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Bayfield considering property tax or sales tax increase
6/22/2013 By: Carole McWilliams
Ignacio Little League and t-ball, left, is in full swing for the 2013 season. Games are played at Shoshone Park downtown. Shown here are the Naturals and Bears t-ball teams.
Bayfield street maintenance needs for the next 20 years will far out-pace what the town can afford without new revenue, according to figures presented at a town board work session on May 30.
At Tuesday’s regular board meeting, Town Manager Chris La May followed up that news by asking whether the town should seek voter approval for either a property tax or sales tax increase to pay for street maintenance.
An election could happen in November or next April, he said. Trustees preferred next April, to avoid competing with an expected property tax increase request from Upper Pine Fire, and to avoid a rushed decision on what to ask for.
Trustees want to get public feedback on whether a sales tax or property tax would be more palatable.
The town’s contract engineer recently finished a street inventory for maintenance needs and costs for the 20 years.
The current maintenance backlog for this year is more than $2.3 million.
“The challenge is maintaining the roads in a cost-effective manner, while extending the life of the roads as long as possible,” La May said in his written memo for the May 30 work session.
He presented three alternative 20-year plans but added, “the total cost is very similar for all the alternatives,” more than $18 million.
Funding options include the general fund, Capital Improvement Fund, and the Transportation Fund – the remaining money from the $6.8 million that the Colorado Department of Transportation paid the town to take over Highway 160B, now called Bayfield Parkway.
La May reported that the Transportation Fund probably will have about $5 million remaining at the end of this year and could be used up by 2021, sooner if some of the money is used as local match for a grant the town is seeking from CDOT for major intersection work.
The Capital Improvement Fund takes in around $295,000 a year, most from town sales tax plus $35,000 that the county pays to lease space in town hall for the County Clerk’s Annex.
The town is paying $270,000 a year from that fund for the town hall lease purchase. That will be paid off in 2017.
The town also has been transferring $80,000 to $100,000 a year to a Vehicle Replacement Fund, cutting into the Capital Improvement fund balance. That fund balance will be about $385,000 at the end of this year, La May reported.
Around $115,000 per year of General Fund revenue is from street or highway-related sources. A total of around $250,000 is budgeted to Public Works for activities other than water and sewer operations, La May said.
He concluded, “The Capital Fund does not have enough resources to assist in funding streets and roads until 2019. The Transportation Fund may be depleted in the next five to 10 years. Current street related revenues in the General Fund are insufficient to support the Public Works operations in the General Fund.”
La May broached the idea of a property or sales tax increase at the May 30 work session. He also listed reducing town services as an option.
The current town property tax rate is 5.950 mills, which brings in around $210,000, La May reported. One option could be to seek voter approval to double that.
Current town sales tax is 2 percent, with half ($260,608) going to the Capital Improvement Fund. The other half goes to the General Fund.
A 1 percent increase in sales tax could bring in another $260,000 a year and fully fund street maintenance needs for the next 20 years, La May said.
As for this year’s $2.3 million in street maintenance needs, La May recommended fully funding it this year, which will reduce maintenance costs for the next few years. Then there would be significant maintenance costs every seven years, he said.
La May suggested this money could come out of the Transportation Fund, or the town could issue bonds backed by the money in the Transportation Fund.
Trustees didn’t make any decision on that.
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