Briefing Memorandum DATE: TO: FROM: SUBJECT: Monday, April 16, 2018 Councilman Clark Zach Rothmier, Legislative Analyst Parks and Recreation dedicated sales and use tax BACKGROUND: The majority of municipalities in the front range have a dedicated sales and use tax to fund parks and recreation capital improvements, parkland and open space acquisition, and certain operations and maintenance expenses (see Appendix A). An increase in sales and use tax can only be approved by voters in the next general election. The deadline for Council to refer a measure to the voters is Monday, August 27th, 2018. 2018 Parks and Recreation funding1: The total request for Parks and Recreation (P&R) in the 2018 budget is $72.75 million, inclusive of administration ($4.47 mil), parks and planning ($40.63 mil), mountain parks (.95 mil), CSU cooperative extension (.19 mil), Buffalo Bill museum (.39 mil), and recreation 26.12 mil). P&R is anticipated to offset $10.07 million through general fund revenue derived from permits, use fees, etc. The 2018 budget request and revenue forecast does not include the golf enterprise fund. PROPOSAL: Council will refer a measure to put to the voters the request to expand the sales and use tax by .25% (two and a half cents for every ten dollars spent) for dedicated funding for Denver’s parks. All money derived from the increased sales and use tax must be expended solely for the acquisition of additional parkland and open space, capital improvements, mountain parks, waterway restoration and reclamation, forestry, and certain operation and maintenance expenses. The ballot measure will create a special Parks fund; and specifically excludes expending derived revenues from that fund towards offsetting any current of future expenditures from the general fund towards P&R (see sample ballot language, Appendix B). IMPACT: Denver’s current sales and use tax rate is 3.65% resulting in total projected 2018 sales tax revenue of $670.77 million.1 The additional tax would result in a total Denver tax of 3.9%, allowing Denver to remain competitive. The 25 nearest jurisdictions that maintain an average sales tax rate of 4.02%2 (city and county tax, combined). The total effective total sales and use tax would be 7.9% if the increase if approved by the voters. (including RTD, SCFD, and state tax). SUMMARY: The additional .25% tax will result in an additional $45.94 million for the dedicated parks fund in 20193. The total projected funds (in 2018 dollars) for P&R (general fund and Parks fund) would total 118.69 million, with $87.52 million being dedicated for parks. 1 City and County of Denver. Mayor’s 2018 budget. Budget and Management Office – City and County Tax Rates, 2017. 3 Using projections from 2018 revenue 2 Appendix A Dedicated Funding Parks and Recreation Funding in Colorado Metro Area Counties County Dedicated Parks or Open Space Tax Notes Adams 0.25% Program includes a citizen oversight board, appointed by the Adams County Board of Commissioners. 68% of tax revenue is award through grants and 30% returns to the generating municipality. Arapahoe 0.25% 50% of tax is given to cities and towns as grants. Boulder 0.60% Tax is split, 80% for open space and 20% for park land and recreation. Broomfield 0.25% .25% through 2019, .1% through 2029, .05% through 2025, .05% perpetuity, .15% through 2030. Denver 0.00% Douglas 0.17% Sunsets 2023 Jefferson 0.50% No sunset Additional dedicated funding sources by municipality Denver Metro Area (over 100k people) Arvada Aurora Centennial Lakewood Dedicated Funding Source(s) 2009-2018 Parks Fund Capital Maintenance and Replacement Plan uses seeded money from various sources (water fund, general fund, GOCO Trust) for capital improvements. Lands Dedicated Fund was eliminated in 2017 Parks Development Fund (Direct developer impact fee and interest derived from other funds). Recreation Fund (user fees and general fund transfer). No - Centennial parks and recreation services are provided by the Arapahoe Park and Recreation District and South Suburban Parks and Recreation District. No Thornton Westminster .25% Sales and Use tax (split in thirds, open space, parks, and tbd by City Council) – sunsets in 2018 .25% Parks, Open Space and Trails (POST) Sales and Use Tax– sunsets in 2032 Other Colorado Municipalities Dedicated Funding Source Fort Collins .85% Sales and Use tax (Keep Fort Collins Great initiative) benefits Police, Fire, P&R, community priorities, street maintenance, and other transport. Parks and Recreation accounted for 11% of expenditures in 2015. Trail and Open Space tax - .1% to acquire parkland. Up to 20% may be used for park capital improvements, renovations, and maintenance. Colorado Springs