Oct 26, 2021 - News

Denver voters will weigh whether to lower and cap sales taxes

Sales taxes in Denver
Data: City and County of Denver; Table: Will Chase/Axios

Denver voters are familiar with ballot questions that ask for tax increases.

Driving the news: This year's ballot asks the opposite.

Ballot measure 304 seeks to reduce the city's combined sales tax from 4.81% to 4.5% β€” and cap it at the lower rate.

The "Enough Taxes Already" campaign, led by the chairman of the Denver County Republican Party and a conservative group that doesn't reveal its donors, is a reaction to six sales tax increases since 2018 that won voter approval.

Be smart: All told, local, state and special sales taxes in Denver have pushed the rate to 8.81%.

Why it matters: The tax cut stands in contrast to the vision outlined by Denver Mayor Michael Hancock and City Council members.

  • The leaders are asking voters to approve an additional $450 million in bonds on the same ballot.
  • The spending is earmarked for five priority areas and would cover the cost of building new libraries, parks, an arena and homeless shelters, as well as upgrading existing facilities.

By the numbers: The city estimates the lower rate will lead to a $49 million reduction in tax revenue for the 2022 fiscal year, impacting discretionary services and dedicated programs already approved by voters, such as preschool, college affordability, mental health and parks.

  • A separate analysis by the conservative Common Sense Institute puts the fiscal impact at $69 million, or a 6.4% cut in annual spending.
  • The city's budget is $1.5 billion.

Of note: Much remains unknown about the full impact of the sales tax cap, such as whether it applies to marijuana taxes and how programs would be impacted.

  • Those decisions likely would fall into the hands of the city council if the measure wins approval.

What else: The bonds will cost the city upward of $775 million to repay over 20 years, depending on the interest rate when sold.

  • Three areas that will receive money β€” transportation, parks and homelessness β€” also receive dedicated streams of current tax revenue.

What they're saying: The Denver City Council unanimously passed a resolution opposing ballot measure 304. Councilperson Robin Kniech said the spending cuts combined with other ballot measures would create "chaos."

Garrett Flicker, the lead proponent of the measure pointed to the regressive nature of the sales tax hitting lower-income people harder.

  • "Combined with the coronavirus and businesses hurting, now is the time for people to have a little bit of alleviation when purchasing basic goods," he tells Axios.

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