Bill of Rights and overcharged property taxes.
Rick Stevens and Leroy Duroux, both fiscal conservatives during their years in office, contended in separate interviews with The Aspen Times that the TABOR violation was erroneously identified as an issue by the town government and created a situation that will be difficult to resolve.
Stevens served as mayor from 1994 to 2004. He was initially appointed to the position, then elected in 1996 and 2000. Duroux served as mayor from 2004 until 2012. He won election in 2004 and 2008.
Stevens said the town has taken a “ready, fire, aim” approach on the TABOR issue and that more research was necessary before the administration told the public there were likely violations.
“I think that needed to be explored more,” Stevens said. “Maybe a little more conversation before they pushed the button.”
Colorado passed the Taxpayers’ Bill of Rights in 1992. It sets limits on growth of government revenue and doesn’t allow new taxes without a vote of the people.
However, taxing districts had the option of “de-Brucing,” a phrase invented because TABOR’s primary author was activist Douglas Bruce. By de-Brucing, a taxing entity could gain flexibility in the revenue it can keep.
Basalt residents voted 224-42 on April 5, 1994, to grant the town government flexibility from TABOR’s restrictions.
The property tax mill levy in 1994 was set at 5.97. Duroux said he believes the town had the flexibility in any given year to raise or lower the mill levy — as long as it didn’t exceed the 1994 level of 5.97.
Duroux, who has served on boards of other taxing districts, said he doesn’t believe Basalt took a novel approach.
“If Basalt is in violation, then a lot of governments in Colorado are in violation,” he said.
Stevens also said the town established its mill levy with the 1994 vote. Both former mayors said the town government took a conservative fiscal approach and tried to keep property taxes at the lowest level possible. The town relied more on sales taxes.
During Stevens’ tenure as mayor, the property tax rate was never increased. The mill levy was reduced or stayed the same. From 1999 through 2003, for example, the mill levy was 3.902.
During Duroux’s tenure, the mill levy was increased four times, reduced three times and kept the same once compared with the prior year.
The biggest reduction came in 2009 for the 2010 tax year. Residents were feeling the bite of the recession at the time, but the assessed rate used by governments hadn’t been adjusted down yet to reflect plummeting property values. The town dropped its mill levy in 2009 to 2.562, the lowest it has been since TABOR went into effect.
During the tenure of current Mayor Jacque Whitsitt, the property tax mill levy has increased six times and decreased once.
Basalt hired Ryan Mahoney as town manager in June 2018 and hired Christy Hamrick as the new finance director and Jeff Conklin as town attorney last year. When Hamrick was working on the budget for 2019, she looked at the variable mill levies Basalt has used since 1994 and how the mill levy has been increased 10 times since 2005. She reported what she discovered to Mahoney and Conklin. They reported it to council and public meetings were held to announce a possible violation of TABOR.
The current administration contends the mill levy should have never been raised from the lowest level in 2009 without a vote of the people. In contrast, Duroux and Stevens said the mill levy ceiling was set in 1994 at 5.970.
The town hasn’t definitively declared a violation because there is no state government agency that is a TABOR watchdog. Governments must be self-policing or citizens who believe there is a problem can file a lawsuit.
Whitsitt agreed that town officials previously believed they could adjust the annual mill levy as long as they didn’t exceed the 1994 level. However, she said the town government consulted with TABOR experts and determined they couldn’t raise the mill levy in any given year.
“Now that we know that was an incorrect interpretation, it’s far more important that Town Council and staff focus on setting our mill levy, addressing the refund issue and strengthening our town’s finances and transparency moving forward,” Whitsitt said in an email.
If a government is found in violation, TABOR calls for it to issue refunds for the last four years, essentially setting a statute of limitations. Basalt has calculated that there was a possible overcharge of about $2 million over the past four years.
The Basalt Town Council will discuss at its meeting tonight how to handle the refunds and will begin discussions on whether it will ask a ballot question in November asking voters to establish a new mill levy.
Duroux noted that the town has had three prior town managers, three prior finance directors and numerous elected officials since the TABOR violations allegedly happened. In addition, the town government’s budget is subject to an annual audit from an outside, independent party, as required by state law.
“It has never been raised as a red flag,” Duroux said of the possible TABOR violation.
Former Town Manager Mike Scanlon, who preceded Mahoney, declined to discuss the issue. He had a severance agreement with the town that prohibits him to discuss town government issues. He said he would be willing to answer any questions from town officials about the mill levy issue.
Former town Finance Director and Assistant Town Manager Judi Tippetts didn’t respond to text and voicemail requests for an interview from The Aspen Times.
The town government has followed the same essential budget process throughout the TABOR era. The finance director works through the numbers while working with department heads and the manager. The manager signs off on the proposed budget and it’s taken to the council for discussions on discretionary matters.
Basalt is located in Pitkin and Eagle counties. Both counties provide information on the assessed value of property. The town finance manager can use a worksheet to calculate revenue from the property tax.
While the political buck stops with the council, Mahoney said they rely on the manager and finance director for accurate and legally compliant budgets.
“Council members are not necessarily financial experts,” he said.
An auditor is another check and balance.
“There’s no reason the auditor shouldn’t have caught the uptick,” Mahoney said.
The town used Blair and Associates of Cedaredge for years as its auditor. It put the job out to bid and selected a different firm this year.
Mahoney said another check and balance might be needed for Basalt’s budget process. It might be as simple as adding a sentence in the budget ordinance passed by the council that notes what the prior year’s mill levy was and what it will be in the new tax year.
Meanwhile, the council must discuss the refunds and a potential mill levy ballot question. The discussion is scheduled at Town Hall at 6:30 p.m. today.
Stevens said the town’s contention that TABOR was likely violated raises an issue of accountability. They are going to have to be transparent about the town’s financial standing and how funds will be used.
“They couldn’t ask for a better opportunity,” he said.
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