I received an email the other day that directly relates to this editorial series about taxes and government expansion. The Daily Post reader was aware that I serve on the Pagosa Area Water and Sanitation District (PAWSD) board, and had questions about the proposed Town sales tax, currently under discussion at the Town Council — and wondered how many households get wastewater service from PAWSD.
And would this potential new sales tax pay for improvements to the PAWSD wastewater treatment plant?
The short answer is: there is no short answer.
Disclosure: I currently serve on the PAWSD Board of Directors, but this editorial reflects only my own opinions and not necessarily the opinions of the PAWSD Board or staff.
My response:
It’s complicated.
The Town government operates the Pagosa Springs Sanitation General Improvement District, which is a government “enterprise” and as such, can collect fees from customers. The customers have no direct control of how much those fees are. The decisions are made by the Town Council, acting as the PSSGID Board.
For many years, PSSGID treated its own wastewater in sewer lagoons near the high school. But the lagoons were releasing too much nitrogen into the San Juan River. About 20 years ago, the Town began the process of getting grants and loans to build a new, modern sewage plant. In the middle of that process, the PAWSD staff talked the Town Council into a different path forward… a seven-mile pipeline to pump the sewage uphill to the PAWSD treatment plant behind the Vista mobile home park.
Under the new plan, PSSGID would pay their portion of the PAWSD treatment costs, would continue to maintain the Town’s collection system of sewage pipes, and would continue to collect its fees from the town customers. Also, the Town would pay back a loan borrowed from PAWSD to build the uphill pipeline, and would pay the cost of electricity for pumping uphill. This agreement between PSSGID and PAWSD was finalized in 2016.
The PSSGID pumping system serves about 900 homes and businesses.
Recently, the Town hired a new Public Works Director, and began analyzing the condition of its aging underground sewer pipes. The conclusion of the analysis was that the Town — not PAWSD, but the Town — had pending necessary repairs in the $40 million range.
How to pay that bill? Increase Town customer fees to $150 a month?
Or maybe, pass a sales tax to cover the PSSGID repairs?
With a sales tax, everyone who makes a purchase within the town limits would pay an additional tax… town residents (1,700 people) and county residents (12,000 people) and tourists (who knows how many?)
One estimate suggests that the tax might generate close to $4 million a year, and thus allow PSSGID to replace and repair its failing sewer lines over the next 10 years, without increasing the fees on the Town customers.
We note the PAWSD sewer customers (about 9,000 of them) would not see any direct benefit from this proposed sales tax. Only the town residents and businesses would benefit. The county voters, however, would not be allowed to vote on the sales tax, because it would be a ‘Town-only’ sales tax.
The current 4% sales tax is collected by Archuleta County and shared 50/50 with the Town government. The current plan for the proposed new sales tax — a 1% tax? — is that it would not be shared 50/50 with the County government.
On the other side of town, PAWSD is making $10 million worth of upgrades to the Vista treatment plant — required by Colorado Department of Public Health and Environment. Under the 2016 agreement, PSSGID will pay for about 1/4 of the cost for that upgrade. I assume the proposed sales tax might help pay for this obligation.
The upgrade required by CDPHE has caused PAWSD customer rates to increase slightly… but has not directly affected town customer rates, as far as I know.
Speaking as a Town resident and voter, currently paying a higher PSSGID fee than PAWSD customers pay, I would probably support the (obviously unfair) new sales tax — if the tax had a sunset and if the tax could be used only for PSSGID sewer repairs.
If the Town Council specifies that the new sales tax can be used for other capital purposes, I would likely vote against it.
As mentioned, the voters in the unincorporated county would not be able to vote on this issue.
Those were the comments I shared with our Daily Post reader.
The Town Council has not yet made a final decision about whether to place this issue before the town voters in November, and has also not decided how much of at tax increase they might propose — 1%? 1/2%? — nor have they decided specifically what the revenues could be used for.
Speaking as a person who’s gotten himself involved in various election campaigns in Pagosa Springs, I am guessing the town voters are likely to approve some type of sales tax — to be paid for partly by people who don’t live within the town limits — as an alternative to a much higher sewer bill.
One positive aspect to this proposal: the Town staff could make the repairs and upgrades incrementally — a little bit each year — instead of taking out a huge $40 million loan which would need to be paid back with interest payments, which would make the cost $80 million instead of $40 million.
Other planned community projects might not have that option, of doing things incrementally.
For example. The Archuleta Board of County Commissioners are planning to build a shiny new administration building in the Aspen Village subdivision, even though they don’t have the money to do it. The plan is to build the multi-million-dollar building with some type of loan.
I suppose, in theory, it could be done incrementally. Just build the offices for the Assessor, Clerk and Treasurer, at first, and add on later as the money becomes available. (That’s how my own house was built.) But governments don’t normally think the way ordinary people think.
Another example. The Town of Pagosa Springs plans to spend millions of dollars, over the next two years, replacing all its underground utilities that run underneath Highway 160, and doing upgrades to the downtown streetscape.
The cost for these upgrades, as revealed to the Town Council earlier this month, was shockingly high.
At least, the Council members appeared to be shocked. As was I.
More about that cost, tomorrow.