Town board looks at sales tax and use tax increases for Community Recreation Center ballot question
May 1, 2014
The Windsor Town Board reviewed draft ballot language for a Community Recreation Center expansion funded by an increase to sales tax and construction use tax revenue at the board's Monday work session.
Town staff presented the board with a draft of the 2002 ballot question used to approve funding of the existing Community Recreation Center. Town Attorney Ian McCargar went through the draft with the board, highlighting areas where the board would need to make decisions.
He said the main points that the board needs to address included what percentage the tax increase will be, when the tax would sunset and by how much.
McCargar said the money collected from increases to the town's sales tax and use tax will be set aside in their own funds to be used only for paying debt service and ongoing operating and maintenance costs associated with the facility. After the debt service is paid off, the tax increase would move to a lower rate to simply cover ongoing maintenance and operations at the facility.
He said the draft, as it's currently contemplated, includes de-Brucing language, which would allow the town to exceed spending restrictions set in the Taxpayer Bill of Rights. The language would allow the town to use money beyond paying off the debt for ongoing maintenance, and McCargar said the board would eventually need to decide what that rate would be.
Town Finance Director Dean Moyer explained that the tax increase would be applied to both the town's sales tax and its construction use tax.
"Back in late 2013, we were focusing strictly on the sales tax," Moyer said. "Just here recently we started to think about the use tax as well."
Moyer said by including construction use tax in the funding, the overall rate increase would be lower.
Mayor John Vazquez said he was uncomfortable with the tax increase being tied to both sales tax and use tax, adding that if the town couldn't rely on a single source of revenue to pay off the debt, they probably shouldn't be doing the project.
Moyer said the town's 2002 ballot question didn't collect enough revenue to cover the debt service and maintenance, which had to be subsidized from other town funds.
Representatives from George K. Baum & Co. attended the work session and told the board that on the 2002 ballot question, the sales tax and use tax were considered a single source of revenue and that revenue from the use tax accounted for a much smaller portion than revenue received from sales tax.
Town Manager Kelly Arnold said the topic will be brought back to the board, likely in June, with revised revenue and cost projections and more of the ballot language's details, including the amount the tax rate would increase.