Littleton looks to raise its sales tax to fund infrastructure projects

downtown littleton
Posted at 6:22 PM, Aug 27, 2021
and last updated 2021-08-27 23:53:22-04

The city of Littleton is projecting that its capital projects fund will run out of money in the next four years.

The area is facing an increasing need for its aging vehicle fleet, roads, and building infrastructure, and says its current revenue sources just aren’t keeping up with the need.

“Over the past few years it’s just kind of reached a critical state where the two revenue sources have just been insufficient,” said City Manager Mark Relph.

Littleton relies on the building use and gas taxes to pay for its infrastructure needs, but Relph says the city has accrued $90 million in deferred capital projects over time and is facing a $6.5 million yearly revenue shortage.

Already, the city cut about $2 million from its spending, which included layoffs and a loss of some services.

“We’re to a point where we can’t cut any more,” Relph said.

They have also reduced spending on their fleet, such as police cruisers and public works vehicles, spending $200,000 this year instead of the normal $1.4 million.

Because of the need, the city council is getting ready to ask voters in the fall to increase its sales tax to help fund improvements to buildings and other infrastructure projects.

It’s just one of numerous ideas that were considered this year as a way to bring in revenue. Proposals to raise the lodging tax and marijuana tax were considered but ultimately tabled since they aren’t projected to bring in enough money.

Another idea considered but the city was closing the Littleton Museum and the Bemis Library. However, the closure of the two would only result in $4.2 million in annual savings, meaning even more cuts would be necessary. Relph says the city doesn’t want to make such Draconian decisions.

Currently, the city’s sales tax sits at 3% (with county and state taxes included, the total comes out to a 7.25% sales tax). The ballot initiative would increase the city sales tax to 3.75% and would raise a projected $9 million annually.

That money would be used on capital improvement funds.

“It is just irresponsible if we don’t take action,” Relph said. “It’s an ongoing issue that we have just got to look to the future and decide — are we going to invest in our community or not?”

Mayor Jerry Valdes says asking voters to raise taxes any time is tough, but he’s hoping Littleton will be able to educate enough voters about the city’s needs before November.

“Hopefully the citizens will understand the financial need of our city. We haven’t had to do a tax increase in about 50 years,” Valdes said.

However, some are worried that the sales tax increase could hurt businesses that are already struggling to recover from the pandemic.

“Last year was a huge struggle, as everybody knows. I didn’t get a paycheck for the entire time,” said Greg Reinke, the owner of the Reinke Brothers Halloween store in downtown Littleton.

In an average year, his haunted house will bring in close to $750,000; this past year, it garnered less than $20,000.

As the pandemic closed businesses, Reinke had to lay off all of his employees but one. Shipping costs for items to stock his store have also increased tenfold in the past year, he says.

Even with the struggles, Reinke is one of the lucky ones. Numerous other businesses in the area closed their doors permanently during the pandemic.

Reinke says he’s not opposed to raising the sales tax and he wants to support the community and its infrastructure.

“What they showed us is that at the 0.5% they can meet their needs,” he said. “I told him I would vote yes on 0.5. I said, 'I understand now why you need that.'”

However, he believes with the current ballot proposal the city is asking, of .75%, is more than it really needs and it could drive customers away.

“Ask for what you need and don’t ask me for what you want,” he said. “Amazon is kicking our butts all over and if (customers) can get it cheaper and still pay the same tax, then we’re going to lose out. And when you lose your retailers, imagine all these buildings down here sitting empty.”

Valdes disagrees. The way he sees it, it’s the customers, not the businesses who will be paying the tax. He says the additional .25% will help future-proof the city.

“It prevents a council, maybe in the future, from having to go back to the taxpayers again and say, 'Maybe now we need to do a .25% or maybe a .5% increase,'” he said.

Untimely, though, voters will have the final say on whether the sales tax is approved.