Letters-Articles-food tax

MONTROSE -- It was a blast from the past Friday morning at Centennial Plaza when eight former mayors of the city voiced their collective opposition to the repeal of the sales tax on food purchased for home consumption.

Former mayor Ken Gale brought seven other former mayors to the plaza so they could speak out about the vote to repeal the sales tax on food purchased for home consumption. Gale, who was mayor in 1988, read a statement signed by a total of 14 previous mayors of Montrose, which included: "A promise made is a promise kept. We promised our voters 30 years ago that if they chose to eliminate the city property tax in favor of a city sales tax that we would totally eliminate the property tax that the city of Montrose had been collecting. In 1986, the city of Montrose eliminated all city property tax. We made that promise and we need to keep that promise."

The repeal of the sales tax on food purchased for home consumption is scheduled for a special election on July 15. City Manager John Schneiger, as well as members of city council, have stated in the past that the loss of the tax would result in a $2.3 million reduction in the city's general fund, which is budgeted at $13.5 million this year. The city uses the general fund for services such as street and parks maintenance, the police department and to fund the Montrose Pavilion and Senior Center.

"I don't like any taxes, but if we have to have a tax I would much rather have a sales tax instead of a property tax," said Ted Hermanns, the mayor in 1982.

"I don't like taxes either, but lot of the visitors to the city help pay this," said Don DaLee, mayor in 1973-74. "I've heard 40 percent to 50 percent of the money raised is from out of town. ... I've always thought a sales tax is the fairest tax we could have because people on lower incomes pay less than they would on a property tax.

"I'm also concerned with how the ordinance (to repeal the tax) is written. If people vote yes on the ballot they're actually voting to get rid of the sales tax on food."

Schneiger and city staff estimate 50 percent of the revenues generated from the sales tax on food purchased for home consumption comes from people outside of the city limits.

"Look at the city and look how clean it is; it's all done through sales taxes in the general fund," Gale said. "I think people need to look around at the city before they mark their ballots. The tax funds so many projects."

The petition to repeal the food tax was drafted by Western Slope Libertarian Party Chairman Mike Humbert, who wasn't surprised the former mayors oppose the repeal. WSLP members and other residents have contended that the tax on food purchased for home consumption is especially hard on low-income families and senior citizens on fixed incomes.

"They're doing their best to scare people into voting against the ordinance," Humbert said. "I'm all for sales tax, but when it comes to the necessity of eating, I think there should be an exemption. The city already has 18 exemptions for sales tax in its city code, why are those more worthy than groceries?"

The city exempts sales tax on livestock items such as feed, seed, fertilizer and herbicides, among other items.

"They (city officials) ignore that they have other tax exemptions on the books, so what's one more?" said John Duncan, a WSLP member. "It's unfortunate that our elected officials don't have the interest of their constituents at heart."

Ballots for the special election to repeal the sales tax on food purchased for home consumption are expected to be mailed on June 26. By state law, the city can mail the ballots no sooner that June 20 and no later than June 30. Ballots must be mailed back or handed in at City Hall no later than 7 p.m. on July 15.

The ballots will be counted at the Montrose County Courthouse as soon after 7 p.m. as possible, according to Assistant City Clerk Sharleen Walker. The city expects to have the results later that evening.

Dear Editor,

Because I was contacted by the proponents of the grocery tax repeal measure that Montrose voters

will consider in the next three weeks, I have followed the election coverage, and read their city's budget.

Your readers should know the Establishment is up to its old tricks again, just as when it opposed the

Taxpayer's Bill of Rights (TABOR) Amendment, which I wrote. The same scare tactics are being dusted

off here to fool people into voting against their own family budgets.

The usual suspects are back again. The Chamber says it opposes tax relief for ordinary citizens, though

it constantly lobbies for tax relief for its members, while seeking government handouts and subsidies. It

mailed out a survey before stating its opposition, and though only 6% of their members replied that they

opposed the grocery tax repeal, that was excuse enough for the Chamber to oppose this modest measure.

The "economic development" crowd wants voters to believe lower taxes are bad for the economy locally, while

that group supports President Bush's tax cuts nationally, which he has promoted as economic stimulus. If

more government spending were the key to prosperity, the Soviet Union would still be a world superpower,

not just a bad memory.

City Hall says it can't survive without taxing baby food and milk, even though the new Home Depot has

boosted city coffers 18% over the same month last year. No matter how much bureaucrats get, it's never

enough. The city has spent tax dollars to pay for illegal campaign material against the ballot issue.(I ought

to know; I have successfully sued governments for that violation five times.) If they have enough money

to break the law, don't they have enough to allow modest tax relief?

The budget shows the city pays for a Washington D.C. lobbyist, pays 100% of all employees' health benefits

(unlike most other governments), increased personnel costs last year 13.8%, and has been spending more than

its revenue every year since 1999. In fact, page 1 of the budget shows city spending leaped from $20.6 million

in 1997 to $39 million this year, almost doubling in six years (16% per year). Taxpayers got no refunds because

voters were tricked in 1996 into allowing the city to violate state constitutional revenue limits forever, as though

any part of the state constitution could be repealed by local option!

Pages 4 and 5 of the city budget list 63 revenue sources, and the city is fighting this simple tax relief regarding

only one of them. Taxing basic needs like groceries is regressive, which means those who have the least income

pay the highest share in taxes. This is not "tax breaks for the rich," the liberals' usual chant.This is the same for all.

Their vehement opposition proves class warfare arguments are just demagoguery. They oppose any tax cut,

anywhere, anytime, because lower taxes would slow our slide towards socialism.

They also are using the oldest trick in the book, comparing this small tax relief to only a part of total city revenue

in order to make the percentage look bigger. In fact, even their estimate of $2.3 million is only 6% of the total

budget, while will grow more than the tax savings next year alone, as shown by the Home Depot figures above.

And is there anyone who believe there is no wasteful spending in government? Here's the chance to curtail it.

Very few Colorado citizens pay a municipal tax on groceries. Montrose needs to modernize its tax system,

starting with an end to this heartless tax that takes advantage of its citizens' basic need for food. The city

admits to having a $15 million slush fund balance this January. That alone would pay for this tax relief for the

next 6 1/2 years. Do your family a favor. In this recessionary time, the city should share the sacrifice. Put

Montrose's bloated bureacracy on a diet (of tax-free food!) Mail in your YES vote by July 12, talk to your

friends, and call 252-8750 to volunteer to distribute "YES" fact sheets to your neighbors. Do it now.

Douglas Bruce

MONTROSE -- As expected, Home Depot's debut bumped up the sales tax revenues in the city's coffers.

Home Depot opened in late March, but the full effect of the store's retail power couldn't be charted until it logged a full month of sales. While the city of Montrose isn't able to release sales tax revenues for individual stores, the month of April did see a 17.9 percent upwards spike from the same month last year. In March, sales tax revenues increased a modest 2.2 percent over 2002, while February had a drop of 4.2 percent. Overall, the city is 6.3 percent below its projected budget for this year.

"We were down 10.7 percent last month and now we're only down 6.3 on our projected budget, so it looks better than it did," City Manager John Schneiger said. "We knew with Home Depot in the mix that there would be some impact, but we don't know what impact it's having on the other businesses in the area. It (sales tax revenue) is headed in the right direction, but we don't know what it will be like by the end of they year."

Home Depot manager Travis Ackley has previously said the spring and summer months are the busiest for Home Depot stores, but he was initially surprised at how much business the store was drawing from Ouray and Telluride.

Schneiger said that if the rest of the year stays the course, the city should be able to meet its projected budget, but that could change if the sales tax on food purchased for home consumption is repealed. Schneiger and the city staff have said losing the sales tax on food bought for home consumption would cost the city an estimated $2.3 million out of it's $13.5 general fund.

"There's no way Home Depot is going to make up for a 17 percent reduction," Schneiger said. "We don't know if Home Depot is going to continue at this level. It's going to take some time to know for sure."

MONTROSE -- The Montrose Chamber of Commerce has thrown its weight against repealing the sales tax on food purchased for home consumption.

Allan Belt, the chamber's president, said the organization's 21-member board of directors voted unanimously last month to oppose the repeal of the sales tax on food purchased for home consumption.

The city has a 3 percent sales tax on food items such as bread, milk, fruits and meat that are bought in local stores. Area residents and members of the Western Slope Libertarian Party petitioned the city to have the tax repealed, and after getting enough signatures earlier in the year the repeal is headed for a special municipal election July 15.

Last month, the chamber conducted a straw poll of its 600 members and out of the more than 60 responses, there was a 2-1 margin against repealing the food tax.

"After careful consideration of this issue, our board of directors voted to prepare a resolution opposing the repeal of the food sales tax," Belt said in a chamber newsletter. "In our view, this nonpartisan initiative would hinder, rather than help, positive economic growth in our community."

City staff has estimated losing the revenues from the sales tax on food bought for home consumption would amount to $2.3 million of this year's $13.5 million general fund, which the city uses for services such as street maintenance, parks, the Montrose Pavilion and the police department. City Manager John Schneiger has said the general fund is 80 percent funded by sales taxes, and the 17 percent cut that would result from a repeal would likely mean cutbacks in some city services.

"If you add these services together, these are some very important functions that the city needs to perform to maintain the quality of living that we have," Belt said Wednesday. "When we start to lose that quality of living, then the chamber feels we're not living up to our mission of fostering positive economic growth for the greater Montrose area. We feel that when these kinds of services begin to deteriorate, that's contradictory to our mission."

The chamber joins the Montrose Economic Development Corp., which also recently drafted a resolution against the repeal, and a group of residents called The Committee to Protect Our Quality of Life as groups that have recently mobilized to oppose the repeal. But the WSLP has also been busy trying to line up allies for its side. WSLP Chairman Mike Humbert said his group has reached out to Douglas Bruce, who was the driving force behind the state's 1992 Taxpayer Bill of Rights (TABOR) law.

"We've asked him (Bruce) for advice because he's been down this road before," Humbert said. "I haven't heard back from him in a while. We've reached out to a lot of individuals and groups, but so far it's still our little group plugging away."

Humbert said the WSLP also hasn't heard back from an accountant who volunteered to look at the city's budget and find ways to curb spending.

"The whole budget issue, to me, isn't where the argument lies," Humbert said. "The whole point is that it's wrong to take food out of people's mouths to fund city projects.

"There's also some confusion about what is exempt. This would only affect food purchased for home consumption, not packaged food, restaurant food or tourist items like film and batteries. There's this perception that it would be a huge cut, but when you look at the actual items it covers, it won't be that much."

Voters registered within the city by June 16 will receive a ballot by mail, postmarked no later than June 20, City Clerk Mary Watt said. Ballots must be returned by mail or brought to the Montrose City Clerk's Office at City Hall by 7 p.m. Tuesday, July 15. If voters pass the repeal, it would go into effect the following day.

MONTROSE -- With the decision to repeal the city's 3 percent sales tax on food purchased for home consumption heading towards a July 15 mail-in election some local residents have formed a committee to oppose the repeal.

The Committee to Protect Our Quality of Life is still getting off the ground, but so far has about 15 members, said Carol Hight, who is a co-chairperson of the committee, along with Bob Ray.

"We've had a couple of meetings so far, but not everyone was able to attend each time," Hight said. "We're still in the forming stage, but I believe our papers have been filed, and if not they'll be filed by Thursday morning. As a political committee in the state of Colorado you have to file papers with the secretary of the state through the county clerk."

The committee is opposed repealing the sales tax on food purchased for home consumption, a local ordinance that has been in place since 1964. City officials have estimated that losing the revenue from the tax on food for home consumption would cost the city $2.3 million out of its general fund annually, which is budgeted for $13.5 million this year. If the tax is repealed it would take a 17 percent chunk out of the city's general fund, City Manager John Schneiger has said. The city uses the general fund to provide services such as police services, and maintaining parks and city roads.

Local residents and members of the Western Slope Libertarian Party started the petition last year because they felt the tax is unfair to low income families and the elderly. On May 19, city council voted to send the petition to the July 15 election instead of enacting the petition itself.

"I think the biggest concern we have is the $2.3 million reduction in the general fund," said Dennis Devor, who is also a member of the committee. "We believe, and the city believes, that's a real number and not the figment of someone's imagination. The other thing to keep in mind is that if this is voted in it takes place immediately. If this passes the city would immediately be without that source of revenue."

The committee plans on making a presentation on June 10 at noon at the Montrose Pavilion. Devor said the presentation would be to area service clubs and would be in lieu of the Rotary Club's and Altrusa Club's regularly scheduled meetings on the same date.

Steve Jenkins, president of the Montrose Economic Development Corp., said MEDC's board voted unanimously last week on a resolution against repealing the food tax. MEDC is budgeted to receive $80,000 from the city this year, plus an additional $10,000 from a challenge grant with the city after MEDC increased its membership.

"We'll be working as individual board members to support the food tax as an integral part of the city's revenue stream and what it will mean if we lose it," Jenkins said. "My experience so far with the city is that they've been very diligent in maximizing funds for the services they provide to the community. There's no fat for them to cut so they'll have to cut services and that will directly impact the quality of life in the community."

City staff has estimated 50 percent of the revenues derived from the sales tax on food purchased for home consumption come from customers who live out side of the city's boundaries.

"The other issue that continues to be ignored is that there are a lot of people who come to Montrose to shop who don't live in the city," Jenkins said. "We should be happy that 50 percent of the sales tax revenue is coming from people not living in the city. If there were a property tax in place it would take something like 16 mills to make up the $2.3 million. I'm glad some of the funds are coming from outside of the community because they provide services that don't come out of my pocket."

Area residents and WSLP members gathered over 460 signatures on their petition, which required 418 to bring it front of city council. Frank Woodrow has been a practicing attorney in Montrose for 41 years and he's not convinced the city needs the added income the food tax provides.

"It looks to me like they're (the city) spending a lot of money on luxury items," Woodrow said. "Things like jogging paths cost gobs of money. I think with the new construction and the new businesses coming into town the city won't notice it. They may not have as much as they're used to, but they have enough to do the job.

"I think they can tighten their belt a bit. They hand out $70,000 a year to anyone who walks in with their hand out, and that's basically political. Government is like me and you, they never have enough money."

Tuesday, May 20, 2003

Voters will decide food tax repeal

Greg Johnson

MONTROSE -- Voters will decide an attempt to exempt the city's 3 percent sales tax on food for home consumption by mail-in ballot. Montrose City Council voted unanimously on Monday to set the election for July 15.

Members of the Western Slope Libertarian Party and other local residents petitioned the council to repeal the tax, claiming it places an unfair burden on low-income families and the elderly. Monday's decision to not enact an ordinance to repeal the tax "is disappointing, but not unexpected," said Mike Humbert, chairman of the WSLP.

Tax collected on food for home consumption makes up an estimated 17 percent of the city's general fund budget, or between $2 million and $2.5 million a year, Mayor Pro Tem Noelle Hagan said. Without a way to replace that revenue, "there's no possible way I could support this," she said.

Threats from council members and city staff that cuts in services are on the horizon if the food tax is repealed are overblown, Humbert said.

"They keep saying it's a cut in the budget, but they don't say sales tax revenues have been growing significantly," he said. "The (city) budget has doubled over the last six years. ... All the threats to (cut services) are used to sway the voters."

Sales tax revenues grew 2.7 percent in 2002, according to the city. Retail sales tax collected in 2002 totaled $8,759,607, compared to $8,529,248 in 2001. Because the city's overall budget has nearly doubled from $20 million in 1997 to about $39 million for 2003, exempting food for home consumption for sales tax isn't really a "tax cut," Humbert said.

Continued retail growth, including the recent opening of Home Depot "will make up" for what's lost from the food tax, he said. By collecting what Humbert calls a "morally wrong" tax, the city "is taking food out of the mouths of babies."

"That's a little disingenuous," Hagan replied. "If (petitioners) were really concerned about that, they would have offered a different ordinance, one that had an alternative for that funding."

Hagan also questioned the WSLP's claim the tax is morally wrong.

"They just want a tax reduction. I don't buy this question of 'morality,'" she said. "Anybody who thinks you can cut 17 percent from a general fund budget and not affect services is living in a fool's paradise."

The city clerk's office will begin working on a mail-in ballot with a single question on it, Mayor J. David Reed said. The question "is straightforward," asking voters if an ordinance exempting food for home consumption from city sales tax should be approved. Voters can choose "for the ordinance" or "against the ordinance."

Contact Greg Johnson via e-mail at editor@montrosepress.com

City plans special session to decide fate of food tax

Mike Robuck

MONTROSE -- The effort to repeal the city of Montrose's sales tax on food purchased for home consumption could be headed for voters' plates after city council meets during a special session Monday.

Council members must decide whether to enact a recently verified petition to repeal the sales tax or to set an election so voters can choose. During Thursday night's regular city council meeting, councilors postponed their decision until noon Monday, when they will hold a special work session at the city council chambers.

When petition signatures were verified April 21, Mayor David Reed issued a press release that said it was likely the council would elect to put the matter to a citywide vote, but Monday's meeting is necessary to get the entire council's vote. If city council does send the matter to a special mail-in election, it will have to take place within 60 days of Monday's decision. City Clerk Mary Watt said the ballots would be mailed out no sooner than 25 days before the election or less than 15 days before the election. Watt has previously estimated the cost of a special mail-in election to the city is about $12,000 since it doesn't fall on the same calendar year as regularly scheduled elections.

City Manager John Schneiger gave a presentation on the sales tax on food during a Thursday night work session that preceded the council's regular meeting. Schneiger said the city contacted 10 area businesses to gauge the impact of repealing the city sales tax on food. Using information from the six to eight businesses that provided information, Schneiger said city staff has estimated the city would lose $2.3 million in sales tax revenue.

The sales tax revenues make up 80 percent of the city's general funds, which it uses to provide services such as roads, trails and the police department. If the effort to repeal the sales tax on food goes through, it will reduce this year's general budget from $13.5 million to $11.2 million.

"I don't think there's a way you could have a $2.3 million reduction in the general fund and not see some reductions in services," Schneiger said. "I think the community needs to know that. I think the community also needs to be aware that the way this petition is written it would become effective immediately if it passes."

Schneiger also said Montrose is one of 11 cities in Colorado that doesn't have a property tax, and of that 11 only Larkspur and Lone Tree don't have sales tax on food. The city attorney's office developed a list of items that fall under the tax and items that are exempt, and determined that more than 50 percent of the money raised by the sales tax comes from non-city residents, Schneiger said.

"The biggest beneficiaries of passing this would be nonresidents and tourists," he said. "The way Montrose has structured its taxes, with the emphasis on sales tax revenues, is common in the state of Colorado and in communities that are regional trade centers. One reason Colorado communities have elected to do it this way was to have tourists help pay for services."

Schneiger said that an average adult in Montrose spends $168 a month on food with $5.58 of that amount going towards the sales tax on food purchased for home consumption, Schneiger said.

After the city manager's presentation, the council took questions from the 16 residents who attended Thursday's work session. Members of the Western Slope Libertarian Party who were largely responsible for starting the repeal addressed the issue.

"That was a very nice presentation, but it was slanted," WSLP treasurer Jo-Jo Ping told Schneiger. "The reason Colorado communities instituted sales tax on food in 1965 was because there was no retail trade in those communities. Now there is. Agriculture and food were the only means of income back then, but things have changed since then. There's a difference between needs and wants. The grandiose plans of the city don't need to be paid for by taxes on food."

The comments from some audience members caused Mayor David Reed to use his gavel several times. WSLP member Susie Adamson objected to Reed limiting the audience's comments to just questions.

"Before you decide to put it to a vote, let the people here have their say without an atmosphere of hostility," Adamson said. "Not paying $70 dollars a year in sales would make a big difference in the things I need to buy."

"To me it's a moral issue," said WSLP chairman Mike Humbert. "How do you justify taking food out of people's mouths to fund projects?"

Reed said he didn't view it as a moral issue, but he did offer his personal view of the sales tax on food.

"This is the fairest thing we do in terms of providing the services we do and the quality of life," Reed said. "The burden is shared with county residents, tourists and other counties."

Humbert said county residents resent the fact that the city benefits from the sales taxes they pay but doesn't allow them to have a voting voice in the matter.

Local attorney Dave Devore said he lives in the county but has an office within the city limits.

"A $2.3 million reduction would be devastating to this community," Devore said. "My perception is that we have the best deal going if over 50 percent of the revenues are coming in from out of the city."

Contact Mike Robuck via e-mail at miker@montrosepress.com

05.16.03 Food tax sits on edge of knife