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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 10/19/2021 - SECOND READING OF ORDINANCE NO. 126, 2021, AMENDIN Agenda Item 2 Item # 2 Page 1 AGENDA ITEM SUMMARY October 19, 2021 City Council STAFF Jennifer Poznanovic, Project and Revenue Manager Ryan Malarky, Legal SUBJECT Second Reading of Ordinance No. 126, 2021, Amending Chapter 25 of the Code of the City of Fort Collins Relating to Sales and Use Tax to Advance Gender Equity. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on October 5, 2021, establishes an exemption from the City’s sales and use tax for menstrual care products, which is one of the 2021-2023 Council priorities to advance gender equity in the City’s Sales Tax Code. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, October 5, 2021 (w/o attachments) (PDF) 2. Ordinance No. 126, 2021 (PDF) Agenda Item 9 Item # 9 Page 1 AGENDA ITEM SUMMARY October 5, 2021 City Council STAFF Jennifer Poznanovic, Project and Revenue Manager Ryan Malarky, Legal SUBJECT First Reading of Ordinance No. 126, 2021, Amending Chapter 25 of the Code of the City of Fort Collins Relating to Sales and Use Tax to Advance Gender Equity. EXECUTIVE SUMMARY The purpose of this item is to establish an exemption from the City’s sales and use tax for menstrual care products, which is one of the 2021-2023 Council priorities to advance gender equity in the City’s Sales Tax Code. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION In July 2021, Council formally adopted the 2021-2023 City Council Priorities. Within the High Performing Government Strategic Outcome, Council identified as a priority to advance gender equity in the City’s Sales Tax Code by establishing an exemption from sales and use tax for menstrual care products. Other taxing entities provide a similar exemption. Effective January 2018, House Bill 17-1127 created a sales and use tax exemption for “feminine hygiene products.” The State defines feminine hygiene products to mean “tampons, menstrual pads and sanitary napkins, pantiliners, menstrual sponges, and menstrual cups.” Below are several examples of how these products are identified and defined in other municipalities. Denver -“Feminine hygiene products” means “products that are designed to absorb or contain menstrual flow. Feminine hygiene products include, but are not limited to, tampons, menstrual pads and sanitary napkins, pantiliners, menstrual sponges and menstrual cups.” Aurora - “Menstrual care products” means “tampons, panty liners, menstrual cups, sanitary napkins, and other similar tangible personal property designed for hygiene in connection with the human menstrual cycle, but does not include "grooming and hygiene products". “Grooming and hygiene products” means “soaps and cleaning solutions, shampoo, toothpaste, mouthwash, antiperspirants, and suntan lotions and screens, regardless of whether the items meet the definition of ’over- the-counter-drugs." After review of these other entities’ exemptions, staff is recommending the following terms be used to create an exemption from sales and use tax: “Menstrual care products” shall mean tampons, panty liners, menstrual cups, sanitary napkins, and other similar tangible personal property designed for hygiene in connection with the human menstrual cycle but does not include “grooming and hygiene products”. ATTACHMENT 1 Agenda Item 9 Item # 9 Page 2 “Grooming and hygiene products” shall mean soaps and cleaning solutions, shampoo, toothpaste, mouthwash, antiperspirants, and suntan lotions and screens. CITY FINANCIAL IMPACTS According to the Final Fiscal Note for House Bill 17-1127, an estimated 27% of the state population is menstruating. Applying that percentage to Fort Collins, that would be an estimated menstruating population of 47,479 (based on 2020 population). On average, $60 is spent on menstrual care products per menstruating person per year. Based on those figures, the estimated revenue loss from this proposed exemption would be $110,000 per year. (Attachments 1 and 2) BOARD / COMMISSION RECOMMENDATION Establishing an exemption from sales and use tax for menstrual care products was discussed by the Council Finance Committee at its September 1, 2021, meeting. The Council Finance Committee recommended as next steps that staff bring an ordinance to Council in October 2021. PUBLIC OUTREACH Staff plans to send letters to notify convenience stores, grocery stores, big box stores, and online retailers that typically sell menstrual care products regarding the updated exemption. To give businesses time to update their point of sales systems, staff is recommending the Ordinance be effective 60 days after second reading. To notify residents, staff plans to send a press release. ATTACHMENTS 1. House Bill 17-1127 - Fiscal Note (PDF) 2. House Bill 17-1127 (PDF) -1- ORDINANCE NO. 126, 2021 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING CHAPTER 25 OF THE CODE OF THE CITY OF FORT COLLINS RELATING TO SALES AND USE TAX TO ADVANCE GENDER EQUITY WHEREAS, on July 20, 2021, the City Council adopted Resolution 2021-077, establishing the City Council’s priorities for action during the 2021-2023 Council term; and WHEREAS, included in those priorities was the advancement of gender equity in the City’s sales and use tax ordinances by establishing an exemption from sales and use tax for certain menstrual care products; and WHEREAS, Article XX, Section 6.g. of the Colorado Constitution grants to the City, as a home rule municipality, all powers necessary to levy and collect taxes for municipal purposes, subject to any limitations in the Colorado Constitution; and WHEREAS, on November 16, 1967, the City Council, in the exercise of its home rule taxing powers, adopted Ordinance No. 058, 1967, to levy, collect and enforce beginning on January 1, 1968, a sales and use tax on the purchase of tangible personal property sold at retail in the City and on certain taxable services provided in the City (the “Sales and Use Tax Code”); and WHEREAS, the Sales and Use Tax Code is currently found in Chapter 25, Article III of the City Code, which has been significantly amended many times since its adoption in 1967; and WHEREAS, City Council hereby finds that amending the City Code as proposed in this Ordinance is in the best interest of the City and its taxpayers and promotes the health, safety and welfare of the community by providing for gender equity in the imposition of tax on certain menstrual care products. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. That Section 25-71 of the Code of the City of Fort Collins is hereby amended by the addition of two new definitions which read in their entirety as follows: Sec. 25-71. Definitions The following words, terms and phrases, as used in this Article, shall have the following meanings: . . . Grooming and hygiene products shall mean soaps and cleaning solutions, shampoo, toothpaste mouthwash, antiperspirants, and suntan lotions and screens. -2- . . . Menstrual care products shall mean tampons, panty liners, menstrual cups, sanitary napkins, and other tangible personal property designed for hygiene in connection with the human menstrual cycle, but does not include grooming and hygiene products. . . . Section 3. That Section 25-73(c) of the Code of the City of Fort Collins is hereby amended to add a new subsection 26, to read as follows: Sec. 25-73. Imposition of the sales tax and exemptions. . . . (c) Transactions and items exempt from sales tax. The following shall be exempt from the sales tax: . . . (26) All sales of menstrual care products. Section 4. That Section 25-74(b) of the Code of the City of Fort Collins is hereby amended to add a new subsection 22, to read as follows: Sec. 25-74. Imposition of the use tax and exemptions. . . . (b) Transactions and items exempt from the use tax. The use, storage, distribution or consumption in the City of the following are hereby exempted from the use tax: . . . (22) Menstrual care products; and (23) All other tangible personal property and taxable services that are exempt, as provided in Sections 25-73(c) and 25-73(d), from the sales tax imposed in this Article. Section 4. The provisions in this Ordinance shall become effective sixty (60) days after final passage. -3- Introduced, considered favorably on first reading, and ordered published this 5th day of October, A.D. 2021, and to be presented for final passage on the 19th day of October, A.D. 2021. ____________________________________ Mayor ATTEST: _____________________________ Interim City Clerk Passed and adopted on final reading on this 19th day of October, A.D. 2021. ____________________________________ Mayor ATTEST: _____________________________ Interim City Clerk