At some point this year, Castle Rock voters might be asked to
restructure the town’s revenue sources.
The Castle Rock Town Council began grappling with financial
issues and future forecasts at a study session Dec. 30.
“We pretty much live or die by our sales tax revenue,” said Mark
Stevens, Castle Rock town manager.
The town’s general fund has been structured around revenue from
sales and use taxes. When the town was facing double-digit growth
and a booming retail economy, the reliance on those taxes worked,
Stevens said. But now that the economy and growth have slowed, the
town “is at a crossroads, and choices are required,” he
said.
Castle Rock is different from other Front Range communities in
many ways, Stevens said.
Castle Rock has the lowest mill levy at 2.592; compared with
Parker, at a 2.602 mill levy, plus 13.978 mills for its fire
district. Brighton’s mill levy is 8.130, with another 8.40 mills
for its fire district.
Castle Rock’s fire protection district and parks and recreation
district are funded by the town.
Castle Rock missed the boat on telephone franchise fees or
setting a higher electric franchise fee. The town didn’t set the
electric fee higher when it could and it didn’t opt for a telephone
franchise before the window of opportunity closed several years
ago, Stevens said.
Castle Rock voters also have never approved a blanket exemption
from the Taxpayers Bill of Rights.
In 1992, voters approved a state amendment that restricts the
amount of tax revenue a government can collect and retain. The
formula for determining the limit is figured using inflation and
growth. All revenue in excess of that amount must be returned to
taxpayers, unless voters approve an exemption.
In the past few years, the town has refunded more than $7
million in excess TABOR revenue, Stevens said.
“The choices and decisions [facing Castle Rock] will not be
popular or easy,” Stevens said.
But Stevens cautioned the scenarios don’t project bankruptcy for
the town, but a need to scale back more.
“It’s a lot easier to project and be conservative and add later
than it is to take away,” said Jay Richards, District 1
councilman.
A second option would be to seek voter approval of a town
property tax increase with a mill levy cap, elimination of the 5.5
percent revenue growth cap on annual revenue growth and exemption
from TABOR. That would dedicate all increased revenues to targeted
community priorities of public safety, streets and transportation,
parks recreation, trails and open space.
“The current mill levy is 2.422, [and that] on a $200,000 home
is $44.32 a year,” Stevens said. “An additional 5 mills would raise
property taxes by about $92 a year on that same $200,000
house.”
A 5-mill increase would create about $1.7 million in additional
revenue, Stevens said.
“Cap new property taxes at 12.5 mills, and there would be more
significant increase with more significant results,” Stevens
said.
Property taxes on a $200,000 house at 12.5 mills would increase
to about $184, and net the town $3.4 million, if there also were
TABOR exemptions.
A 15 mill cap with the same conditions would generally add an
additional $4.2 million per year with the same growth potential and
increase taxes by about $230 a year on a $200,000 house, Stevens
said.
“The town projects in 2003 it will collect about $733,780 in
property taxes collected,” said Jay Beeton, town communications
manager. “It costs about $757,290 to operate the police and fire
departments for one month.”
The final option Stevens presented the council was to seek voter
approval to create a new special district or merge with an existing
special district to provide governmental services, such as fire and
recreation.
This would result in a new property tax mill levy for Castle
Rock property owners; a different method by which designated
services were provided; and a reduction in existing town service
responsibilities and costs.
The council will continue discussion on financial strategies at
its next study session and special session, 6 p.m., Monday in the
council chambers at town hall, 100 N. Wilcox St., Castle Rock.