Excerpt
Park County Second Quarterly Report
Board of County Commissioners
May 2007

This is the second educational article concerning a tax question for the roads within Park County In the last Quarterly Report, a flat tax was discussed. This article will discuss a sales tax ballot question. The question is: Why ask a sales tax question instead of a flat tax question, and how do the mechanics of a sales tax question work?

The mechanics of the sales tax question become somewhat convoluted because there is a statutory limit on the total amount of sales tax that can be collected within the county from all taxing entities. That total is 6.9%. However, in addition to the 6.9%, the county may have a 1.0% sales tax, which it does. For example, please see the chart below and reference the Town of Fairplay. The current break down is as follows: the county contains two incorporated towns that have their own sales tax in place. The Town of Fairplay has a 4.0% sales tax and the Town of Alma has a 3.0% sales tax. Park County has a 1.0% sales tax in place for the preservation of land and water. The State of Colorado has a 2.9% sales tax. The chart below shows a  “visual” of where Park County is in relation to the limit. (The authority for sales tax amounts is CRS 29-2-108. Limitation on amount. (1) In no case shall the total sales tax or total use tax imposed by the state of Colorado, any county, and any city or town in any locality in the state of Colorado exceed six and ninety one-hundredths percent; except that this limitation shall not preclude a county sales tax or use tax at a rate not to exceed one percent.)

Sales Tax Rates

Out of Town

 

Park County

1.0%

State

2.9%

Total

3.9%

 

 

Fairplay

Fairplay

4.0%

Park County

1.0%

State

2.9%

Total

7.9%

 

 

Alma

Alma

3.0%

Park County

1.0%

State

2.9%

Total

6.9%

The chart shows that between all the taxing entities, the limit of 6.9% has been reached and also exceeded by the county’s 1.0% sales tax within the Town of Fairplay, as allowed by law. The chard also shows that the Town of Alma has a total of 6.9%. This information is important because it helps to illustrate why the towns must ask a ballot question that lowers the portion of the sales tax that they currently collect in order for Park County to ask for a countywide sales tax. In this instance, if Park County wishes to ask for a 2.5% sales tax for roads, the total percentage for the Town of Fairplay would increase to 10.4%. The Total percentage for the Town of Alma would be 9.4%. Both of these amounts exceed the statutory limit. This means that Fairplay would need to ask a ballot question that rescinds 3.5% of their existing sales tax and that Alma would need to ask a ballot question rescinding 2.5% of their existing sales tax. Of course, the ballot questions need to reflect that these changes are contingent upon the success of the countywide question. Should a countywide question pass, Park County would be the collection agent for the amounts reduced. Thus ,Park County would need to pay those funds back to the Towns. This is possible by entering into Intergovernmental Agreements (IGAs) between the county and the towns. Working in cooperation with the towns is necessary to ask the sales tax question for roads, and this process does not supplement the towns’ budgets, rather it serves to make them whole.

The reasoning behind a proposed sales tax of 2.5% is based upon what we know of the existing 1.0% tax for land and water protection. Since the existing 1.0% tax generates approximately $500,000.00 per year, 2.5% should generate approximately 1,250,000.00 per year during the first years after approval. Because the county would become the collection agent for the two incorporated towns via IGAs, the county would pay approximately $250,000 back to the towns, leaving approximately $1 million for roads. Again, based upon what we know of our existing 1.0% sales tax, approximately 85% of these funds are collected from nonresidents (i.e. tourists). Currently, the average Park County resident pays about $4.17 per year in sales tax to the county. Thus, the proposed 2.5% tax increase would cost each county resident an additional $10.42 per year, for a total of $14.59 per year.

When compared to the flat tax, a sales tax doesn’t generate as much revenue, thus, the County would not be able to perform as much reconstruction on roads as with the flat tax. However, as more commercial development comes into the county, the amount will increase. Since the proposed sales tax is considerably lower than the amount that was being contemplated with a flat tax, we would propose a sunset of 15 to 20 years rather than the 10 years proposed for the flat tax. Again, we would appreciate input on the issue of sunset from the citizens in the county. The advantages of a sales tax is that it is the least intrusive of all taxes, the mechanism to collect it is already in place, it doesn’t raise the “fairness” issue that the flat tax idea has raised and the majority of it is paid by nonresidents rather than residents. Speaking of the “fairness” issue, the BOCC is not insensitive to those on fixed incomes, owners of multiple parcels or those who otherwise would not receive a “direct” benefit from an assessment of property. It is for these reasons that the BOCC prefers a sales tax. Also, vehicles purchased outside of the county would remain exempt from the sales tax. As discussed previously for the flat tax, revenue generated by this sales tax would be earmarked for specific equipment and specific road improvements. Because a sales tax funding stream is subject to change, hopefully to increase as commercial development increases, the ballot question will provide a prioritized list of roads for improvement.

The BOCC would like to take this opportunity to say that if it were possible, we would improve every road in Park County. We would perform snow removal on every road in the county. In fact, during the storms this winter, we had a policy that of: “if it looks like a county road, plow it.” Road and Bridge Department did a great job this winter. The BOCC knows that the road and bridge employees have the ability to get the job done, as they have demonstrated time and time again throughout the years. The public needs to understand that a new funding stream is needed to improve roads, purchase equipment and provide services. As previously discussed in the last Quarterly Report, we need to replace 12 of our existing 19 motor graders. Motor graders cost approximately $300,000 each. This totals $3.6 million just for 12 motor graders. Ultimately, the county should have 21 motor graders. Should a sales tax ballot question pass, our new management plan would call for an initial lease/purchase of 6 graders and also allow for a systematic replacement plan of 3 graders per year to be paid in full at the sunset, thus, keeping our grader fleet in superior condition and under warranty. This funding stream would also allow the county to purchase crushing equipment, allowing the county to produce gravel in its existing pit(s) at a cheaper price than outright purchase. Crushing operations can take place in the winter for summer application. This of course would enable the county to place gravel on roads that so desperately need new surface material. Further, this funding stream would allow the county to purchase a paving machine. A paving machine would enable the county to repair some of the chip sealed roads by first laying in a correction course and then a mat of asphalt. It should be noted that this funding stream would be small enough to limit how much actual reconstruction can be performed. However, if steps aren’t taken in the very near future, the county will begin to lose some of the older chip sealed roads. The forgoing is a partial list of equipment and materials for which a new funding stream would be earmarked. Earmarking ensures that the new funding stream cannot be diverted to other uses because the uses will be clearly defined in the ballot questions. The BOCC also wishes to take this opportunity to thank those of the public who provided input to the idea of the “flat tax,” both the positive and the challenges. We would greatly appreciate input on the sales tax concept.

Complete Park County Quarterly Report

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