Referendum 2A - ballot language
Shall the town of Hayden's taxes be increased by $100,000 annually (first full fiscal year increase) and by whatever additional amounts are raised annually thereafter from the extension of a use tax of two (2.0) percent upon the privilege of using or consuming within the town construction and building materials purchased at retail for use in connection with construction or building projects and shall the existing two (2.0) percent use tax on motor vehicles be eliminated effective Jan. 1, 2008, all in accordance with Ordinance 587, passed and set on July 19, 2007, with the net proceeds of such use tax to be collected, retained and spent for purposes determined by the Board of Trustees; and shall the town be permitted to collect, retain and expend all revenues derived from such use tax as a voter-approved revenue change and an exception to limits which would otherwise apply under Article X, Section 20 of the Colorado constitution or any other law?
Steamboat Springs Hayden town officials want voters to replace an existing automobile use tax with one on building materials. In addition to raising more money, officials say the move would shift the tax burden from existing Hayden residents to newcomers.
"The bottom line for the use tax was I made a promise when I started the job that as growth and development occurred, I would put the town in a position to have growth pay for itself," Hayden Town Manager Russ Martin said. "This is a shift in burden."
The ballot question, if approved, would repeal the current use tax on new automobiles and levy a 2 percent tax on half the value of new construction, based on building permit valuations. The current use tax generates between $25,000 and $30,000 a year, Martin said. In a year similar to 2007, Martin said the new tax would raise between $75,000 and $100,000. In 2006, the town collected $934,571 in sales tax; $370,000, or 39.5 percent of total sales tax revenue, came from business generated from Yampa Valley Regional Airport. The town collected $307,615 in property taxes.
Martin said residents continue to pay a fairly high burden with the automobile use tax. While existing Hayden residents would be subject to the building materials use tax if they added on to their homes or built new ones, Martin said it primarily would affect developers and newcomers to the community. He noted most people probably buy a new car more often than they renovate their homes.
Town officials say the new tax is needed to keep up with the increasing demand for town services - such as water lines and police - created by the town's steady growth and development. A citizens' tax review committee examined the town's revenue structure and recommended the use tax on building materials.
"We can balance the budget with or without a use tax, as we have for years," Martin said. "The issue is increasing the service."
A use tax was one of the town's only options to increase revenue, Martin said. Unlike a home-ruled city or town, such as Craig or Steamboat Springs, Hayden is a statutory town limited by state law in the taxes it can collect. For example, while Steamboat can increase its sales tax beyond a state-mandated maximum of 4 percent, Hayden cannot.
That could be changing soon, however. Both Martin and Finance Director Lisa Dowling have said the town will take steps to develop its own home-rule charter in coming months.
Martin said he has not heard much fuss from developers about the proposed use tax. In July, developers Roger Johnson and Jon Peddie said the tax would not stymie growth.
Johnson, president of Mount Harris Development and one of the developers of The Villages at Hayden subdivision, said the tax could encourage growth if the revenues are used to fund infrastructure projects that are "economically productive for the area."
Jon Peddie, co-developer of the Valley View Business Park, said increased costs would simply be passed on to consumers.