Town to ask voters for a "use tax’
Town Council members say the 4 percent “use tax” –a concept they rejected last summer – won’t be an additional cost because residents already pay it in most places they buy building materials, such as lumber, drywall and nails.
“It takes a revenue stream and puts it here, rather than down in Denver,” says Councilman Brian Sipes, one of four who gave preliminary approval Tuesday to putting the tax on the November ballot.
The tax –which would be dedicated to transportation, recreation, capital projects and other services – would be collected by the town before a builder is issued a building permit, says Avon Finance Director Scott Wright. When a builder applies for a permit, the town building official would assess the total cost of the work and assume that 50 percent of that was spent on building materials, Wright said.
The builder then would pay 4 percent of that 50 percent and get a receipt from the town showing he or she has paid the use tax. Upon purchase of materials, the builder would show the receipt when paying and would exempt from any local sales tax, Wright says.
“When you go and buy something and there’s a sales tax you say “I don’t have to pay it. Please take that off,'” says Town Councilman Buz Reynolds.
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Town Councilmen Pete Buckley and Mike Brown voted against the tax, however. Buckley stridently criticizes his colleagues for not looking for alternative sources of revenue.
“This tax is the wrong thing to do,” Buckley says. “The reason we’re doing it is the town is bleeding red ink.”
Instead of trying to institute a new tax, Buckley says, the town should promote more special events in the summer and winter to boost sagging revenues.
“We haven’t done our jobs; we haven’t done diligence,” he says.
Last August, the Town Council voted against putting the use tax on the ballot because some thought it would increase building costs at some of the most convenient places to buy materials, such as lumber yards in Edwards, where there is no use tax. But a sinkhole opening under the town’s finances and an ensuing budget crisis have sent council members scrambling to boost cash flow.
Mayor Judy Yoder says the tax would not only increase revenue, but it would help out Avon merchants who may be losing business to areas –such as unincorporated Eagle County –that don’t have a use tax.
What may be driving the council’s decision to revive the use tax is The Home Depot’s scheduled opening of huge hardware stores in Avon next summer.
“It would be a big benefit to The Home Depot, to put them on a level playing field,” Yoder says.
Grudgingly, the Town Council voted earlier this summer to start charging people to ride Avon’s buses, which are free. But Town Manager Bill Efting told council members Tuesday Avon needs more money to keep the buses running.
“If we’re going to keep up public transportation, we’re going to need some sort of dedicated funding source,” Efting says.
A public hearing will be held at the July 22 Town Council meeting before the final vote on putting the use tax on the ballot for the November general election.
Councilwoman Debbie Buckley, meanwhile, says she supports the use tax because it would keep sales tax in Avon. She voted for it, too, because it’s up to Avon voters to approve.
“This gives people the right to decide,” she says. “We’ve already had to ask people to pay for buses. Do they want to have services cut or pay more for the rec center?
“The choice is use tax or less services,” she said.
Matt Zalaznick covers public safety, Eagle County Courts and Avon/ Beaver Creek. He can be reached at 949-0555, ext. 606, or via e-mail at firstname.lastname@example.org.