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Home My WebLink Aboutcoa.cclc.ag.10262010 COMMERCIAL CORE & LODGING COMMISSION SPECIAL MEETING SISTER CITIES MEETING ROOM OCTOBER 26, 2010 8:30 A.M. 8:30 I. Roll call and approval of minutes - Oct. 6 th minutes. II. Public Comments not on the agenda (please limit your comments to 3 minutes) III. Ballot issues 9:00 IV. Hyman market vendors 10:00 V. Adjourn , C )'1L . THE VOICE OF COLORADO'S CITIES AND TOWNS c a c't' OO ' '1" " 1 101 1144 Sherman Street, Denver, CO 80203 • (p) 303 - 831-6411 / 866- 578-0936 • (f) 303.860-8175 • www.cmLorg To: Interested Municipal Officials From: Mark Radtke, Legislative and Policy Advocate Date: July 9, 2010 Subject: Revenue loss from Propositions 101, Amendments 60 and 61 Three ballot questions that face Colorado voters this November place their cities and towns at a financial crossroads. Proposition 101, Amendment 60 and Amendment 61 combine to slash municipal tax and fee revenue and impose restraints that will make the financing of public facilities difficult and expensive. During the past two years of recession, nearly every city and town has cut services and cancelled maintenance work as revenues have seen single and double digit reductions. Now there's the possibility of even more severe cutbacks to municipal revenue and services. Proposition 101: • Reduces specific ownership tax paid on vehicle registration to $2 for new vehicles, $1 a year thereafter. The loss of this property tax is estimated at $500 million statewide for municipalities and other taxing districts. • Reduces vehicle registration fee to a flat $10. This ends one of the principal funding sources for the Highway Users Tax Fund - and will reduce the municipal share of HUTF by some $45 million. Street maintenance dollars to cities and towns will decrease 38 %. • Eliminates sales tax on the first $10,000 of a vehicle's value. Municipal sales tax ' averages about 3.5 %. This will significantly reduce sales tax revenue for cities and towns. • Eliminates sales tax on telecommunications services. This is another significant reduction in sales tax revenue - the primary source of revenue for municipalities. • Cuts the state income tax by 25% - a loss of some $1 billion for the state budget. Amendment 60 • Cancels voter authorized property tax TABOR over - rides. TABOR authorizes voters to allow revenue generated above the TABOR limits to be retained and expended by municipalities. Many cities and towns have voter approved permanent or temporary over -rides. • Future TABOR over -rides limited to four year period. If a future TABOR over -ride is approved - it can never be in effect for longer than four years. • Enterprise funds must pay property tax. Municipal services such as water, sewer, electrical utilities, recreation programs, will all have to pay property tax, forcing an increase in utility bills and program fees. • Imposes a 10 year limit on any property tax increase approved by voters. This would eliminate the ability of municipalities to ask the voters to approve the type of long term bonds used to finance such projects as water treatment plants and library buildings. • Cuts school district mill levies in half — state required to backfill. This is the same state budget that was forced to cut school district funding by more than $300 million this year. Amendment 61 • Lowers capacity for municipal borrowing. Future limit would be set at 10% of real property assessed value. • Requires voter approval for any public debt, including lease- purchase and lease- back financing. • Requires tax decrease to match debt payments upon completion of debt repayment. This would require a tax reduction even if the debt was repaid by project revenues and not tax dollars. • No state government debt — period. What you have now for large state facilities is what you get. Several cities and towns have already put pencil to paper to estimate the Proposition 101 revenue reductions. Aurora estimates it would lose some $23 million in general fund revenue — Greeley $16 million. Loveland is looking at a 19.7 - percent loss to all city funds. Denver's general fund revenue will decrease more than $62 million which is more than the street maintenance and solid waste budgets combined. Already greatly decreased by the recession, funds for street repair and maintenance would be cut back significantly. The elimination of 38% of Highway Users Tax Fund dollars to municipalities is a cut of $4 million to Aurora, $3.6 million to Colorado Springs, and $1.6 million to Pueblo. Smaller towns are highly dependent on HUTF funds for street maintenance. Alamosa will lose nearly $90,000, Steamboat Springs $254,000 and Trinidad $119,000. Utility bills will increase. Amendment 60 ends the ability of municipal enterprises to fund large -scale projects while maintaining reasonable customer rates. For large multi - million dollar projects such as a sewage treatment plant, bonds are issued over a 20 to 30 year time period. Amendment 60 caps that time period at ten years. The results are not unlike what you face with your mortgage. If you choose to pay off your home with a ten year mortgage rather than a 30 year mortgage, your monthly payments will be much higher. The size of projects will also be affected as Amendment 61 lowers the total amount of debt a municipality may issue. The ceiling of 10% of assessed valuation is much lower than many cities have in place through their citizen approved charter. Evans will have to drop its current 15% limit by one third. The new limit will lower Longmont's bonding capacity by 38 %. Even without a bond -issue to repay, utility bills will increase. Amendment 60 for the first time requires a municipal enterprise, such as a water system, to pay property tax. Boulder residents will pay an estimated $7.9 million more each year in water and sewer rates to cover the required property taxes. Aurora estimates their residents will see a 15% hike in their water bills. Colorado Springs, which provides water, sewer, electricity and gas utilities, estimates it will have to increase rates by 50% over a five year period to meet bond repayment and property tax requirements. The municipal hospital in Colorado Springs will have to pay $6 million a year in property tax. Amendment 60 goes further — it changes TABOR. The TABOR provisions in the Colorado Constitution allow voters to over -ride TABOR revenue limits and allow municipalities to use all revenue collected to provide services. Residents in most cities and towns have voted to do just that — but Amendment 60 cancels property tax over- rides. Many communities will see their voter action voided including Keenesburg, Windsor, Platteville, Ouray and Evans. Cancelling the voter approved TABOR over -rides will cost Golden some $1.5 million in property tax revenue each year — the City of Lafayette will lose $638,000 — Fort Collins $2.5 million. Another blow to our communities is the provision slashing school district property tax in half. Somehow the state budget is expected back -fill that loss — a state budget that Proposition 101 is cutting by reducing the state income tax by $1 billion. Proposition 101, Amendment 60 and Amendment 61 come at a time when municipal revenues and spending are decreasing. Like the adjustments being made by families during this recession, our cities and towns have had to cut spending, spend smarter, and work with their citizens to determine service priorities. The CML State of our Cities and Towns survey shows that nearly a third of our cities and towns have cut staff positions. 41 percent have imposed hiring freezes. Capital projects have been put on the shelf. Routine maintenance has been cancelled. Funding for parks is down an average 21 percent and street maintenance is down 31 percent. Funding cuts have even reached essential services such as public safety as police budgets have been cut an average 13 percent and fire departments 2 percent. Approval of Proposition 101, Amendment 60 and Amendment 61 could more than double these statistics. Passage of these measures would seriously erode the reliability of basic services, the attraction of new business to the state, and our ability to enjoy the quality of life we have created for our families. Estimated Toss in annual municipal revenue - Proposition 101 Specific Ownership Tax (SO7) is the property tax levied on motor vehicles Sales tax losses are from the tax exemption on the first $10,000 of a purchased motor vehicle and sales tax on rented or leased vehicles, Telecommunication losses are for sales tax and fees HUTF is the loss of vehicle registration fees deposited in the Highway Users Tax Fund SOT Salestx Telecom HUTF Aurora 2014 2,279,000 8,903,000 7,805,000 4,083,000 Boulder 2011 316,000 377,000 4,657,000 485,000 Boulder 2014 1,266,000 1,098,000 4,657,000 485,000 Breckenridge 2011 144,800 292,000 150,000 225,000 Breckenridge 2014 140,500 397,500 150,000 225,000 Centennial 2011 473,000 750,500 1,500,000 1,100,000 Centennial 2014 498,000 2,602,000 1,500,000 1,100,000 Colo Spgs 2011 618,700 3,065,700 1,109,000 3,650,000 Colo Spgs 2014 2,453,000 12,344,000 1,109,000 3,650,000 Denver 2014 19,023,078 31,169 130 8,712,670 3,103,965 Estes Park 2011 7,690 49,415 270,990 89,910 Estes Park 2014 30,759 188,147 270,990 89,910 Federal Heights 2011 300 153,882 296,443 42,000 Federal Heights 2014 1,198 294,037 296,443 42,000 Fort Collins 2011 310,643 1,725,000 4,700,000 850,000 Fort Collins 2014 1,242,570 5,100,000 4,700,000 850,000 Golden 2011 80,000 654,000 55,000 182,000 Golden 2014 300,000 900,300 55,000 182,000 Greeley 2014 700,000 2,100,000 2,700,000 300,000 Lafayette 2011 75,977 150,207 1,066,579 262,859 Lafayette 2014 303,909 487,895 1,066,579 262,859 Lakewood 2014 167,500 972,000 6,317,000 2,164,000 Longmont 2011 185,000 715,000 2,882,000 228,000 Longmont 2014 739,000 1,937,000 2,882,000 28,000 Loveland 2011 158,000 572,000 2,131,000 402,000 Loveland 2014 630,000 1,594,000 2,131,000 402,000