Our View: A tax that saves money?
Ryan Summerlin April 22, 2014
Saving money by agreeing to tax yourself seems the weirdest kind of contradiction. In this case, though, voters in the Eagle River Water & Sanitation District can do just that by mailing in a “yes” vote on ballot question A on their spring ballots.
How people can save money by taxation is a complicated issue — as is the language on the ballot. But here are a couple of facts:
• Thanks to mandates from the federal Environmental Protection Agency and the Colorado Department of Public Health and Environment, the district must improve its three wastewater treatment plants in order to reduce the discharge of phosphates and nitrogen into Gore Creek and the Eagle River. That work must take place, meaning the main question is how to pay for it.
The district’s board of directors had two choices to pay for the roughly $25 million in improvements. They could either borrow money and repay it with higher rates, or borrow money and repay it with money from a tax increase.
The companies that issue bonds believe that tax revenues are a safer form of repayment, so those bonds carry a lower interest rate than bonds repaid with higher rates. That means the district will save about $1.8 million over the 30-year life of the bonds if it uses tax revenue. The vast majority of district customers will pay less in increased taxes than in rates if they vote for question A.
Equally complex is question B. A 1992 amendment to the state constitution known as the Taxpayers Bill of Rights, or TABOR, sets strict limits on local governments’ ability to raise taxes and spend money. In its most basic form, TABOR requires local governments to ask voters for any tax increases. But the amendment’s spending limits are tied to a complex formula involving inflation, tax rates and the consumer price index for the Denver/Boulder area.
Many, if not most, local governments in the state have exempted themselves from portions of TABOR that govern spending revenue raised in excess of the amendment’s limits. That’s what the water and sanitation district wants to do with question B, since the district is also seeking grants to help pay for the wastewater plant upgrades.
Just as important, the district will still have to ask voters for any future tax increases. Question B deals only with spending.
The district’s ballot this spring is a dense mass of fine print, all of which is required by TABOR. But boiled down to its basics, the district is asking two reasonable questions of its voters. We recommend a “yes” vote on both.