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Town Council’s 2010 Strategic Plan includes several financial issues that may impact residents and businesses.
The first change is scheduled to take effect Jan. 1, 2011, unless Council takes action to modify the plan. It involves the Town’s sales and use tax, which Castle Rock consumers pay on groceries and other retail purchases, including motor vehicles.
Information on the change will be presented at the May 4 Town Council meeting, which begins at 6 p.m. in Council Chambers at Town Hall, 100 N. Wilcox St. Residents and members of the business community are invited to attend and provide comment.
The total sales and use tax rate in Castle Rock is set to go from 7.5 percent to 7.9 percent next year, representing an impact of 4 cents on every $10 spent. This is because the Town portion of the tax automatically will revert to 4 percent due to a decision by Castle Rock voters 15 years ago.
Douglas County voters in 1995 approved a 15-year, .4 percent County sales tax increase to bring in additional funds for County road and bridge projects.
Not wanting the total sales tax in Town to increase, Castle Rock voters that same year approved a .4 percent reduction to the Town’s portion of the tax, also for 15 years. The County, in turn, agreed to refund to Castle Rock the .4 percent collected withinTown limits so the Town could use that revenue for Town transportation projects.
In 2007, County voters elected to extend the .4 percent County tax increase through 2030. The Town sales tax rate still is set to return to 4 percent Jan. 1, bringing the total sales and use tax rate in Castle Rock from 7.5 percent to 7.9 percent.
The change will mark a revenue increase to the Town of $2.1 million annually. The Town plans to use those funds for public health and safety support and services that have been impacted by the slow economy.
Town Council could elect to decline the increase or to opt for a lesser increase than the .4 percent voters approved. Council also could choose to put the question to a new vote.
If Council declines any increase, the Town would lose about $700,000 in revenue annually, starting next year, due to a tax-sharing agreement with the County. This could have significant implications on the Town’s budget and, consequently, its operations.
Even with the sales tax increase figured into financial models, the Town will fall short of the funding needed to maintain its current services.
Town Council recently redefined the Town’s mission as ensuring public health and safety and has begun shifting general tax dollars away from auxiliary services, including transit and recreation.
Consequently, a question could be placed on the ballot for this November’s election so voters can decide what level of transit they want and how a service would be funded. Council on Tuesday will discuss whether now is the right time to hold that vote given the planned sales tax increase and other factors.
One factor that could have a major impact on these and all other elements of the Strategic Plan is the outcome of three initiatives on the November 2010 statewide ballot. Amendments 60 and 61 and Proposition 101 would have significant impacts on Town finances if approved by voters, which would require changes to the Strategic Plan.
Proponents of the measures have set up websites at limitpropertytax.com, limitcodebt.com and cotaxreform.com, respectively, and opponents have set up the site protectcoloradocommunities.net, which interested readers can visit to learn more.