Would Dedicate Revenue Stream For CCAASE



TELLURIDE — The Town of Telluride Council on Tuesday unanimously directed staff to prepare language for the fall ballot that will ask residents to approve a sales tax increase of six-tenths of one percent in order to create a dedicated revenue stream to fund local nonprofits, special events and infrastructure improvements to the town’s parks that will sunset after seven years.

If approved by the electorate in November, the CARE – or Community support, Arts, Recreation and Events – Tax is anticipated to generate roughly $650,000 annually for major programs currently paid out of the town’s General Fund and Capital Budgets, including the $325,000 in grants that the Commission for Community Assistance, Arts and Special Events disperses annually to the community’s nonprofit organizations.

“The grant process lends itself particularly well to a dedicated revenue source; that’s where this notion of CARE Tax came into being,” said Town Manager Frank Bell who based the tax proposal on similar programs in Summit County and Salt Lake City.

“If you’re going to do taxes, generally taxes like this are pretty popular,” he said.

Bell brought the proposal to council after it directed him to envision means by which to generate more revenue for the town following its ratification in March of a four-step plan to counter a $2.4 million budget shortfall.

The shortfall is largely the result of the dramatic decline in local real estate sales that has dried up the 3 percent Real Estate Transfer Tax levied on each transaction upon which the town depends on almost entirely to replenish its Capital Fund.

The Capital Fund functions like a revenue hub with annual transfers to other major funds including those responsible for maintaining critical town services, paying off town debt, and financing major capital improvement projects.

As of May 31, the town had collected approximately $380,000 in RETT, down roughly 76 percent from the $1.583 million it had collected by the same time last year.

“At the end of the day we’ve cut what we can cut from the budget without drastically reducing services,” Bell said as he pitched the idea.

“We’ve got to figure out some ways to either increase our revenue or get some things out of our budget,” he continued. “We’re operating on the margins right now.”

The tax would create a revenue source large enough to pull funding for the CCAASE entirely out of the General Fund budget and would also fund grants not administered by the CCAASE like that for The New Community Coalition.

The balance would go to improve parks infrastructure, which Bell said is important for the success of the town’s many festivals and special events that, in turn, generate sales tax revenue for the town.

“Since events are a major economic engine in this community it is important to reinvest in our staging and spectator areas,” he stated in a memo to council.

The Parks and Recreation Board has plans to improve the stage and backstage area at Town Park, to upgrade utilities for concerts and concessions, and to improve the concession area, it continued.

Additionally, it has a “shovel-ready” plan in place to improve Elks Park whenever it can get the funds to do so.

But the town has not been able to fund needed improvements in the parks of late, and is not likely to be able to do so until the Capital Budget improves.

“We need to make sure our parks are able to handle the use they’re getting,” Bell said.

Despite the citizens having rejected four of four proposed tax increases last fall, Bell and council hope that the community may be more amenable to a sales tax increase that will place the tax burden on both residents and visitors

“The folks paying the sales tax are the same as those using the infrastructure,” and nonprofit services, said Bell.

“It gets as many users of our services into the pay side and the use side,” he said.

“I’m not advocating not doing what CCAASE does anymore,” he said.

“What I’d like to see the council do is stand behind this proposal”

Like council, audience members were largely supportive of the proposed tax increase.

“I think Frank is spot-on with this,” said CCAASE Chair Ron Gilmore. “I think that this is by far the best approach to the whole situation.”

“I think this is a great start,” said San Miguel County Commissioner and visual artist Elaine Fischer. Fischer recommended that council consider the sunset provision which, she said, probably would have helped the child care initiative she worked on last year to have pass at the ballot box.

“I would seriously consider that; it’s something I didn’t consider,” she said.

Although he supported council’s decision to pursue the ballot question, Councilmember David Oyster stated his concern that an increase would give Telluride one of the highest sales tax rates in the state, and that it could negatively impact the town as a result.

“That’s the argument to not do this, that the sales tax would be too high,” said Bell.

“We commend the theory of a dedicated stream, we’re just not really thrilled with the execution of this,” said Telluride Business Alliance Executive Director Meehan Fee, who argued that a sales tax increase would make business more difficult for the town’s retailers.

“Once again the lion’s share of the burden is being foisted upon them,” she said.

“Proceed with great care because you’re mixing apples and oranges in the whole process,” said Telluride Foundation President and Chief Executive Officer Paul Major.

Major warned that “to tax individuals to give charitable contributions is inconsistent with the [Internal Revenue Service] code,” although he reiterated that he was not speaking against generating dollars for local nonprofits.

An ordinance to place the question on the ballot must still be drafted and approved by council.

“It’s going to take a tremendous amount of community support to make it pass,” said Mayor Stu Fraser, urging supporters of the measure to begin the spade work to cultivate community buy-in.

“If it doesn’t happen with the economic stress we’re under right now it’s going to make it very difficult,” he said.