Basalt officials are uncertain if they violated Colorado’s tax limit law but they are contemplating a “conservative” approach and potentially going to voters with a proposed solution in November, officials said at a community meeting Wednesday night.
The Town Council will discuss this summer if voter approval should be sought in November to keep any property tax revenue that has potentially been unlawfully retained since 2010 and to establish a new base-level property tax rate. A decision on a November ballot issue must be made by Sept. 6, according to Town Manager Ryan Mahoney.
“I think it’s important to recognize that the mill levy changes that have occurred over the last two-and-a-half decades were done in an effort to be responsive to the community’s desired service levels,” Mahoney said.
But that approach might have violated the Taxpayers Bill of Rights or TABOR, an amendment to the Colorado Constitution that was approved by voters in 1992.
TABOR places limits on government taxing entities’ ability to retain increases in revenue and requires a vote when taxes are raised. Basalt, like many other municipalities, counties and special districts, voted to ease restrictions on revenues in 1994.
At that time, the town’s property tax rate was 6.151 mills. The Town Councils in office between 1994 and 2010 voted to lower the mill rate nearly every year as property values went up. The property tax rate bottomed out at 2.56 mills in 2010.
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Since 2010, the councils have approved a mill levy increase 10 times without voter approval. The general operating mill levy has increased to 5.957.
Mahoney said the town’s investigation indicates it is possible that the town had the legal ability to raise the mill levy rate in those 10 years because of the voter approval granted in 1994. However, that remains a gray and untested area in lawsuits over TABOR, said Dee Wisor, a Colorado attorney who Mahoney introduced as an expert on the tax law. He was hired by the town to help investigate the issue.
Wisor said there is no “TABOR cop,” so there are gray areas.
That’s why the town is considering a conservative approach. The council members will be asked if they want to make sure the town is complying with the law by either asking for permission to keep revenue from those 10 tax increases and establishing a new baseline tax rate or, as an alternative, refunding roughly $2 million to property taxpayers and go back to the 2010 mill levy of 2.56. TABOR limits liability for refunds to four years.
Wisor said he is unaware of any other case exactly like Basalt’s, but some Colorado entities have gone to voters to seek approval to keep revenue when there was a gray area. He labeled those “forgiveness” votes.
Basalt resident Carol Hawk said the town gets revenue from various sources, with sales tax being the main one. If the town did something wrong and unlawfully raised property taxes, it should refund the excess, she said.
“The forgiveness vote is really hard for me to swallow,” Hawk said.
Other residents who attended the meeting also spoke in favor of the town granting a refund.
Councilman Auden Schendler objected to the characterization that the town did something wrong. Prior council lowered the mill levy rate when possible while still maintaining services, he said.
A staff with a new manager, attorney and finance director raised questions about the mill levy increases, brought it to the attention of the council and the council directed them to investigate it in a transparent way and hold public meetings.
“To me, this is an example of good government,” Schendler said.
He added that he believes the issue will go to voters in November. They will have the option of allowing the town to keep all the revenue in question or require a refund and force reductions in services.
Hawk said raising the prospect of service cuts was “fear mongering.”
Mahoney and Finance Director Christy Hamrick countered there would be consequences for town services.