Filing: City health trust never was

Christopher Tomlinson

The Grand Junction Police Department.

With tax revenue expected to decline this year due to the coronavirus COVID-19 pandemic and resulting economic slow down, Grand Junction City Council is considering asking voters for relief from revenue caps mandated by the Taxpayer Bill of Rights (TABOR), which would limit the city’s operating budget in future years.

Under TABOR, tax revenue is allowed to grow a small amount year-to-year. However, the “base” for that calculation is the previous year’s tax revenue. What can result after an economic downturn is the new baseline would not allow the city to return to its pre-economic downturn spending level for years going forward even if the economy recovers quickly, sometimes referred to as “ratcheting.”

“I want to emphasize, we don’t know if there is going to be a ratchet-down,” City Manager Greg Caton said. “We don’t know if the excess is going to increase. We won’t know for some period of time, but we see this on the horizon. We wouldn’t be doing our fiscal responsibility if we didn’t bring this for discussion and potential consideration.”

If the economy, and the resulting tax revenue, were to return to its previous level fairly quickly the city could be left with a larger than normal amount of tax collected in excess of its TABOR limit.

If the city collects more than it is allowed it must either return the money to taxpayers or ask taxpayers to keep it. In Grand Junction voters have allowed the city to keep its excess revenue to go toward road paving through 2022 then toward increasing road capacity through 2037. This could lead to the city having to cut its operational budget while being flush with cash limited to road projects.

“What’s really important to understand for the community is if we end up with a larger excess than we anticipated at this point we wouldn’t be asking the voters because we are allowed to keep it,” Caton said. “But we’re allowed to use it for a very narrow use, which is capacity.”

Caton described a hypothetical scenario where the city would see an $8 million revenue reduction in 2020 with a return to its previous level in 2021. Without voters approval to do away with the revenue cap, referred to as de-Brucing, that would result in cuts to services, Caton said.

“If we bounce back up (in 2021) we could have an excess of like $8 million,” Caton said. “That 8 million dollars is utilized today to put cops on the street, firefighters, public works, parks and recreation and general administration. That’s going to eat into our core of funding this city.”

Council Member Chuck McDaniel highlighted the strange circumstance the city would be in that hypothetical situation.

“It’s the operating funds that are going to suffer and therefore the delivery of services in the city,” McDaniel said. “We’re going to get to keep all the money. We’re going to have really great streets and no police to ride on them.”

To fix this potential problem, the City Council is moving forward with putting a question on the ballot this November, asking residents to allow them to remove the revenue cap on the city. Council Member Phyllis Norris said even among residents who do not favor tax increases they see some of the issues TABOR causes for local governments.

“It’s been amazing how many people have recognized that the tax system in our state, including TABOR, is not good and we need to change that,” Norris said. “I think there’s more people open to seeing this and getting rid of it today than there has ever been because people are recognizing what it is doing to communities.”

Both McDaniel and Norris said they favored a permanent de-Brucing question with the option to go back to voters if it failed with a more limited proposal. However, Council Members Anna Stout and Rick Taggart argued for asking voters to de-Bruce for a limited time-period.

“We just have not been successful in this community with ballot items that don’t sunset,” Taggart said. “I agree with Chuck that it would be nice if we could do this permanently, but I don’t think it’s as simple as if we fail in November we go back in April. I don’t think we’ll get two bites at something like this.”

The rest of the council agreed that a “sunset” for the de-Brucing effort was the option they preferred. Caton suggested a 15-year time period would be the preference of staff, which the council agreed with.

OTHER BUSINESS

The council discussed how to allocated around $470,000 in Community Development Block Grant (CDBG) funding.

The CDBG grants are mostly allocated to go toward capital improvements for organizations that service low and middle income people within Grand Junction. The council reviewed staff recommendations and decided to provide funding for remodeling the HomewardBound homeless shelter and for a city program that replaces lead water lines.

The council also heard a presentation from Mesa County Public Health on policy options to reduce the number of children using “vape” products. The council will continue the discussion and include marijuana in that presentation at its July 13 work session.

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