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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 02/05/2019 - ITEMS RELATING TO EXTENDING THE KEEP FORT COLLINSAgenda Item 17 Item # 17 Page 1 AGENDA ITEM SUMMARY February 5, 2019 City Council STAFF Ginny Sawyer, Policy and Project Manager John Duval, Legal SUBJECT Items Relating to Extending the Keep Fort Collins Great Tax. EXECUTIVE SUMMARY A. Possible Public Hearing and Motions Regarding Protest(s) of Ballot Language. B. Resolution 2019-019 Submitting a Ballot Issue Question to the City’s Registered Electors at the City’s Regular Election on April 2, 2019, Asking Them to Extend the “Keep Fort Collins Great” .85% Sales and Use Tax Voters Approved in 2010. BALLOT LANGUAGE AMENDED 02/04/2019 The purpose of this item is to set the ballot language and refer the 0.85% Keep Fort Collins Great tax amount to the April 2, 2019, election. Any protest of the proposed ballot language must be received no later than Monday, February 4, 2019, at noon. The protest(s) shall be heard, considered, and resolved by Council prior to adoption of Resolution 2019- 019. If protest(s) are received, copies will be included in Council’s “Read-before” packet. Since 2011, the voter-approved Keep Fort Collins Great 0.85% sales tax has funded basic operations and enabled the City to maintain a desired level of service and respond to community desires in an environment of population growth and annual inflation. Prior to the 2020 sunset of KFCG, and before building the 2021-22 budget, the City has been engaging the community in the decision of how to fund current service levels. After a year-plus effort including multiple Council discussions, board and commission outreach, and public engagement, a Resolution presenting ballot language for the April 2, 2019, election is being presented for Council consideration. This ballot option does not increase the overall local tax rate. Please note that in the ballot question the dollar amount for the estimate of the first fiscal year revenues is left blank. City staff is continuing to work on what this estimate should be. Council will be provided with a memo in its “Read Before” packet on Tuesday with the dollar amount to insert into the ballot question. Protest hearings pursuant to City Code Section 7-88 (regarding re-districting) and Section 7-156 (regarding ballot title and/or submission clause) shall be conducted in the following order, as part of the agenda item for the item under protest:  Announcement of Item;  Staff Presentation for Agenda Item;  Presentation by each person who timely filed a Protest;  Councilmember questions of City staff and the protesting parties; and Agenda Item 17 Item # 17 Page 2  Motion on each Protest, discussion and vote on each Protest the by the City Council. After completion of the Protest Hearing, Council will return to the Agenda Item and receive citizen comments from any persons desiring to speak on the Agenda Item. STAFF RECOMMENDATION Staff recommends adoption of Resolution 2019-019. BACKGROUND / DISCUSSION The City’s current local tax burden is 3.85%. The on-going general tax rate is 2.25% and has not changed in 36 years. There are three dedicated and temporary ¼-cent taxes (Open Space, Street Maintenance, Community Capital) totaling .75% and the Keep Fort Collins Great (KFCG) .85% dedicated tax that expires on December 31, 2020. In 2008-2009, the City was experiencing significant revenue shortfalls. In response, a major community dialogue was launched to engage the public regarding choices surrounding elimination of services and identification of new revenue. The end-result of these efforts and dialogues was the passage of KFCG, a .85 dedicated sales tax, in November 2010. By vote, these dollars support the following operations:  33% Street Maintenance and Repair  17% Other Transportation Needs  17% Police Services  11% Parks and Recreation  11% Other Community Priorities  11% Fire Protection and Other Emergency Services (Poudre Fire Authority) The City utilizes KFCG dollars to fund numerous programs and basic services. Each year a summary report of Agenda Item 17 Item # 17 Page 3 KFCG funds and projects is created and posted online allowing residents to see all projects funding by KFCG dollars (www.fcgov.com/kcfg). For over a year, staff has been engaging the public and Council on what a sunset of KFCG means and possible revenue replacement options. The following general themes emerged throughout the engagement process:  Residents support City services.  On the whole residents are happy with the services they receive.  People recognize that the on-going base rate has not increased in 36-years and yet demands for operations and maintenance have increased in that time.  There were few suggestions for reductions in service and no consensus within the suggestions.  While majority support an on-going base rate option, some would prefer a renewable option. On January 22, 2019, a majority of Council expressed support for bringing forward ballot language for a one time vote to increase the base sales tax rate by 0.85%. However, this tax would not be imposed on food for home consumption. (Attachment 1) This option for revenue replacement when KFCG sunsets does not increase the local tax rate, but it does require a TABOR election. CITY FINANCIAL IMPACTS As previously stated, proposed ballot language does NOT increase the current local sales tax rate. Resolution 2019-019 would increase the ongoing sales tax rate by 0.85% on January 1, 2021 following the sunset of KFCG. The language includes existing KFCG exemptions, most notably not taxing food for home consumption and not imposing the use tax on manufacturing equipment. It also continues the existing level of contributions for fire protection and other emergency services, 11% of the tax revenues. The remaining revenue would be collected as General Fund revenue and would be prioritized and allocated by Council and the community to address needs and desires through the budgeting process, with the exception of the fire protection amount. BOARD / COMMISSION RECOMMENDATION Staff met with 18 City boards and commissions to discuss the KFCG sunset and possible revenue replacement options. Most boards supported replacing revenue in full (0.85%) with few boards voicing a preferred option. Written recommendations are attached. (Attachment 2). PUBLIC OUTREACH Staff hosted and/or presented KFCG sunset information at:  9 public meetings  3 CityWork Alumni groups  2 service clubs  Fort Collins Chamber legislative group and Leadership Fort Collins class  The Board of Realtors legislative group  Downtown Business Association Board and Membership meetings  North Fort Collins Business Association  Campus West Merchant Association  United Way staff  Poudre Fire District Board meeting Agenda Item 17 Item # 17 Page 4  Coloradoan Editorial Board  Visit Fort Collins Board  Multiple City staff department meetings The feedback from these meetings is reflected in the general themes mentioned above. ATTACHMENTS 1. Work Session Summary, January 22, 2019 (PDF) 2. Board and Commission Written Recommendations (PDF) 3. PowerPoint Presentation (PDF) City Manager’s Office City Hall 300 LaPorte Ave. PO Box 580 Fort Collins, CO 80522 970.221.6505 970.224.6107 - fax fcgov.com DATE: January 25, 2019 TO: Mayor Troxell and Councilmembers FM: Ginny Sawyer, Project and Policy Manager TH: Darin Atteberry, City Manager Kelly DiMartino, Senior Assistant City Manager RE: January 22, 2019 Work Session Summary: Keep Fort Collins Great Sunset All Councilmembers were present, with Councilmember Cunniff joining by telephone. Staff provided background, an update on outreach, and two options for revenue replacement. Direction was sought on a preferred option for a referral to ballot. Options presented: Option A - Increase the City base sales tax rate by 0.85%. A one-time vote to increase the base rate tax by 0.85%. This revenue would be general fund revenue and would be prioritized and allocated by Council and the community to address needs and desires through the budgeting process. Option B - Increase the City base sales tax rate by 0.60% and put forward a 0.25% renewable tax A one-time vote to increase the base sales tax by 0.6% and a vote to consider a 0.25% dedicated, renewable tax. The 0.6% amount covers all but 0.01% of current level KFCG contributions for Police, Streets, Fire, and Parks and Recreation programs and services. To maintain existing KFCG programs and services, the remaining 0.25% tax would support “Other Transportation” and “Sustainability” programs and services. General comments: ▪ Overall support for Option A based on: o Funding core services o Simplicity of ballot language o Options to refine in future elections if not supported ▪ Would like any ballot language to be clear in fire protection support and in language clarifying that local tax rate remains the same. ▪ Some support for Option B to allow for future conversations on service and tax rate. Follow-up Items: ▪ Staff will bring Option A as ballot language to the February 5, 2019 regular Council meeting. ATTACHMENT 1 ATTACHMENT 2 1 City Council Regular Meeting February 5, 2019 Keep Fort Collins Great-2020 Sunset ATTACHMENT 3 Purpose 1. Possible Public Hearing and Motions Regarding Protest(s) of Ballot Language. 2. Consideration of Resolution 2019-019: Submitting a 0.85% On- going Sales Tax Option Before the Voters. 2 KFCG Conversation November 2017 Council Finance Committee February 2019 Council Meeting 3 Council Finance Committee Council Work Session Council Regular Meeting – Last day to refer to the April 2, 2019 Election Option: Same Revenue Resolution 2019-019: Increase the City base sales tax rate by 0.85%. • One-time vote to increase the base rate tax by 0.85%. • Revenue prioritized and allocated by Council through budgeting process. 4 Ballot Language Basics Resolution:  Maintain current local tax rate.  Provide funding for Fire Protection and Emergency services.  Exempt groceries and prescription drugs.  Exempt manufacturing from Use Tax.  Trigger TABOR election notice requirements. 5 Recommendation Resolution 2019-019: Submitting a 0.85% On-going Sales Tax Option Before the Voters.  Overall support from public outreach participants.  No consensus on reductions.  Maintains current level of service.  Assures prioritization of all funding through the budgeting process. 6 -1- BALLOT LANGUAGE AMENDED 02/04/2019 RESOLUTION 2019-019 OF THE COUNCIL OF THE CITY OF FORT COLLINS SUBMITTING A BALLOT ISSUE QUESTION TO THE CITY’S REGISTERED ELECTORS AT THE CITY’S REGULAR ELECTION ON APRIL 2, 2019, ASKING THEM TO EXTEND THE “KEEP FORT COLLINS GREAT” .85% SALES AND USE TAX VOTERS APPROVED IN 2010 WHEREAS, on November 2, 2010, the City held a special election conducted as a coordinated election with Larimer County; and WHEREAS, at that election, the City’s electorate considered and 60% of those voting approved a ballot issue question asking whether the City’s sales and use tax rate should be increased from 3.00 % to 3.85% commencing on January 1, 2011, and ending midnight on December 31, 2020, to be spent for these purposes: (a) 33% for street maintenance and repair, (b) 17% for other street and transportation needs, (c) 17% for police services, (d) 11% for fire protection and other emergency services, (e) 11% for parks maintenance and recreation services, and (f) 11% for other community priorities as determined by the City Council, which tax rate increase is known as the “Keep Fort Collins Great” tax (the “KFCG Tax”); and WHEREAS, since 2011, the KFCG Tax has funded basic City operations and enabled the City to maintain a desired level of service and respond to community desires in an environment of population growth and annual inflation; and WHEREAS, in anticipation of the 2020 sunset of the KFCG Tax and its potential effect on the City’s budget in future years, the City has engaged the community in the decision of how to best fund current service levels in upcoming years and, after a year-plus effort, including multiple City Council discussions, Board and Commission outreach and public engagement, the Council has determined this can best be accomplished by asking the City’s electors to extend the KFCG Tax; and WHEREAS, the City Council has also determined that the KFCG Tax should be extended without an expiration date and that using the revenues generated from this extended tax should not be restricted to specific uses, with one exception, so that its revenues are available for City operations, maintenance and any other public purposes; and WHEREAS, the one exception the City Council has determined is necessary for the restricted use of the revenues is that the City’s current funding of the fire protection and emergency services being provided by the Poudre Fire Authority should be maintained for now at the same 11% of revenues as is now being provided under the KFCG Tax; and -2- WHEREAS, Article X, Section 3 of the City’s Charter authorizes the City Council to submit any question to a vote of the people at a regular City election. NOW, THEREFORE, BE IT RESOLVED 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 in the recitals set forth above. Section 2. That there is hereby submitted to the City’s registered electors at the City’s regular municipal election to be held on April 2, 2019, this ballot issue question with the following ballot title and submission clause: City-Initiated Ballot Issue Question No. 1 SHALL CITY OF FORT COLLINS TAXES BE INCREASED BY AN ESTIMATED [DOLLAR AMOUNT] FOR THE FIRST FULL FISCAL YEAR (2021) AND BY ALL AMOUNTS COLLECTED ANNUALLY THEREAFTER, BY EXTENDING, WITHOUT EXPIRATION, THE CITY’S CURRENT “KEEP FORT COLLINS GREAT” .85% SALES AND USE TAX, WHICH EXPIRES ON DECEMBER 31, 2020, WITH THE REVENUES FROM THIS TAX USED AS FOLLOWS:  11% OF REVENUES SHALL BE USED TO FUND THE FIRE PROTECTION AND EMERGENCY SERVICES BEING PROVIDED BY POUDRE FIRE AUTHORITY (PFA) UNDER THE CITY’S EXISTING AGREEMENT WITH THE POUDRE VALLEY FIRE PROTECTION DISTRICT (DISTRICT), OR IN SUCH OTHER AMOUNT AS THE CITY AND DISTRICT MAY AGREE, BUT ABSENT AN AGREEMENT BETWEEN THEM FOR PFA’S SERVICES, THESE REVENUES MAY BE USED AS DETERMINED BY CITY COUNCIL; AND  ALL THE REMAINING REVENUES MAY BE USED FOR MUNICIPAL OPERATIONS, MAINTENANCE AND ANY OTHER PUBLIC PURPOSES; BUT THIS TAX SHALL NOT APPLY TO:  ITEMS NOW EXEMPT UNDER THE CITY CODE FROM THE CITY’S SALES AND USE TAX; , INCLUDING FOOD FOR HOME CONSUMPTION; AND  FOOD FOR HOME CONSUMPTION; AND  REGARDING THE USE TAX ONLY, MANUFACTURING EQUIPMENT; AND WITH ALL THE TAX REVENUES, AND INVESTMENT EARNINGS THEREON, TO BE COLLECTED, RETAINED AND SPENT AS A VOTER-APPROVED REVENUE CHANGE NOTWITHSTANDING THE SPENDING AND REVENUE LIMITATIONS OF ARTICLE X, SECTION 20 OF THE COLORADO CONSTITUTION? -3- _____ Yes/For _____ No/Against Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 5th day of February, A.D. 2019. __________________________________ Mayor ATTEST: _____________________________ City Clerk