Fort Collins City Council narrowing down tax proposals. Here's what they would fund, cost

Fort Collins City Council is narrowing down which tax measures it might seek voter approval for on the November ballot.

City staff estimates there's a funding deficit of about $46 million for the city to achieve several of the goals council and staff have identified as priorities, including parks and recreation, climate goals, transportation and housing.

Council has discussed several options for different tax measures it could ask voters to approve during several work sessions this year, and staff will present draft ballot language for these tax measures during a July 25 work session.

If council asks to bring any of these ballot measures forward, they will be put to a vote during an Aug. 15 council meeting, city project and policy manager Ginny Sawyer said.

There are still a lot of "ifs" about which tax measures, if any, council will put on the ballot, but here's what staff has proposed and what council has discussed so far:

What tax measures are City Council considering?

Here's the most recent set of tax measures staff presented to council in a June work session:

• A property tax increase of three to five mills to fund parks, recreation and potentially aquatics facilities

• A quarter-cent sales tax increase to fund climate action goals

Staff will present draft ballot language to council on those two tax measures during the July 25 work session.

Council also seemed open to increasing the franchise fee on natural gas from 1% to 3%, which would show up on residents' gas bills. That can be done by a council vote and does not need to go to the ballot. Council asked staff to come back with more direction on how to do this, as well as ways to be more transparent with the community on how the funds from this fee would be used.

Which tax measures are no longer being considered?

After an April work session discussing additional options, staff nixed the following options:

• A substance use tax on alcohol, marijuana and/or nicotine, after getting a mixed response from council, some of whom were concerned about the already high taxes on those areas and the financial impact from the recent law change allowing wine sales in grocery stores.

• A large emitter tax, which would apply to only two businesses — Broadcom and Anheuser Busch — and would not be sustainable, city chief financial officer Travis Storin said. Both businesses expect to be below the Environmental Protection Agency threshold in the next several years. Several council members were in favor of this tax, but ultimately staff did not move forward with it because it would generate less than $1 million annually and would not be a long-term funding solution.

• A utility occupation tax on natural gas was largely opposed to by council because of the burden it would put on residents at a time where natural gas prices and bills are already high.

How much would these tax measures generate for the city and cost residents?

In total, the city could generate a total of $29 million to $41 million if both tax measures are put on the ballot and approved by voters, and if council moves forward with the franchise fee.

The 0.25% sales tax increase being proposed by staff would:

• Generate $10 million annually

• Cost about $31 per resident or $78 per household annually

Staff noted that the sales tax on food would remain at 2.25%.

A three- to five-mill property tax increase would:

• Generate $11 million to $18 million annually

• Cost residential property owners $29 to $143 annually

• Cost commercial property owners $125 to $626 annually

Here's what a five-mill property tax increase would mean depending on the property:

• $143 on a $400,000 home

• $179 on a $500,000 home

• $268 on a $750,000 home

• $358 on a $1 million home

• A commercial increase of $626 on a $432,000 property

The proposed 2% increase of the franchise fee would generate $1 million annually and cost each household approximately $14.

If council moved forward with these staff proposals, the net annual increase per household is estimated at $235.

Where would these funds go?

The city has big goals in four areas: climate, parks and recreation, transportation and affordable housing.

At the start of 2022, city staff realized Fort Collins would be in about a $46 million funding deficit to achieve those goals.

None of the tax measures council is considering putting on the ballot would close the entire funding gap — even if they put every option on the ballot and each one was approved by the voters — so here's what staff has proposed council ask the voters to fund:

• The property tax increase of three to five mills — which would generate an estimated $11 million to $18 million annually — would go toward funding parks and recreation.

• The sales tax increase — which would generate an estimated $10 million annually — would go toward funding the city's climate goals.

If council decided to move forward with the franchise fee — which would generate an estimated $1 million annually — staff suggested those funds go toward climate goals.

Staff said if council decided to ask voters for the lower proposed property tax increase of just three mills, the estimated $11 million in revenue would fund almost all of the $12 million budget used for upkeep of parks and recreation infrastructure upkeep. Anything more — like a four or five mill ask — would mean funding for capital projects, which could include new recreation centers and new aquatics facilities, both of which have been identified as high priorities in the city's parks and recreation master plan, staff told council at June's work session.

Staff also told council there is an impending need to make significant improvements to the Mulberry Pool that this tax measure would be able to fund.

The city has large goals for climate improvements as well, which includes having zero-waste neighborhoods, more walkability and emissions-free buildings, all related to council's identified 31 priorities.

Council and staff did not talk much about what specific climate goals would be funded with the proposed tax measure, but Mayor Jeni Arndt noted that council has made these a priority and they "need to be resourced if we're going to meet those goals."

What needs to be done before voters see anything on their ballots?

Staff will present draft ballot language to council during a July 25 work session. At that time, council will discuss specifics about what these tax measures would ask for, including the exact mill amounts on the property tax measure and the length of any of these taxes.

At the work session, council can direct staff to bring this to a council meeting for a vote or choose not to move forward with these ballot measures. If council does decide to vote on adding any of these to the ballot, that vote will occur during the Aug. 15 council meeting.

If any or all tax measures are approved by council, voters will see them on their ballots this November.

Election day is Nov. 7.

This item is already on the ballot: Voters in November will decide if felons can run for office in Fort Collins

This article originally appeared on Fort Collins Coloradoan: Fort Collins potential tax proposals would fund parks, climate action