Cripple Creek voters to consider sales tax increase after COVID mars revenues

Oct. 18—Cripple Creek officials are hoping a proposed citywide sales tax increase will help boost the city's coffers after revenues dropped during the COVID-19 pandemic.

"We're in a deficit on device fees and the general fund has taken a hit from COVID," City Administrator Frank Salvato said this week. "We haven't recovered from 2019, so part of it is just to prop up the general fund again because we've taken such a hit."

On Nov. 8 voters in Cripple Creek will decide whether to approve increasing the city's sales tax by 1 cent — or 1%, from the current 2% sales tax rate up to 3% — beginning Jan. 1. The increase would not apply to food purchased for consumption at home.

City officials estimate Cripple Creek's sales tax revenues could increase by an estimated $300,000 to $900,000 in the first full fiscal year if voters approve the proposal.

The money would go into the city's general fund, which pays for police and fire services, parks maintenance and road repairs.

The City Council hasn't decided exactly how the city could use the additional revenues if voters approve the sales tax increase next month, Salvato said. The council was expected to go into budget workshops where it would discuss it Tuesday and Wednesday afternoons, he said.

A boost to the city's coffers is much needed, officials say, because Cripple Creek's revenues have dipped since casinos closed for several months in the early days of the pandemic. The city depends heavily on revenue from tourism and its casinos and money from gaming device fees hasn't rebounded back to pre-pandemic levels, despite increased device fees City Council imposed in April.

Salvato said he was unaware of any opposition to the question.

A proposed 2023 budget available on the city's website and dated Sept. 22 shows device fees account for 44% of Cripple Creek's general fund revenues, the largest of any of the fund's revenue sources. Gaming taxes make up the next largest portion of the fund, at 23%. Sales taxes account for 10% of general fund revenues.

Finance Director Paul Harris reported in a July 13 city memo that in the third quarter of 2022, Cripple Creek had 2,779 gaming devices — down 47 devices, or 1.7%, compared to the second quarter of 2022. The number of gaming devices in the third quarter of 2022 compared with the third quarter of 2021 is down 122 machines, or 4.2%, the memo states. Most of that decrease is due to a remodel happening at the Bronco Billy's casinos, Harris noted.

But "if you compare the third quarter of 2022 with the first quarter of 2020 before COVID-19 hit, the number of devices is down 806 machines, or 22%," he wrote. "At the (worst) point in the pandemic, it was down almost 25%. Although the count has recovered a bit, being down 22% from the pre-COVID number has a very negative effect on the city's main source of revenue."

Additionally, Harris reported in a Sept. 28 city memo, data from the Division of Gaming for August show statewide the industry was down 4.8%, or $4.9 million, from July.

Comparatively, Cripple Creek had a good August, he said. The total dollar amounts of coins played on slot machines as well as cash, coins, chips and other monies played at live gaming tables in Cripple Creek was up $4 million, or 2%, from July, according to the memo. Those amounts for August 2022 compared to August 2021 were down $193,000, or 0.1%. Year-to-date, those figures fell $37 million, or 2.4%.

The city's gaming revenues were up $517,000, or 3.3%, from July, Harris wrote. When comparing August 2022 to August 2021, proceeds are up $1.1 million, or 7.3%. Year-to-date, proceeds are up $1.1 million, or 1%.

Council expects to approve a finalized 2023 budget on Dec. 7, Salvato said.

Cripple Creek voters will also decide next month whether to legalize the sale of recreational and medical marijuana in city limits. Proponents say the move would boost city revenues to help fix local roads, sewer and water infrastructure, and could help address parks and recreation needs, among others.

Opponents have said legalizing marijuana sales in the small gold mining and casino community would increase crime and have argued the city is too small to address emergency, law enforcement and public health needs they say would follow if voters approved the measure.

The City Council decided in August to refer the citizen-led marijuana initiative to voters in the Nov. 8 election.