The debut of Aspen’s tobacco tax last year generated so much more revenue than the city expected that the extra funds could be bundled into the upcoming food-tax refunds given to residents later this year.
That’s according to city Finance Director Pete Strecker, who said the city collected $436,000 in tobacco taxes for 2018.
That amount surpassed the city’s estimate of $325,000 in collections as explained to voters on the ballot question in the November 2017 elections, when the measure passed by a near 3-to-1 margin.
Strecker said Friday he is working on a memo he will present to Aspen City Council concerning what to do with the $111,000 surplus.
One scenario would be rolling that money into the city’s food-tax refunds that will be given to residents who lived in Aspen for the entire 2018, including their dependents. Residents must apply for the refund, which this year is $55 per individual. The deadline to file with the city is 5 p.m. April 15.
Another option is asking voters how to handle the surplus, Strecker said, adding his goal is to present the memo to the City Council in March.
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Strecker said the amount of money the city told voters it expected to collect was “our best estimate.”
“We really didn’t have a baseline to know how much,” he said.
The City Council brought the ballot question to voters in an effort to deter tobacco use.
A new $3 tax was placed on a pack of cigarettes bought in Aspen — with a 10-cent increase annually until the tax reaches $4 — on Jan. 1, 2018. The tax also included a 40 percent hike on all other tobacco products including snuff, chewing tobacco, e-cigarettes and cigars.
Because the tobacco tax revenue exceeded city projections by more than 33 percent, the state’s Taxpayer Bill of Rights, which Coloradans approved in 1992, takes effect.
“Under TABOR, state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates if revenues grow faster than the rate of inflation and population growth, without voter approval,” explains the Colorado Department of the Treasury’s website.
In other words, the municipal government will have to find something else to do with the surplus other than the stated intention from City Council members that the revenue would be used for outreach and education about the health woes spawned by tobacco use.
A special line item in the general fund, where the money goes, states that all tobacco tax revenue be used for “health and human services, tobacco-related health issues, and addiction and substance-abuse education and mitigation.”
The tobacco tax took effect on the same day as the city’s legislation raising the tobacco purchase age from 18 to 21 years old. The consumption age remains 18 in Aspen.