It appears increasingly likely that Silverton voters will be asked Nov. 4 to add another one percent to the town’s sales tax, a move that would generate an estimated $132,000 a year for the town.
But will the town’s voters go along with it?
Silverton Town Council members reiterated their support for increasing the town’s sales tax at a work session Monday. And a citizens’ committee formed to support the proposal has already met twice to plot a campaign to pass the measure.
Town Administrator Elyse Salazar said Friday that the Town Council faces a sort of point of no return at its meeting on Monday, Aug. 25, when it must decide whether to proceed with the ballot proposal or not.
“That’s when it’s time to either pull back or run forward,” Salazar said.
“I can’t think of anyone on the (town) board that’s against it,” said Trustee Jim Lindaman, chairman of the Town Council’s finance committee. He said the town has little choice but to pursue a sales-tax increase given that property tax revenues will be flat and perhaps even lower come the reassessments in 2010. “I think there’s going to be a positive vote on the 25th (of August).”
The town expects to earn $530,040 on sales tax this year, based on projected actual sales in 2008 of some $13.2 million.
Shoppers in Silverton currently pay a 6.9 percent sales tax, with 4 percent going to the town and 2.9 percent to the state.
Salazar said she has been checking with businesses in town to see how sales are going this summer and so far “we are tracking steady, but not above” last year’s figures.
“As long as we don’t see a decrease, we’ll be OK for this year,” Salazar said.
A new state law allows statutory towns such as Silverton to raise their sales tax, with voter approval.
A committee of citizens formed to determine the feasibility of a sales-tax increase met Friday to discuss the issue.
Salazar noted that nearby cities have higher sales-tax rates, with Durango’s at 7.9 percent and Montrose at 8.15 percent.
“We’re pretty low compared to other mountain towns,” said Kristi Smith, Silverton Chamber of Commerce board member. “Everyone I talk to is for it.”
“I guess I’m not quite as optimistic,” said Willie Tookey, county administrator and former mayor of Silverton. He said he recalls past efforts in which the same arguments were made only to see voters reject the measures.
The town’s sales tax was last increased from 3 percent to 4 percent in 1994. Tookey said a vigorous door-to-door campaign was needed at that time to get voters to go along with it.
“I’m not saying it can’t be done, but it will be a lot of work,” Tookey said. “The first time we brought this up we thought it was a no-brainer, and yet it was defeated badly.”
Mark Watson, owner of Silverton Grocery, expressed support for increasing the sales tax, but agreed it might be a tough sell.
“I think it is going to take some education for the public,” he said. “Our sales tax is already low. Let’s let the tourists pay for it.”
He said “the majority of people who live here don’t do 70 or 80 percent of their shopping in town,” but instead pay higher sales taxes in places like Durango and Montrose.
Salazar noted that a town survey distributed to voters in the April 1 town election found residents don’t want any cuts in town services, but they also don’t want a tax increase.
Salazar said something will have to give, noting the painful round of budget cuts enacted for 2008 and that difficult budget decisions loom for 2009.
“We’re talking about cutting essential services at this point,” Salazar said.
Sales tax committee members suggested the town should have a specific plan on where the sales-tax increase would be spent. And while town council members may be asked to campaign for the ballot proposal, Lindaman said it is vital for the chamber of commerce to take an active role.
“The chamber should be where the grass roots start,” Lindaman said.
Salazar agreed.
“We need to find a champion for this other than the town,” Salazar said. “Once it becomes an official ballot item, the town cannot spend any money to campaign for it.”
Lindaman said the sales tax committee envisions teams of two going door-to-door to campaign for the measure.
Town Councilman John Schertz said many in town don’t seem to realize the predicament the town faces in trying to maintain essential services.
He said he was asked by someone if the sales-tax increase would mean water rates could go down again.
“They’re just not seeing the grand scheme of things in any way shape or form,” Schertz said.
Salazar said voters need to realize that essential services are on the line as the town struggles with rising costs and flat revenue.
Mayor Terry Kerwin said the town needs to make it clear how the extra sales tax revenue will be used to get voters on board.
“It can be done,” Kerwin said. “But people need to understand what they’re buying into.”
Salazar told council members that it was vital that the council demonstrate “united support” for the proposal by voting unanimously at next Monday’s council meeting to proceed with the ballot proposal.
She noted the council has demonstrated “pretty unanimous feelings on this so far.”
And Salazar said council members also must be prepared to campaign for the measure on their own if there is a chance of it winning voter approval.
Schertz agreed council members need to make the case that “we truly need this for services.”
And he said one of the biggest selling points is that tourists pay the bulk of sales tax the town receives.
“These people who file in and out of here every day for six months can carry us,” Schertz said.
Kerwin agreed increasing the sales tax is a “softer touch” for town residents than other options.
Paul Zimmerman, owner of the Pickle Barrel restaurant, said he thinks the business community is largely supportive of the measure, realizing tourists need to pay for the services the town provides.
“It’s insane that 400 or 500 people are supporting all this, but we are,” Zimmerman said. “We’re paying for all these people to visit here.”
Salazar said in the end, essential services will be on the line if the town can’t come up with more money.
“I don’t want to be accused of using scare tactics, but it took a lot of creative maneuvering last year to balance the budget,” Salazar said. Without a sales tax increase, she said, “we will survive but not with the same level of services.”
Kerwin pointed to the public restrooms at the town’s “Potty Park,” built in 1974 as among priorities the town cannot address without more money coming in.
“It’s a piece of junk,” Kerwin said, and it may take a few hundred thousand dollars to replace. “That’s what it takes to do things.”
Kerwin said it may be difficult to persuade voters to back the sales tax increase, but he sees little choice.
“This is what we have to do,” he said.