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City faces taxing decisions

City officials warn of tough budget choices if a 0.5-cent tax for street projects doesn’t pass.The leading opponent of the tax says the city already is making poor choices about finances, and can’t justify the new tax.Stan Stevens, who has long argued against city tax increases, questions the city’s use of existing taxes and its unwillingness to use other reserves rather than ask for more from taxpayers.City officials consider Stevens’ allegations off-base. They also say if the street tax fails, they will have to use general funds for street projects at the expense of other city needs.”That creates a whole other source of issues that (City) Council needs to deal with if that’s where the money is going to come from,” said city manager Jeff Hecksel.In September, city residents got a taste of the financial issues facing council even if the tax measure passes. With the city facing a budget deficit, Hecksel proposed to council a budget alternative that would have cut funds for programs such as Summer of Jazz and the YouthZone nonprofit organization and for most city-sponsored recreation offerings.Council ended up avoiding those cuts, but at the price of eliminating the vendor fees paid to businesses for collecting the city sales tax, and increasing the city’s utility franchise fees and utility payments in lieu of taxes. Stevens said those increases are an indirect tax of $350,000 because they would be passed on to utility customers.”Utilities don’t pay taxes, we pay taxes,” Stevens said.The city’s 2006 financial outlook is tight despite an anticipated 19 percent sales tax increase from the opening of the Glenwood Meadows commercial project, and even if the street tax is approved. City officials cite the opening of the Wal-Mart in Rifle, the Sept. 11 attacks of 2001 and the economic downturn that followed, and the Coal Seam Fire of 2002 as contributors to several years of poor sales tax collections in Glenwood Springs.The city has been subsidizing other needs with landfill and electric utility surpluses, but council considers that to be inappropriate and wants it stopped.Hecksel said if it turns out that street projects would have to come out of the city’s general fund, they would join police, fire, parks and recreation, planning and the city clerk’s office as programs competing for the revenues of a fund basically provided for by just a 1.5 percent sales tax.But Stevens said the solution is simple. Rather than raising taxes more, the city should simply fund street work out of its 1 percent acquisitions and improvement tax.He argues that tax, and not the existing 0.25 percent sales tax that expires at year’s end, was intended for street projects. But instead, he said, the city used the acquisitions and improvements tax for purposes such as making payments on a loan for the city pool, even when it had more than $12 million in reserves from other city funds it could have drawn from instead.He maintains that with the increase in the acquisitions and improvement fund from the Glenwood Meadows tax revenues alone, “the A and I (fund) will have enough money to do all the streets and sidewalks in the city” each year.Hecksel said that fund allows spending only for certain types of capital projects. All city funds must be used according to the restrictions placed on them, he said.”I’m certain that the city has done that,” he said.He said much of the acquisition and improvement fund already is obligated to debt. Some might argue the money is obligated to the wrong things, but the city has benefited from projects such as the pool, municipal operations center, new City Hall, and land acquisition for the possible relocation of Highway 82, he said.Hecksel also disagrees with Stevens’ contention that the city should have tapped reserves in other funds instead.”That’s mismanagement, in my opinion,” he said.Electric reserves, for example, are maintained to insure the integrity and reliability of the electric system, Hecksel said. He said it wouldn’t be smart to spend it on roads, and then have to borrow money and raise electric rates when a substation upgrade is needed.Stevens also questions why the city is asking for a tax increase even while some city operations with the ability to collect fees, such as the planning department, are subsidized by taxpayers. He argues it should be self-funded by developers.Council earlier this year imposed sharp increases in planning fees on developers, but they still don’t fully cover the costs the city incurs. But some say that’s justified because the city also benefits from development.Stevens has been the only vocal opponent of the street tax. But some critics of the recent city decision to install planters in the middle of Midland Avenue as an attempt to slow traffic have suggested it might influence their decision on the tax. Council member Bruce Christensen hopes ire over the planters doesn’t jeopardize the tax’s passage.”It’s a real important issue for the city.”He also hopes people aren’t misled by the ballot language. It projects that the tax could generate up to $2.1 million in its first year. But Christensen said that’s a high-end estimate, so the city can avoid ending up in a situation where it would have to rebate some tax revenues under the Taxpayers Bill of Rights amendment if revenues come in higher than expected. In fact, Glenwood Spring anticipates the tax would bring in $1.8 million in its first year. And only half of that would be new revenue. Half would make up for revenue from the 0.25 percent tax that will expire at the end of this year.Contact Dennis Webb: 945-8515, ext. 516dwebb@postindependent.com


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