EDITORIAL NOTE: This editorial installment, Part Two, was supposed to be published on Thursday, July 26, but for reasons that will not be revealed — including a planned two-day trip to Santa Fe to dog-sit a Jack Russell Terrier — the Daily Post editor fell down on the job. We offer our apologies, and hope our readers will enjoy the editorial, one day late.
Many of the conversations during the Tuesday, July 24, joint Town Council-Board of County Commissioners work session lingered in the realm of “Hypothetical.”
One conversation concerned the idea of a new joint taxing authority to handle the expansion of community’s recreational offerings — to be overseen, hypothetically, by a separate elected board with its own tax-funded budget.
Another conversation focused on the idea of a “Capital Facilities Authority” — yet another hypothetical tax-funded agency (unlike any that exist anywhere in Colorado. apparently) which would oversee the capital facilities needs of every government entity in the community, to be funded by its own dedicated stream of tax revenue. Hypothetically.
Not everyone at the meeting embraced the same hypothetical ideas. But at least some of the elected officials had fun dreaming about new streams of tax revenues, we assume.
One discussion that was much less hypothetical covered the rumored intentions of the BOCC to place a $28 million (estimated, by me) sales tax increase on the November ballot. We briefly discussed that argument in Part One.
But there are numerous reasons why a sales tax, in particular, is a poor choice for funding long-term capital debt for Archuleta County. One reason was brought up by Tracy Bunning — the negative impact on the Town’s future funding options.
The Town collects very little in terms of property tax. The lion’s share of the community’s property taxes accrue to the County government and the School District. So the Town relies much more heavily upon sales taxes than does the County. The addition of one percent to our local sales tax, starting in 2019 and running through 2034, for example, would likely be a discouragement to additional sales tax increases for other necessary projects.
Typically, in Colorado, governments use a mill levy (property tax) to fund long-term debt, through General Obligation (GO) bonds sold to investors. And a GO ballot measure is typically worded so that the mill levy automatically adjusts annually to raise exactly the amount needed to pay off the bonds. As local property values increase, for example, the mill levy assigned to the debt will go down.
In 2017, the BOCC decided to fund a jail proposal, not with a property tax increase but rather with a one-percent sales tax increase. Sales taxes provide a volatile source of revenue. When the local economy is strong and families are spending money locally, sales tax revenues are high. When the economy falters, however, local governments see a decline in sales tax collections. During the Great Recession, the Town government saw their sales tax collections drop from $3.4 million (in 2006) down to $3.0 million (in 2010) — a drop of more than 10 percent.
A future economic downturn that caused a major retailer to close its doors would have an even more devasting effect on local sales tax collections. I’m thinking here — hypothetically — about Walmart, which occasionally closes unprofitable stores in small rural communities.
Because of this sales tax volatility, the BOCC proposed on last year’s ballot that they wanted to collect about 20 percent more taxes than they actually needed to pay off the borrowed debt, to assure the investment bankers that the County would always have enough sales tax to pay the annual interest and principal payments.
Near the conclusion of a public meeting last September — organized by local activists Carl and Carol Mellberg to promote expanded facilities for the County Sheriff, and the $26.6 million tax increase necessary to fund the new debt — local architect Brad Ash and Denver-based architect Bob Johnson explained what the facility might look like, and why it might cost so much to build it.
We will note the word: “might.” The actual ballot language that county voters considered last November did not promise anything about the design, size, or actual cost of the proposed facilities. The ballot measure promised only that we would pay up to $26.6 million in additional sales tax over the next 12 to 14 years, at a rate of up to $2.9 million per year, and that up to $20.5 million would be spent on “new debt.”
And that at least a portion of the money would be used for “a new Detention Center and new Sheriff’s Offices.”
Legally, according to the ballot measure presented to voters last year, the new taxes could be spent on anything defined by the BOCC as “Justice System Capital Improvements.”
One thing I learned at that September promotional event: that the architects would be charging a commission based upon 8.5 percent of the final construction price, in order to draw the final design. According to my pocket calculator, that “soft cost” would come to about $1.2 million paid to the architects, for a facility with estimated construction “hard costs” of $14.1 million.
Last year, the total estimated cost of the new and enlarged Sheriff’s facilities — including “hard” and “soft” costs — was $17.9 million. Call it $18 million. Commissioner Maez told us on Tuesday that the 2018 cost, for a similar facility, has likely increased by $2 million. So call it $20 million. Add the interest payments made to the investment bankers, and we can call it $28 million. Maybe $29 million?
A request from the Colorado Judicial Department, asking the BOCC for expanded courtroom space and court office space, is at least four years old. The decision to abandon our existing County Jail took place in April 2015 — well after the BOCC had begun discussions with the Judicial Department. But the bond measure that appeared on last November’s ballot said nothing specifically about the Courts. The BOCC made some vague promises to the Judicial Department, however — to the effect that, if the Sheriff’s facility tax increase were approved by the voters, the BOCC would, at some point, figure out a way to convert our existing (but now abandoned) jail into court spaces, at a cost that was never firmly defined.
Pretty much hypothetical, in other words.
Every speaker who presented at last year’s September 19 promotional event spoke in favor of the proposed tax increase, assuring us that it would be completely impractical to renovate the existing jail, and that the County Sheriff truly needs an office three times the size he was occupying in 2014.
No one presenting at that event addressed the long-standing requests coming from the Judicial Department for additional courtroom and office space.
No one presenting at that September 19 event mentioned that the Sheriff’s average number of jail inmates housed at the County jail between 2010 – 2012 was “29 inmates”… and that the average number of inmates between 2013-2015 was “13 inmates.” (Based on data provided by the Archuleta County Sheriff’s staff. More details about that calculation in this Daily Post article.)
But the main problem, last September, was that no one addressed how this project had gotten so far off track, in terms of sensible government spending.
Bill Hudson began sharing his opinions in the Pagosa Daily Post in 2004 and can’t seem to break the habit. He claims that, in Pagosa Springs, opinions are like pickup trucks: everybody has one.