Durango City councilors informally agreed Tuesday to ask voters to approve a property and a sales tax increase in November.
The increases could raise about $7.5 million in 2019 for general city services such as street maintenance and police. The additional city revenue would cover projected budget shortfalls and long-term construction needs, including a new police station and $15 million in other facilities costs.
The councilors agreed to ask for a 5.4 mill property tax increase and a 0.55 percent increase on sales taxes. The sales tax increase would raise the total sales tax rate in Durango from 7.9 percent to 8.45 percent.
If the 5.4 mill increase were approved, homeowners would pay $140 more per year on a home with an assessed value of $400,000, Assistant City Manager Amber Blake said.
The tax question was shaped by months of public meetings focused on the city budget and a statistically valid survey.
“We are listening to the outcomes of the process, and now, we let the people decide,” Councilor Melissa Youssef said.
The survey found that 58 percent of respondents supported a sales tax increase and 33 percent supported a property tax increase to fund long-term city needs.
The proposed ballot question specifically lists public safety, code enforcement and the operation and maintenance of a police station for support. The increases would also fund construction and maintenance of streets, alleys, curbs, gutters and sidewalks.
Tax increases could sunset in 2043, according to the draft question.
The board is expected to vote to place the question on the ballot Tuesday, Blake said.
Mayor Sweetie Marbury, who has been skeptical of a sales tax increase, supported the 0.55 percent increase in part because Farmington is also increasing its sales taxes to 8.375 percent.
She was previously concerned that a sales tax increase in Durango might drive more residents across the border to shop in New Mexico.
Councilor Dick White supported the property tax portion of the tax increase because it would provide stable revenue to finance a new police station and cover the city’s contract with the Durango Fire Protection District.
“These are long-term commitments to public safety for the whole community,” he said.
Before a new police station could be built, voters would be asked to approve issuance of debt in a separate election, Blake said.
Initially, the council discussed tax increases that would raise about $8 million. But councilors decided to ask voters to consider tax increases that would raise about $7.5 million in 2019.
The city expects to make up the $500,000 by increasing fees and decreasing the amount of general sales tax collections devoted to the Parks and Recreation Department, Blake said.
The Durango Community Recreation Center will be paid off in December, and that will free money to cover other expenses within the department, City Manager Ron LeBlanc said.
The city could raise about $200,000 by raising fees on some services, such as spring and fall cleanup, an increase in fees at Greenmount Cemetery and a 20 percent increase on new and renewing business license fees, among others.
While the amount raised through fees is relatively small compared with total needs, Marbury and other councilors supported increasing fees based on residents’ feedback.
A city survey found 50 percent of respondents supported increasing fees and cutting services to address the problem of rising expenses.
Fee increases would be approved when the council votes on the 2019 budget, Blake said.
The tax increases would not be used to fund water, sewer, trash and recycling services. Those services are paid for through utility bills and managed separately.