Basalt’s ongoing property tax brouhaha has seemingly quieted down since the town government announced in early February that it had been inadvertently violating the terms of Colorado’s Taxpayer Bill of Rights (TABOR) amendment for almost a decade.
According to a link on the Basalt town government’s website, it all came down thusly:
- The town’s new finance director identified a potential issue with the way the general operating mill levy rate had been set while preparing the 2019 budget [in November of 2018].
- The town attorney and finance director jointly reviewed the issue with the town manager and informed the town council of their initial research.
- Town council requested further review of this issue and transparent communication to the community. Additional analysis was then completed by TABOR experts — Dee Wisor from Butler Snow, and Kevin Collins and Dawn Jones from CliftonLarsonAllen.
The problem with fitting the Basalt town budget to the stringent terms of TABOR has been going on since 1994, when voters adopted a property tax mill levy rate of 6.151.
Every year after that, until 2010 (when the mill levy dipped to 2.56, its lowest point), the town’s mill levy was below the 6.151 rate because property values had been going up, resulting, according to the town website, in “$4 million in taxpayer savings.”
But, in 2010, that trend was reversed when, as a result of the downward spiral of real estate values, the town began inching its way back up toward the 6.151 mill levy rate that was established in 1994.
Big no-no according to the terms of TABOR.
According to Wikipedia, in 1992, “the voters of the state approved a measure which amended Article X of the Colorado Constitution that restricts revenues for all levels of government (state, local, and schools). Under TABOR, state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth.”
According to the terms of TABOR, any governmental entity that violates the terms of the Constitutional Amendment is liable for only the previous four years of transgressions. A statute of limitations, as it were.
Basalt estimates that it has illegally overcharged its property owners about $2 million in the last four years.
According to Town Manager Ryan Mahoney, “Staff discovered the issue in late November and we were required to set the mill levy by Dec. 14. We researched it at the staff level and then informed council of our initial findings at the Dec. 11 meeting. This was the first possible meeting to have a discussion with them as it took several days for staff to do the research. This was also the meeting that the budget was up for adoption and the last date prior to the required Dec. 14 date to set the mill levy. We spoke with council in executive session to let them know that there may be a TABOR issue. We still did not have all of the facts at that time and we let them know that we still needed a bit more time to fully understand the issue.”
The town held two public information sessions in February.
Now, according to the Basalt town government website, the town is entering into a multi-month period during which it will “continue legal and financial review, community outreach.”
The options at this point, according to the website, are:
- The town can propose a ballot question to the voters in November asking to set the mill levy rate and keep prior revenues collected.
- The town can reduce the services it is able to provide and lower the mill levy to the 2010 rate of 2.56.
- The town may keep the current mill levy rate based on the 1994 voter approval.
If the town opts to pursue the “forgiveness” ballot issue in November, it would have to adopt the ballot language by Sept. 6. According to the website, the town council “may meet to discuss the potential for ballot question” in July and August.
So far, with the exception of a few short-lived reactionary rants on the Basalt Community Facebook page, the Basalt town government has pretty much controlled the TABOR-related narrative.
And that is beginning to grate on the nerves of at least one resident who has begun the process of trying to get input from several third parties with significant TABOR expertise and enthusiasm.
Those efforts have presented the possibility that there could very well be a citizens’ initiative that would compete with whatever the Basalt town government may decide to put on the November ballot — if they opt to go that route.
Carol Hawke is a politically active citizen who has served on several boards and who ran unsuccessfully for Basalt Town Council in last spring’s election.
She is very concerned that the TABOR controversy will end up getting “swept under the rug” by the town government.
“I have talked to several people who have expressed interest in getting outside information,” Hawk says. “I contacted the Colorado Municipal League, and they put me in contact with the Independence Institute and the TABOR Foundation. They were very helpful and offered several alternatives for citizens to deal with this situation.”
Hawk said contacting those groups was a real eye-opener.
“I was shocked that no one enforces TABOR compliance on the local level,” she says. “Why have it if no one is paying attention?”
According to an email, the alternatives presented to Hawk by the Independence Institute via email were:
- File a lawsuit against the town (which the Independence Institute did not recommend).
- Run an issues committee opposing the town’s solution.
- Oust/run against town council members using the violation as having been on their watch
- Do nothing.
- And, most intriguingly, start the process of a citizen-initiated ballot question to appear on the same ballot as town’s “forgiveness vote.”
Hawk’s plan at this juncture is to convene a citizens’ group to gain input. She also wants to bring members of the Independence Institute and/or the TABOR Foundation to Basalt for a public presentation at the Basalt Regional Library sometime during the week of March 11, though a firm date has yet to be set.
Hawk says both groups have resources to assist in the citizens’ ballot initiative process.
Thing is, Hawk says she is right now flying blind.
“If we go that route, we would need to start getting organized in June, because we would have to establish wording and get enough signatures to get the issue on the ballot,” she says. “That is a problem because we won’t know until September what the town’s wording would be for their ballot question if they opt to go that route.”
It is unclear at this point whether the town would have to go through a protracted “first reading, second reading, public hearing process” to establish its ballot language.
When asked about the process of establishing ballot language, Mahoney would only say, “The town will follow the appropriate legal procedure for adoption of ballot language if the council decides to move forward with a ballot question.”
There are several aspects of this controversy that have stuck in Hawk’s craw, not the least of which being that she feels the town owes her about $1,000.
“That’s a big amount of money for me and my family,” she says. “If that’s how much they owe us, what about City Market and Whole Foods and other commercial properties? I’m not trying to bankrupt my town. But I am bothered by the town’s lack of transparency.”
She sent an email to Mahoney on Feb. 13, which read: “Just wondering why the TABOR issue was not mentioned last night at town council or in your weekly report!? I would have thought the public meeting on Feb. 6 was important enough to mention. Will town council be addressing it at all? When can we expect an update?”
Mahoney responded later that day, saying, “We just had a public meeting on the issue and the public has been informed and kept up to date. We have no new information at this time.”
Hawk is also miffed that the town government has hired a three-person team to help it navigate its way through the TABOR controversy — at taxpayers’ expense.
“At first, I thought, ‘hey, great, they’re bringing in people who know what to do,’” Hawk says. “Then I learned these are people who are not working for the citizens. They are trying to help the town get out of this mess. They are not on the side of the taxpayers of Basalt.”
“The decision was made to seek outside opinions as TABOR is a complicated subject and we felt that this issue warranted a second opinion,” Mahoney said via email. “Dee Wisor has concentrated much of his legal career to municipal finance issues and is well qualified to provide an opinion on this issue. The expenses will be included in the town’s legal budget.”
According to Mahoney, the town has thus far paid “$8,294 for Dee Wisor’s attorney services and external CPA accountants.
“TABOR is a complex law and we wanted to assure the information was accurate on the front of this issue,” he said. “Staff will continue to minimize the cost of outside attorney and accountant services.”
Penn Pfiffner, chairman of the TABOR Committee, has been borderline effusive in his communications to Hawk.
Via email, he wrote, “Carol: It’s always encouraging to speak with local leaders who support the Taxpayer's Bill of Rights, and who are willing to work to change things for the better. I look forward to what you and your political allies may accomplish in Basalt.
“You and I talked today about how the next steps would be for you to create a structure and set out objectives to resolve this problem. Who among your town council is willing to listen to you and collaborate on a fix? You identified (almost?) a dozen citizens of the town who showed up and expressed support for your position. Can you corral them and recruit them to be vocal supporters for a solution?
“How much realistically can the town return to the taxpayer? I explained that the Taxpayer's Bill of Rights provides for only four years of illegally collected taxes to be returned, but you can always negotiate for more. Mike Krause’s [of the Independence Institute] suggestion to run a citizen’s initiative is worthy of consideration. Krause is right that there are better ways to react than just to file a lawsuit — expensive and it takes years to resolve. It would be best if you and your group (‘Basalt Taxpayers?’) can negotiate a good result with the elected officials. No voter approval is needed to return the illegally imposed taxes, nor is voter approval necessary to lower the mill levy (only to raise it). If negotiations fail, then your group would be poised to oppose any tax request referred by the town council.
“The TABOR Committee will likely respond enthusiastically to help you by soliciting interviews with the local media (newspaper and radio) to set out what we know about the constitutional requirements. We also would want to turn our position statement into a guest column (op-ed) in the local newspaper. A bit less likely, but worth investigating as possibilities, would be meeting with a group that you create or testifying before the town council.”
Pfiffner said in a phone interview that his organization was founded in 2009 because he felt there were governmental efforts, mostly on the state level, to weaken or even rescind TABOR.
He said that his group rarely gets involved in local issues.
But one gets the impression that, given half a chance, Pfiffner would walk barefoot all the way from the Front Range to Basalt if it meant he could engage in some TABOR-based fisticuffs.
He was on the original TABOR Committee, which worked form the late 1980s until the Taxpayer Bill of Rights was added to the Colorado Constitution in 1992. He served in the Colorado State Legislature at least partially because of his TABOR expertise. This dude verily genuflects toward the Colorado Springs home of convicted felon (literally) Douglas Bruce, considered by most to be the father of TABOR.
Pfiffner said he knows of only one similar circumstance that is close to what is now going on in Basalt.
According to Pfiffner, the town government of Grand Lake in fall 2017 imposed a municipal fee aimed at improving street lighting, street cleaning and police services. They did so, Pfiffner contends, without seeking voter approval. The citizens of that small town near Rocky Mountain National Park consequently voted in a new town council, which overturned the fee. But, as far as Pfiffner knows, the money already collected has yet to be returned to the citizens.
Pfiffner is quick to point out, though, that, as Hawk indicated, there are no statewide TABOR police traveling around inspecting the books of every municipal government. If towns do not self-report their transgressions, or if TABOR-savvy citizens do not come forth, there is little chance of getting busted.
There is potential irony at play here, according to Hawk.
If a citizens’ group does form and gets ballot wording ready for a November election, it may ultimately be more forgiving than what the Basalt town government would put on a ballot.
“If they ask for forgiveness on the part of the citizens and it gets voted down, then the town will have to refund about $2 million plus 10-percent interest,” she says. “I would envision ballot wording on the part of the citizens that would give the town, say, three years to pay that money back. I could live with that.”
Hawk is also miffed that the town is already playing the “reduced services” card, saying that, if forced to return that $2 million in illegally collected property tax money, then essentially town services would suffer.
The Basalt website says, “It has not yet been determined which services would be reduced.”
The website then goes on to list services that might be impacted should Basalt be forced to return that $2 million to its citizens. That list includes about everything a town government does, from police to snow plowing to daycare.
Hawk is of the ardent opinion that invoking the specter of reducing town services if the TABOR-related money has to be returned to the citizenry is not only a low blow, but a perplexing argument.
“It’s bullshit,” she says. “Sales tax revenue has skyrocketed during the same time frame as the TABOR overcharge. But the town has taken on more debt.”
Hawk says she will spread the word throughout the town when and if she brings the Independence Institute and the TABOR Foundation people to Basalt.
To view the part of the Basalt town government website that deals with the TABOR issue, go to https://www.basalt.net/575/TABOR-Law-Compliance-and-Basalt-Mill-Lev
To learn more about the TABOR Committee, go to https://www.thetaborcommittee.com/