Mike McKibbin

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August 22, 2012
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Sales tax question set

The wording of a three-quarters of a cent sales and use tax increase was given unanimous final approval for the November general election ballot by Rifle City Council at its Aug. 15 meeting.

If approved by city voters, the increase will help the city repay a $25.5 million loan from the Colorado Water and Power Development Authority. The loan, on which the city closed on Aug. 14, will fund the construction of a new water treatment plant to replace the current Graham Mesa plant, which is old and in danger of failure, according to city officials.

The sales and use tax hike, if approved in November, would take effect in January and would end once the loan is repaid. It would increase the city's sales tax rate from 3.5 cents to 4.25 cents and would raise an estimated $1.65 million a year.

John Scalzo of Rifle, a vocal critic of the water plant funding plans, told council they should ask for a one cent sales tax hike to help lessen future water rate hikes even further.

"You'll have bigger savings in the long run," Scalzo said. "It seemed you already had your mind made up to go for a half cent sales tax, but you changed to a three-quarters cent. I think you should just make it an even penny."

City Manager John Hier said the three-quarter cent sales tax revenue will be "almost exactly" what the city needs to repay the loan.

John Steele of Rifle, a frequent vocal critic of the city's plans until recently, told the council his water bill will likely increase from $81.37 this month to $145.60 in September, due to the city's water rate hike. The increase was approved earlier this year to help repay the same loan.

"My goal is to cut consumption by 30 percent," Steele said. "I'd also warn you that if you're not careful about how you tell your customers their bills are going up, they will be down here and they won't be happy."

The money from the higher water rates will help pay for operations and associated costs of the new plant. The rate structure is tiered, so those who use the most water pay the highest rates.

Steele said he expected some businesses to see their water bills go from $300 to $500 a month under the new rates.

Gil Frontella of Rifle warned the council the local economy may take much longer to come back than the last oil shale bust, which was about 13 years, he said.

"If it does, you're going to have a lot of people asking why you put the city $25 million in debt," Frontella cautioned.

In an interview Friday, Hier said the city could not seek an energy impact grant from the state Department of Local Affairs to help with the water plant because the program was suspended the last two years due to state budget cuts. Grants will resume this fall, he noted, and the city plans to seek funds to help with a second water line crossing over the Colorado River.

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The Post Independent Updated Aug 22, 2012 05:38PM Published Aug 22, 2012 05:36PM Copyright 2012 The Post Independent. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.