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HomeMy WebLinkAboutMinutes 09/27/2000 SPECIAL MEETING SEPTEMBER 27,2000 Present: Tom Stone Johnnette Phillips Michael Gallagher James R. Fritze Jack Ingstad Sara J. Fisher Chairman Commissioner Commissioner County Attorney County Administrator Clerk to the Board This being a Special Meeting the following items were presented to the Board of County Commissioners for their consideration: Amendment 21, Tax Cut Chairman Stone introduced the first item on the agenda, Amendment 21, proposed tax cut. Kevin Kline, Manager of the Colorado State Fire Chiefs Association, stated he mostly deals with safety. He related they are not supporting Amendment 21. Chairman Stone stated he understood the local individual supporting this Amendment is relating that part of the Amendment requires the State to backfill the State replacement, but others say the opposite. Mr. Kline stated what Amendment 21 does is create tax reductions. The first year it is a $25.00 reduction for an individual income tax return and $50.00 for a joint return. Utility, motor vehicle and property taxes will be affected. The property tax affects every municipality, special district, school, etc. The second year it is a $50.00 cut, the third year it is a $75.00 cut. Amendment 21 is an amendment to article 10, Section 20, which is the taxpayers bill of rights. The first sentence, a $25.00 tax cut increase the first year and increasing every year there after. There is no time limit. It shall be for every district. The interesting thing about the second sentence, "income and property taxes equal to yearly revenues from sales and use taxes, food and drink, other than tobacco and alcohol." He showed a slide that read "Warning: The reliability of fire protection, healthcare, police protection, ambulance, library, water, parks and recreation, schools, and transportation services would be cut dramatically under Amendment 21. Amendment 21 says the following: (B)(d) Tax cuts. A $25 tax cut increased $25 yearly shall lower each tax in each tax bill for each 2001 and later district, utility customer and occupation tax and franchise charge; vehicle sales, use and ownership tax: yearly income tax. (8)( d) tax cuts and state replacement of local revenue shall not lower state or local excess revenue, the state may limit local acts increasing replacement costs, joint income tax returns equal two tax bills, and attorney fees and costs to enforce *8)(d) shall always be paid to successful plaintiffs only. Mr. Kline spoke to the limits that can be placed on the school district, ambulance districts, city, county, towns. The Legislative Council indicates this proposal does not require the state to replace the money that local governments will lose as a result of this proposal. Less money will be available for the vital government services upon which taxes will be cut by 4 billion dollars. State revenues will be cut by an estimated $2.0 billion during the same period, reducing money available for highways, prisons, education, and other state programs. In addition, if the State 1 09-27-2000 replaces lost local revenue, all taxpayers statewide will pay for local services, such as recreation and library districts, that benefit just local communities. State replacement of local taxes could also result in more state control over local issues. Mr. Kline stated the proponents tend to want to decrease the size of government but say that the State will come up with the difference. Lower taxes are good right? Unless it means we won't get the services we rely on. He reviewed examples as follows: Fire Department. To be effective Firefighters must be well trained, well equipped and arrive in time. Service takes money. Amendment 21 cuts budgets. Property tax funded departments get the biggest hit. Sales and Property tax funds get a smaller hit. 90% of the budget in career departments is staffing such as Municipal Fire Departments. Equipment in volunteer fire departments is up to 75% of total budget. Mr. Kline showed an analysis of Elk Creek Fire District Property Tax Revenue Under the Douglas Bruce Amendment 21 Proposal. He spoke to the low mill levy and relatively low assessed valuations. They get hit the hardest. Eagle County Districts in 5 years. Basalt 33.4%, Greater Eagle 18.5, Gypsum Fire 27.9 and Western Eagle County Ambulance 42.9%. He stated these are less than elsewhere in the state because of the growth. Chairman Stone stated as the area grows, we need more services, not fewer. The needs increase. Mr. Kline stated growth in government is directly related to the growth in service demands. He showed a statewide slide. He stated the average loss for a fire district is about 63%. Total dollar loss is 39%. The gap shows how many communities depend on special districts to provide their services. Political Darwinism. Amendment 21 targets the most needy and most cost-effective. It kills the weak first. Costilla County - Fire (1.5 mills). It has a low average assessed value. In the first year they are wiped out. We'll have to pay the consequences, higher insurance premiums, if you could get insurance at all, special district homeowners may be stuck with debt and property values decline. The following is what Doug Bruce says and the responses to those statements: The tax cut is the same for everyone. FALSE. Areas with lower property values will see a decline in services more rapidly than larger, wealthier areas. The tax cut will help business. It will actually shift the burden. The Gallagher Amendment - residential rates are going down as commercial continues to grow. To keep up with funding, the mill level will increase. As they do that, there will be fewer and fewer property tax payers. The payment will be off set by higher prices. He spoke to the single tax payer and the commercial facilities moving out. The Big Lie: State Replacement does not exist. He questions where state replacement comes from. The Big Half-Truth: its only an .8% cut but if you look at Fire Districts for example, it would be a 63.98% cut. Communicate the Local Impact, decide what the specific cuts are going to be, be accurate, be sincere, do not be a fear monger, keep it simple, keep it honest and keep it consistent. Commissioner Phillips asked how many Counties have opted out of TABOR. Mr. Kline stated he doesn't know for sure but believes it is the majority. He reviewed the reasons to vote no, the reliability of fire, water, healthcare and other services provided by special districts would decline. Amendment 21's wording is so confusing and complicated that 180 different versions were proposed and rejected. Amendment 21 will eliminate one-third of funding for road and highway improvements. Chairman Stone stated as a County they are allowed to take a position. He stated they are not permitted to spend public funds but they are allowed to take an official position. This is an opportunity for the public to convince the Commissioners to take an action for or against this proposed Amendment. 2 09-27-2000 Terry Lowell, Finance Director, stated in his review the methodology and the assumptions that underlie the numbers. He spoke to the handouts he presented. He stated you can see there are impacts to all. The cemetery districts are impacted the most the first year. Using the accumulated assessment, by the end of year five you are up to $375 accumulated decrease. He stated you see that the water and sanitation districts, 93% and fire protection districts, 69%. He stated these figures represent what he can see happening. He stated CSAFE used a different methodology comparing the increase in property taxes within the next five years. Chairman Stone thanked Mr. Lowell and then stated the increase of revenues is a function of increasing property values, which is related to growth and the increase in valuation is merely offsetting the increase in spending. Rick McCutcheon, stated he works with Vail Resorts and serves on the Bachelor Gulch Metro District, stated one of the concerns he has is for snow removal. He believes if this passes they will have elections and will those be every year. Mr. Klein stated you could have an election every year. In case of metro districts, fee for service is an alternative. You can't do that for every district, fire for example. In practice, some ofthe districts will just raise their fee, which will not be tax deductible. There will be a shift to business. Mr. McCutcheon stated there is a risk you will have to have an election every year. He spoke to the fear at the polling place. He thinks it is a campaign that everyone should support. He spoke to the color graph and how showing the districts grabs your attention. He stated he included the Sherman & Howard information in some of the property association mailings. He suggested that is a great way to raise funds. He thanked the Board for the opportunity to comment. Chris Trees, representing the Colorado River Water Conservation District, stated he is limited to an informational presentation. He stated his company has taken a stand. They exist on a .28 mill levy. He stated the average tax payer pays 5 to 7 dollars annually and will pay zero if this is passed. Only residential homeowners with properties values over $900,000 would pay anything. The notion of State replacement of local revenue losses is a dream and that certainly a Front Range dominated legislature is going to replace the revenues for the Colorado River District is pure fantasy. Chairman Stone asked what the Colorado River District does. Mr. Trees responded it is not an obvious tax because of the small mill levy. He stated it was established by the legislature in 1937 to assure that western Colorado would have a voice whenever the . Colorado River was being discussed. He stated they are often the "no" sayers when the desire is to take water to the Front Range. He suggested they are doing something right for the Western Slope. He spoke to the Gallagher Amendment and the shift of tax burden to non-residential properties. He stated there is no local opt out. You can have elections to exceed the mill levy under TABOR, but this provides no local opt out. He stated there are real limitations on this amendment. He concluded that his Board would encourage the Board of County Commissioners to join them in their opposition. Chairman Stone thanked Mr. Trees for his presentation and for what they do. He spoke to the need to protect our water. Rick Flugge, Captain with the Gypsum Fire District, stated they are in the same thinking that this tax amendment will be a bad deal. He spoke to the staffing of the Gypsum Fire Department and the fact that they only have two full time employees and have plans to hire a third in October. He spoke to alternate revenue sources. If this does come to pass they will have to start looking at a fee base response. He stated they will have to look at alternate funding. He stated that is a double wammie on the tax payers. He stated they currently do charge for out of district alarms. He stated they would be looking at increasing those out of district charges. He stated they would have to hire more staff to maintain the billings and administration functions. There are significant up front costs. The numbers speak for themselves. It would fundamentally change how they do business. Chairman Stone spoke to the fifty one districts and the number of elections that would be held. He spoke to the Eagle Cemetery District and the cut of 77% of its funding, Eagle Sanitation District will 3 09-27-2000 be cut 79% and Basalt Water Conservation District will be cut 90%. Mr. Lowell spoke to his position on the 911 Board. He stated as the Treasurer, it does concern him that utility tax is undefined. He spoke to the 911 tax and if this amendment passes that tax goes away the first year. Rick McCutcheon stated he works a lot with Stan Bernstein and what is interesting in the long term projections, you can do a lot with fund balances. He stated he can imagine in the future that districts would need to have one fell swoop with a tax increase to build up a fund balance to anticipate the $25 cut every year. It is a non-productive use of taxes. That will also have another effect on Colorado as people try to purchase resort property in this state rather than another. He stated he would like to share that he was on the Vail Tomorrow committee and at those sessions one ofthe things that was a high priority was to consolidate services. He spoke to the consolidated fire district and the impact it will have. He stated this was counter productive to the effort that they were working on. He stated now they have a case not to regionalize and consolidate, simplify government. Chairman Stone asked the Board for their comments. Commissioner Gallagher stated this is a good thing for the people of Eagle County to get a clear view of the effects of 21. He stated when he wore a white hat and put out fires he remembers when the fire services sold subscriptions. He stated those were scary days. He stated he shares Mr. Flugge's concern about this passing and those that signed the petition because they see it as a tax cut. He encouraged the Board to oppose this amendment. He thinks it is incumbent on them to advertise the consequences. He believes it is the Board's responsibility to advertise the consequences. Commissioner Phillips stated it does sound good to have the tax burden go away. She stated she likes having the services that she has become accustomed to. She stated she feels these cuts will be detrimental and feels the cuts to the school district are too great. She spoke to the fact that Doug Bruce still does not have the right amendment. She does not see where the State can or will be able to continue to pick up the revenues that are going to be lost. She feels after much review that this is something they definitely have to oppose. She spoke to the petition and that they hired petition circulators that came to Colorado to circulate the petitions. She believes this is something that all entities need to support and especially so on the western side of the divide. Chairman Stone stated he would like to have a vote on this and his vote would be against Amendment 21. If the state does have to backfill it will be the beginning of socialism. He spoke to the need to treat every entity equally and then there will be law suits. He stated there will have to be a huge bureaucracy. He stated in a democracy, there have been votes to develop the districts and the citizens have chosen to support them. One size does not fit all. He spoke to the school finance act and its failure. He stated this is of particular importance to the Board of County Commissioners. He spoke to the discussion with the Eagle County School District and the tax they proposed. He stated using the states numbers, the cost of living has increased in this area 30%. The cost of living for funding has been on .31 %. He stated that is what will happen to all the different districts and it will be unfair for all. He stated this is Eastern Slope making decisions for the Western Slope and vice versa. He called for the question. Commissioner Phillips moved to direct staff to prepare a resolution opposing Amendment 21 and suggested this may the time to encourage people to vote no on the tax issues. Commissioner Gallagher stated he would second that motion if Commissioner Phillips would include the information submitted by staff as an appendix to the resolution. 4 09-27-2000 Commissioner Phillips concurred. Commissioner Gallagher seconded the motion. The vote was declared unanimous. Chairman Stone stated he would like to have a similar meeting to this for Amendment 24. He asked Mr. Ingstad if they have been able to schedule that. Jack Ingstad, County Administrator, stated they are working on that and hope to have it scheduled before the day is over. Chairman Stone asked if there were any others that the Board might want to have meetings such as this. Commissioner Gallagher and Commissioner Phillips both stated they think these are the two most important. There being no further business to be brought before the Board this Special Meeting was adjourned. Attest: Clerk to the Bo ~ 5 09-27-2000