[bouldercouncilhotline] Hotline: Tax Proposal for this November

[cmosupport at bouldercolorado.gov]

Sender: Becker, KC

On June 18, City Council will be considering which of several ballot items to move forward for further drafting by staff. 

We've been asked by the Transportation Advisory Board (TAB) to put a transportation tax or fee on the ballot. We've also been asked by some members of the Open Space Board of Trustees to re-dedicate 1or 2 taxes which expire in 2018 and 2019 to Open Space & Mountain Parks (OSMP). 

I'd like to propose that we do put the 2 open space taxes on the ballot but that some of it be re-purposed for other uses in the city. I'd like to see the taxes used allocated in the following way: 1) re-dedicate the .15 for open space; 2) re-allocate the .33 to the Transportation Department and to the General Fund.

There is some important background for this issue.

1. The Transportation Maintenance Fee (TMF): The idea of a tax or fee to support ongoing maintenance of transportation has been in the works for some time. The city's Transportation Department, like several other capital-heavy departments in the city, is seeing revenues not keep pace with costs. The gap between revenues and expenditures that many of our departments face was highlighted several years ago in the city's Blue Ribbon Commission report. The city has taken several measures to close the widening gap between expenditures and revenues like de-brucing our property taxes, un-dedicating some taxes,and modifying budgets. But the issue remains. 

Our Transportation system (including bike paths, bus system, complete streets and street network) is much-loved, and has consistently polled very high among Boulder residents as a top feature worth supporting in the city. A city poll done earlier this year showed that support for additional funding for transportation is high. If we don't provide additional funding for transportation, paving will deteriorate, important transportation amenities will not get built, and deferred maintenance will mean even greater costs down the road.

I'd like to see the city ask voters for new transportation funding because it is needed and it is well-supported. But I don't think the TMF is the best mechanism  to provide the funding. A transportation fee would apply to not only all residents and businesses, it would apply to CU and BVSD and these organizations can hardly afford significant new annual costs. A transportation fee styled as a tax would not apply to these organizations, but it might eat away at the limit Boulder voters will eventually reach in regards to new taxes.  I think we should avoid chipping away at that limit for core city functions so that Boulder voters continue to support and will support upcoming important state, county, and school-district measures. Also, there is some push back against the TMF from  those who,although they believe Transportation deserves the funding, don't like the methodology for assessing the fee on residences and commercial and retail establishments. 

2. Open Space Taxes: The city's OSMP Department currently receives .88 of out total 3.41% sales taxes. It also receives about $1million annually from the general fund (established when OSMP took over the mountain parks from the Parks & Rec Department). This means that OSMP receives about 30% of all sales tax dollars that the city takes in. Almost one-half (.4%) of OS taxes are permanently dedicated to OSMP.  The other OS taxes  (.44) expire in 2018 and 2019.  

OSMP has been on an accelerated acquisitions plan for a while. Our Open Space system is one of the many pride & joys of our city. It has developed into a mature and much-loved system.  City Council just approved last month an OS Acquisitions Plan. Like all major plans in the city, it has a Fiscally Constrained funding plan, an Action plan, and Vision plan. OSMP is $25million short of fully funding its Vision Plan for acquisitions. 

3. The General Fund: The General Fund is, as it sounds, the main fund for the city. It is funded with sales taxes, some property taxes, and other fees (like some parking fees and tickets and development fees). It is used to fund the Police Department, Fire Department, Library & Arts, Human Services, Housing Division, and general city offices like the city attorney's office, city managers office, Planning Department, and human resources office.  None of these departments has dedicated taxes, although some do have various fees that help fund them. The General Fund also provides funding to Open Space as mentioned above and some to Parks & Rec, which do have dedicated taxes. 

Like the Transportation Department, the city departments funded by the General Fund see revenues not keeping pace with costs. The city had the same sales taxes in 2012 as it had in 2002.  There's no doubt that the General Fund will need some new source of funding in the next few years to maintain services where they are, never mind meeting other community needs. For instance Council has identified public safety as a priority for new funding.  To address Council's request, the Police Department is proposing to add 8 new police officers at the rate of 2 per year. This is about $100,000 per officer per year. It can't happen unless we cut somewhere else in the General Fund.


Proposal
Looking at the city as a whole and looking at county, state, and school district needs that are lining up, we need to be strategic and thoughtful about the taxes we ask voters to approve. Rededicating the .15% sales tax that expires in 2019 gives the OSMP the ability to more than meet their vision plan for acquisitions, including $10million for "unidentified needs."  It affirms our commitment to the open space program and allows OSMP to meet funding needs at the highest level.  No other department in the city would have funding at or beyond the "Vision Plan" level that this tax would give to OSMP, but because Boulder voters have consistently supported open space, I think it is worth asking that they renew the .15%.  

Dividing the .33 (roughly $9million a year in 2013 dollars) gives the Transportation Dept the ability to meet its pavement needs and continue some enhancements. Using the existing .33% sales tax for Transportation and the General Fund means we don't ask voters to approve a new tax or fee for these purposes, thus preserving additional taxing capacity for the many upcoming tax proposals that we will see and also avoiding any significant push-back we may see against a TMF. It also gets much needed money to all of the General Fund departments including Housing & Human Services, Police, and Fire. 

Asking voters to approve these tax renewals this year means that city departments can start start planning on how to allocate the funding.  It means that they have the certainty of future funding even if it doesn't become available until 2019 and 202.  It also means that these tax proposals won't crowd a ballot already expected to be very long in 2014 and won't compete agains other important tax measures coming forward in the next few years. 

Several people have told me that General Fund taxes are hard to pass. Although I'm not sure that that's completely true, I think that's all the more reason to 1) try early and 2) try it with a tax renewal rather than a new tax. Several people have said they wonder if re-allocating the .33 leaves enough money for Open Space. Even by the OSMP's own projections, they will have money for unidentified needs and will be able to fund acquisitions (even those that are very remote in terms of location and in terms of actually ever becoming available for purchase) to fullest extent identified in the Acquisitions Plan. I will also note that my proposal assumes the $1million general fund transfer to OSMP continues, although that is of course (like all of what I'm proposing) subject to Council's direction. 

I look forward to the discussion of these issues on June 18.

KC