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Next New Tax, and New Tax Cut |
Glenn Walsh | 6/19/09
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The Pagosa Springs Town Council and Archuleta Board of County Commissioners held a remarkable joint work session for ninety minutes yesterday morning. Unlike the sessions with the local water districts, which resemble large holiday dinners of unhappy Nordic families, these sessions between the Town and County are by unpredictable turns funny, hopeful and contentious.
Yesterday’s session had a sad aspect for this writer, a Town resident and something of a Town loyalist. The Town spent much of the session with its hat in hand and County kept its hands on its wallet. Which demonstrated that a critical change is taking place: Archuleta County is assuming regional political and financial leadership after a long period of Town preeminence.
 The two governments presented two very different proposals which reflected their present financial and political predicaments. The Town proposed a massive tax increase on new housing starts while the County proposed a property tax cut.
Councilor Stan Holt presented the Town proposal for a new use tax on building materials. That tax would be assessed against any building materials shipped into the County for residential and commercial projects. The tax would apply to materials which are neither produced or available locally.
Holt attempted to put past attempts to institute the use tax issue in some perspective: “It was quite a few years ago, we tried to have the voters approved a use tax. But we tied it up with oil and gas, automobiles and everything else and the voters rejected it.”
For supporters of the use tax, this is the preferred reading of history. Supporters of the new tax contend that voters rejected use taxes in 2003 — by a vote of 3003 to 303 — because the proposed tax included charges on out-of-County purchases of automobiles.
Yet, advocates for use taxes do not explain why County voters rejected a building materials tax — which did not include automobile purchases — in 2000 by a nearly four-to-one margin.
Holt, who expressed concerns about downtown business decline earlier and more perceptively than any member of the Town Council, gave his rationale for the new tax: “So much material is coming into Archuleta County from outside and it’s a freebie. People are taking advantage of the fact that they can buy material out of County and have it delivered and save themselves four percent sales tax. ... That’s is a huge disadvantage for our merchants.”
According to Holt, the new tax is the best option: “La Plata County has a use tax. So we cannot reciprocate.” Here, Holt misspoke. La Plata County does not have a use tax. A use tax was proposed to La Plata voters in 2001, but was rejected by a three-to-one margin. Durango, however, does assess a use tax against a very broad range of out-of-County purchases, including — at least technically — internet and catalog sales. Practically, use taxes on building materials and automobiles are the taxes which are reliably collected.
For Holt, purchases of home packages are a key problem: “People are buying a kit home — a log home kit from British Columbia — and they drive in with a crane, and in three days the kit is up, the people have a house and they are gone. And the only thing the Town and the County getting out of it is building permit.
The town councilor recommended that the new tax be limited it to the construction industry solely, adding “When somebody builds a $500,000 house and they are saving four percent on it, that adds up to a whole bunch of money.”
Mayor Ross Aragon was quick to concur: “I totally agree. One hundred percent.” Councilor Mark Weiler added his support: “Me, too. Absolutely.” One assumes that Weiler does not share in the somewhat accusatory tone directed at out-of-County sellers. Weiler is the president of Parelli Natural Horsemanship, and is credited with creating one of the region’s most successful marketing companies based on largely untaxed internet sales.
At this point, County Commissioner John Ranson took the discussion in a different direction, commenting “I don’t think any tax will pass this November with what just happened with these real estate assessments.” Owing to a number of factors — chiefly a year-old assessment period which does not reflect recent price declines and the exclusion of foreclosure sales from the assessment formula — homeowners are facing a 25 percent increase in their property taxes, on top of a 45 percent increase two years ago.
Ranson proposed a rarity: a tax rate cut. “We have been talking about trying to create an alternative. We can’t do anything about the assessments. That’s the assessor and state law. ... We have been pursuing an idea that looks feasible where we can lower the mill levy for a period of time. It would basically bring the taxes back down to a level that is a little more palatable for the community. And it is not that the County doesn’t need the money, but it is one of those situations where everybody is hurting and we just need to be more disciplined with our money. ...
Ranson suggested that other government and metro districts would need to join the County, and added “We have grave concerns that it is just a very hard time for people to get these kinds of tax bills.”
Interestingly, there was no immediately positive reaction to the proposed tax cut from the Town Council. Worth mentioning here that Councilor Darrel Cotton was not present, however. Town Manager David Mitchem endorsed the idea but cautioned against permanently “ratcheting down” revenues after the economy rebounds.
Holt returned to his view that the new tax is not a tax increase on voters: “If it is properly explained I don’t think the populace is going to consider it a sales tax on them if we explain that this is just making out-of-County merchants pay our sales tax. ... We are not laying another sales tax on our people. ... If it is properly explained, I think the voters, once they understand it, will approve it.”
Holt, who on almost all issues represents — often defines — the broadest community-wide consensus, left undefined the intriguing concept of “our people” versus those who wish to become residents of Archuleta County. It is worth noting that the use tax is just that — a tax which is assessed against users. No tax is assessed against out-of-County merchants.
County Chair Bob Moomaw supported Ranson’s proposal, but added some caution about the limited benefits an across-the-board mill levy reduction will bring for taxpayers whose assessments have risen dramatically: “Understand that some of the assessments are going up thirty percent and some of them are going up very little. To say that we can even it out for the individual taxpayer is not that simple.”
Here are two questions that are also not simple to answer. The County’s tax cut, while encouraging, will likely reduce the average taxpayer’s bill by forty or fifty dollars. Where is the fairness and balance in asserting the critical need to cut the taxes of existing residents by fifty dollars, while raising the taxes on new homebuilders willing to invest their life savings in this County by $10,000?
Second question. Later in the session the Town would literally plead with the County to forgive $7,300 in landfill fees related to Clean Up Week. The Town asserted it simply cannot afford the payment.
How can an entire Town maintain it is unable to pay a $7,300 bill, and yet assume that each and every new homebuilder in Archuleta County can afford to pay an additional $8,000-12,000 in use taxes?
Not “our people,” not our problem?
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