Saturday, October 26, 2002
The city is seeking a 5 mill property tax on the Nov. 5 ballot dedicated to local fire and ambulance services. We asked City Councilman Paul Strong to discuss the proposed tax: how it will be spent if approved and the impact if the tax is not approved.
Q. The city is seeking a 5 mill property tax dedicated to fire and ambulance services that will raise $1.9 million. How will this money be spent?
A. The language on the ballot restricts the use of the money raised through the property tax to fire and emergency medical services. When the city and Steamboat Springs Rural Fire Protection District consolidated in 2001 we agreed to hire our first full-time fire/EMS personnel but have been able to hire only half of the full-time staff that we need and agreed upon. We still are a volunteer fire department and could not operate without the incredible commitment our volunteers provide. The full-time staff can provide quicker response time to emergencies but we rely on the volunteers to be able to put out any fires.
This tax would enable us to hire the staff we need and provide them with the equipment they need to give the community the level of service it needs. The other critical issue addressed by this tax is it builds a wall around the fire/EMS budget and keeps it from having to compete with other city budgets and being cut in times of falling sales tax revenue.
Q. Currently the city spends about $1.3 million on fire and ambulance services. How will that money be used if the tax is approved?
A. Those funds will return to the general fund and the council will have to decide where those funds are best allocated. City staff has recommended, and I concur, that these funds should be used to fund items on our capital improvements plan but the decision will have to be made by council as a whole.
Q. Why didn't the city offer sales tax relief in conjunction with this new property tax?
A. We looked very closely at the possibility of reducing the sales tax or eliminating it on certain items. We thought eliminating the tax on groceries or utilities would be a way to give a break to the local residents while still maintaining the tax flow during the tourist season. However, if we eliminated the tax on groceries, the mill levy for a property tax just to stay at a revenue-neutral level was unacceptably high. In the end, we felt that swapping taxes makes the whole issue much more complicated and a straight property tax is the best way to raise the funds needed to provide the level of fire/EMS service the community deserves.
In the event this tax passes, I would certainly be willing to support placing a revenue-neutral property tax swap for sales tax on the ballot and let the residents decide that issue.
Q. The tax proposal is indicative of the city's desire to have a more stable source of tax revenue. Is this the beginning of a trend toward using more property taxes to fund city services? Can we anticipate the city will come back next year or the year after and ask for another property tax, or is this it?
A. The sales tax has always been very attractive because tourists pay a majority of the tax and enable the community to enjoy amenities that could never have been possible if taxes were paid just by locals. However, as the percentage of the sales tax paid by tourists has been dropping, we have seen property held by out-of-town owners increase considerably, to the point where now the majority of property is not owned by local residents. So, a property tax now achieves what was always the aim of a sales tax.
A tax for fire services is particularly suited to a property tax because those with more to lose in case of fire pay more for those services. Currently, a second home that sits vacant most of the year enjoys the benefit of fire service without having to pay for it because there is no one there to spend money and provide sales tax.
A problem with the sales tax is the city is left with fewer funds when the demands for services are the highest. When we go into a recession, the need for social services rises dramatically and it is also precisely the time the business community could most use help in attracting customers to help preserve jobs in the local economy. A property tax would provide more flexibility in these times.
I cannot speak for the council on the need for additional taxes, but if this initiative passes, I could not foresee placing another tax increase for the city on the ballot in the near future.
Q. What's the impact if the tax is not approved?
A. The budget for 2003 has already been prepared using the worst-case scenario that the tax does not pass. We will not fund fire and EMS to the level needed and the budget for fire and EMS will have to compete with the other city budgets as there will be deep cuts in all city budgets for the next few years.
Q. It is the ultimate goal of the City Council to dedicate 15 percent of the overall budget for capital improvements. How close will this tax get us to reaching that goal if it is approved?
A. We have budgeted $1.3 million for capital improvements in 2003 versus the roughly $300,000 we are spending in 2002 and that would bring capital spending to around 6.5 percent of the general fund. If this tax passes, we would free up another $1.3 million, doubling the amount available for capital spending, or about 13 percent. Our plan is to reach the 15 percent level in 2007, but it is possible we could almost reach that level next year. We can achieve funding fire/EMS to the level needed and accomplish funding the capital improvement plan with this property tax.