Transcript Meeting Countywide Needs
Meeting Countywide Needs
How do we maintain current services and standards with falling revenues in Chaffee County?
Prepared by: Chaffee County, City of Salida, Town of Buena Vista and Town of Poncha Springs
Current Sales Tax Structure in Chaffee County
Local Sales tax rates: Salida – 3% City + 2% County = 5% total Buena Vista – 2.5% Town + 2% County = 4.5% total Poncha Springs – 2 % Town + 2% County = 4% total Unincorporated Chaffee County – 2% county
Local Sales Tax Collections 2006-2010
2006 2007 2008 2009 2010 Buena Vista $ 1,448,669 $ 1,645,305 $ 1,746,644 $ 1,684,532 $ 1,663,185 Poncha Springs Salida (2%) 232,781 3,338,198 320,295 3,607,420 324,542 3,789,567 303,606 3,564,803 307,000 3,357,617 Subtotal Chaffee County
Total Tax Revenue
YOY increase 5,019,648 2,349,655 5,573,020 2,740,102 12.81% 5,860,753 2,900,209
$ 7,369,303 $ 8,313,122 $ 8,760,962 $ 8,280,826 $ 7,987,802
5.39% 5,552,941 $ 5,327,802 2,727,885 -5.48% 2,660,000 -3.54%
Where Sales Taxes are Generated
County; 27,91%
Percent of Sales Taxes Generated
BV; 20,96% Poncha; 2,91% Salida; 48,22%
Chaffee County; 51,51%
Population by Location (
2008
)
Population Percentage by Location
Buena Vista; 13,60% Poncha Springs; 3,99% Salida; 30,90%
Sales Tax and Population Relationship
Sales taxes are paid based on where the purchaser takes possession of the item purchased, for example: Businesses located in unincorporated Chaffee County only charge 2% local sales taxes Items delivered from in-town to unincorporated Chaffee County are charged only a 2% local sales tax.
People living in unincorporated Chaffee County pay only 2% local sales tax on utilities and telephone.
Items bought outside of Chaffee County contribute no local sales taxes.
A conservative estimate is that at least one third of local sales taxes in Chaffee County are paid by visitors.
Today’s Situation in Chaffee County
Sales taxes are the primary source of revenue to fund general services for each of the municipalities and the County 2009 sales taxes fell 5.48% from 2008 and were just above the level collected in 2006.
2010 sales taxes have continued to be less than 2009 through the first 4 months of collections and are projected to be down another 3.5% from 2009 levels.
The economic recovery is forecast to be a long slow recovery.
To maintain services in 2009 and 2010, each entity pulled down reserves, but this is not a sustainable policy.
What are Sales Taxes used for?
Sales taxes represent the majority of revenue used to fund basic government services in Chaffee County.
Buena Vista – sales taxes provide 68% of the dollars needed to pay for these existing services: fire, police, municipal court, administration, parks, recreation, street maintenance, support for recycling, fireworks, and Neighbor to Neighbor, vehicles and equipment, and capital improvements .
Community Support & Development; 8.28% Total Administration & Overhead; 24,07% Public Works; 21,40% Parks & Recreations; 10,51% Public Safety; 35,73%
More about how the taxes are used
Poncha Springs uses sales taxes to provide these services: street and roads, parks, trees, visitors’ center, fire mitigation, support for recycling, support of local agencies that assist citizens, capital improvements, administration and maintenance of town ditches.
More about how the taxes are used
Salida – sales taxes provide 70% of the dollars needed to pay for these existing services: fire, police, municipal court, administration, planning, parks, pool & recreation, street maintenance, support for the SteamPlant, vehicle and equipment purchases and capital improvements.
Salida 2010 Use of Sales Tax Dollars
Police & Fire; 37% Pool, Rec, Parks; 12% Community Development; 5% Public Works; 26% Administratio n; 20%
Chaffee County 2010 Budget by Program
Landfill; 3,1% Other; 6,5% Parks and Recreation; 1,0% EMS; 6,2% General Government; 23,7% Road & Bridge; 8,8% Health & Welfare; 31,8% Public Safety; 18,8%
Other financial challenges facing local governments
State of Colorado is cutting funding to schools, non governmental agencies providing various services, county social service agencies, and grant programs that assist with local projects such as water and waste water infrastructure construction.
The PILT (Payment in lieu of taxes) money used by the County to fund basic services is threatened as the federal government seeks ways to reduce the deficit.
Costs for health care, utilities, chemicals and other products used by government continue to increase. Security and technology requirements for public safety services and general government continue to increase.
What has been done so far?
Both Chaffee County and Salida experienced significant declines in sales tax revenues in 2009 that resulted in cuts to planned expenditures, not filling open positions, years .
For instance: Buena Vista has used 32% of General Fund reserves, or $622,386, since 2008 to finance 2009 and 2010 projects in an effort to enhance Town infrastructure and amenities such as town parks and the municipal airport, while maintaining core services.
What else has been done so far?
Salida reduced the level of streets improvements planned for 2010, delayed the completion of the public works building frontage and the extension of the Monarch Spur trail from its dead end through the Starbuck subdivision, implemented salary freezes, indefinitely postponed the replacement hire of a police officer who resigned in the spring, and cut funding for community support grants. In addition, medical insurance costs are increasingly being shifted to employees. Staffing levels never returned to the pre-2004 lay-off levels. Reserves were tapped in 2009 and will be again in 2010, which is not sustainable.
More about steps already taken to reduce costs and maintain services
Poncha Springs has delayed the 2010 chip seal project, delayed the purchase of public works equipment and the construction of a public works equipment shed, and is projecting no salary increase for employees in 2011.
Chaffee County has reduced employee levels equal to 8 full-time positions since 2008. 2009 salary increases where limited to 2% for county employees and 2010 has no increase in the budget. The 2010 chip seal projects and vehicle replacements were delayed. Employee health insurance premiums continued to increase.
What more can be done right now?
Municipalities and county governments will have to reduce existing services and maintenance programs to cut costs in order to balance future budgets.
Municipalities and county governments can continue to use reserves to balance budgets until the state minimum 3% reserve level is reached.
The county could adopt a 4% county wide sales tax to increase revenue for current services to avoid cuts (if voters choose this option).
Adopt use taxes on building materials and automobiles purchased outside the county to replace the local sales tax not currently collected on those purchases (if voters choose this option).
Should local governments reduce existing services?
Local governments in Chaffee County operate at a minimum level while the push from citizens is for more services – public transportation, more parks, more trails, more plowing, more street cleaning, more pavement, more trash pickup in parks, faster EMS response, more green space, more public bathrooms, quicker turn around on permits, more information on web sites – that all take additional dollars. More cuts will mean less of all these things at a time when Chaffee County has been working to build our reputation as a desirable place to live, to work, to raise children, and to locate a business.
What does a 4% County-wide sales tax involve?
There are several steps to adopt a new 4% county-wide sales tax: All the municipalities and the county have to agree on how to allocate the taxes among them – that has been done.
Each municipality has to place a measure on the November ballot to eliminate the 2% town and city sales tax if the new tax passes.
Every voter in the county gets to vote on eliminating the current 2% county sales tax and replacing it with a new 4% county-wide sales tax.
The new tax would start January 1, 2011.
Who will pay the increase in sales taxes?
If the county-wide 4% sales tax passes:
Sales taxes paid on purchases in each of the municipalities will be the same as before the new
tax.
People in unincorporated Chaffee County will pay 4% on utilities and telephone and on deliveries from in-town businesses instead of the 2% paid before. This includes second homes in the County. For example the additional tax on $100 of utilities would be $2.00.
Businesses in unincorporated Chaffee County such as Nathrop and Johnson Village will collect 4% instead of 2% local sales taxes.
What difference would a 4% County tax make on collections?
Estimates based on past trends are that an additional $1.3 million of sales taxes would be collected that will be distributed among the four sales tax collecting entities in Chaffee County.
Each of the four entities; Chaffee County, Salida, Buena Vista and Poncha Springs, would receive additional sales tax dollars with a 4% county wide sales tax.
How does a use tax work?
Colorado statutes only allow a use tax on building materials and automobiles.
A use tax is applied throughout Colorado to balance the amount that citizens pay to support their local government through sales taxes on large purchases and to support local businesses that compete with those in larger communities.
With a use tax in place, the purchase of a vehicle outside of the County will require the collection of the 4% sales tax that would be paid if the vehicle was purchased in the County.
What about building materials?
Since building materials are bought at many locations the use tax requires the payment of estimated sales tax based on the value of the materials to be paid with the building permit. A use tax permit then allows the builder or owner to not pay sales tax on the items as they are purchased. This is common throughout CO.
Poncha Springs already has a use tax on building materials in place.
The use tax is viewed as creating a level playing field for local suppliers of building materials and insuring that new construction supports local government services that will be required by the new construction.
How much will a use tax generate?
Revenues from use taxes are more volatile than other sales taxes because they are on large ticket items that are more discretionary than utilities, clothing and food.
Based on averages from 2004-2008 the 4% use tax would generate an estimated $600,000 per year which would be allocated to the local government where the building occurs or where the vehicle is registered.
For the ballot question the maximum amount of the use tax will need to be determined, if it is decided to move forward with the use tax as part of the ballot question. This more precise estimation will involve a detailed study.
Who benefits from the County-wide sales and use taxes being proposed?
Local businesses in the municipalities who compete for business with those in the county who do not collect the same sales taxes.
Businesses in Chaffee County who compete with big box stores and auto dealerships whose sales do not help support our community.
All those who view Chaffee County as the community in which we all live and depend upon and believe we should all pay our fair share to support services.
Those who want to maintain current services Those who want to see improvements in services, maintenance, and other community amenities over time.
Questions?
As with any tax issue in Colorado there is a great deal of complexity in the language and details involved with making tax changes. The goal today is to layout the framework for intelligent discussion around the issues so the community can decide where to go next.
Please contact any staff or elected official when you have new questions arise about this subject after you have left this meeting.
What questions do we have now?
Contact information
Salida – Buena Vista – City Hall – Town Hall Poncha Springs Town Hall Chaffee County – County Building 539-4555 395-8643 539-6882 539-2218