To: Honorable Mayor and Members of Town Council
From: David L. Corliss, Town Manager
Title
Resolution Supporting a “Yes” Vote on November 2021 Ballot Questions 2A, 2B, 2C and 2D
Body
________________________________________________________________________________
Executive Summary
At its August 17 meeting, Council approved ordinances submitting to the electorate at the November 2, 2021, special municipal election the following ballot questions:
• 2A: A new housing construction tax for police and fire
• 2B: A Parks and Recreation sales tax on lodging
• 2C: An open space sales and use tax
• 2D: A question authorizing for 10 years the Town’s use of “excess” TABOR revenues solely for police, fire and roads
Council referred these items to the ballot after months of evaluating the Town’s long-range financial projections and alternative revenue options and collecting public feedback on the same. Now, Town Council will decide if it would like to formally endorse these ballot items through the attached resolution (Attachment A).
Discussion
In recent years, Town staff has prepared a five-year financial plan as part of the annual budget process, to gauge the sustainability of the Town’s finances over a longer term. The plan includes projected staffing and other operating costs and endeavors to ensure anticipated needs can be met with expected revenues. This planning in recent years had made it apparent that the Town’s current revenues - with Town tax rates having not increased since 1994 - will not be sufficient to keep up with future needs, especially when it comes to fire and police services.
The revenue forecast in the following table assumes the Town’s sales tax collections would increase 8% over 2020 in 2021. It includes a 4.5% increase for 2022 over this year and 3% year-over-year increases for the other years. The forecast for expenditures includes 75 needed positions in fire and police, as detailed in March presentations by the Chiefs - including the personnel needed to open a sixth fire station in northeast Castle Rock in 2025. The projections indicate that by the end of the five-year financial planning period, the Town would experience an annual shortfall of nearly $13 million if it hires all of the needed fire and police positions.
|
|
2022 |
2023 |
2024 |
2025 |
2026 |
|
Revenues |
$64,278,243 |
$62,642,023 |
$64,586,111 |
$66,566,208 |
$67,361,070 |
|
Expenditures |
$61,344,704 |
$64,792,194 |
$68,310,446 |
$76,758,082 |
$80,348,466 |
|
Net change in fund balance |
$2,933,539 |
(-$2,150,171) |
(-$3,724,335) |
(-$9,891,874) |
(-$12,987,396) |
Recognizing the importance of keeping up with public safety levels of service and needs in other key areas, staff presented Council in March with information regarding roughly a dozen alternatives the Town could pursue to generate additional revenue to meet future needs. Concurrently, staff queried residents via the 2021 community survey regarding the palatability of some of the alternatives, including instituting a lodging tax in Castle Rock and requesting voter approval of a property tax mill levy increase.
A moderate mill levy increase did not receive majority support in the 2021 community survey. Respondents indicated they might support a minimal property tax increase and that they also favored the option of taxing new development to fund future public safety needs. The idea of a lodging tax received majority support in the 2021 community survey, as it had in surveys past.
As staff”s financial analysis continued, it became clear that a significant mill levy increase would be needed to support the Town’s future public safety needs. Staff in June worked with a consultant to poll likely Castle Rock voters on that option and others Council had honed in on during its discussions of the Town’s long-term financial needs: A tax on new housing construction for fire and police, a 0.1% sales tax increase for open space and trails, a lodging tax for parks and recreation and a 10-year “TABOR timeout” for police, fire and roads all saw majority support in that poll. Based upon this and other feedback, Council submitted these items to the November ballot.
A $7-per-square-foot tax builders would pay when pulling permits for new houses and apartments would generate the funds needed to add 75 fire and police positions over the next five years. The requested 1-cent-on-$10 sales tax increase could generate about $270,000 annually for open space and trail maintenance needs, plus allow for the accumulation of more than $8 million by 2026 for additional acquisitions. The lodging tax would help the Town update parks, improve public vegetation and entryways into Town, and more. Approval of the TABOR timeout is critical to the Town’s ability to construct the needed interchange at Interstate 25 and Crystal Valley Parkway and is also expected to help bolster funding for fire and police in years with strong sales tax receipts.
Staff this summer mailed postcards and a brochure to educate the community about these issues. A series of social media posts was shared in July and August to provide answers to frequently asked questions. Staff further attended events like National Night Out, a First Fridays concert and Town board and commission meetings to provide information and answer questions about the Town’s financial needs and the potential ballot items before Council finalized them in August.
While staff may provide only educational information and respond to questions about the ballot items between now and the election, Council is welcome to advocate for the items and may wish to formally endorse them via the attached resolution.
Attachment
Attachment A: Resolution