Cortez City Manager Drew Sanders told City Council on Tuesday that staff will provide a full timeline and accounting at the Dec. 9 meeting to explain a sales tax overcollection mistake revealed weeks ago.
Sanders said in mid-October that the collection rate of 0.55% – meant to be reduced to 0.35% in 2018 – had gone unnoticed for years. All money has been used for its original purpose of sustaining the recreation center, Sanders said.
“We have been collecting at the 0.55% rate all along, unbeknownst to any of the current staff or the current council,” Sanders said during the Oct. 14 meeting. “But because we found this, we are obligated to bring it forward and present it to council and the community.”
For every $10 spent at a Cortez business, 5.5 cents have gone to the Cortez Recreation Center, even after voters opted “yes” in 2018 for that amount to be 3.5 cents.
City Council voted unanimously on Nov. 12 to restore the sales tax collection rate to its original 0.35%.
“As soon as it was brought to our council’s attention, the direction was fix it now,” said council member Robert Dobry during the Nov. 12 meeting. “Don’t wait through the end of the year. Don’t wait through anything. And our goal is to fix it as soon as possible and then we’ll figure the rest out from there.”
“We are not fully ready to provide a full review, as it were, about what occurred,” Sanders said.
Sanders said City Council needed to pass an ordinance fixing the mistake before investigating what happened and how much was overcollected.
“The first prong, as it were, we had to get the future tax collection corrected. And so that involved getting that ordinance passed.”
After the ordinance, it takes at least 45 days for the finance department to work with the state and businesses to implement the new rate, Sanders said. He said sales taxes can be changed only on Jan. 1 and July 1.
“Now that that is in progress, it’s time for us to pay attention to the back end, which we’ve done. We think we’ve got the body of information that we need. Now we just need to compile that into an understandable mass that we can deliver to you, and by extension, the community.”
Sanders said city staff are “relatively certain at this point that we really only have a couple of options.”
Those options will be addressed at the Dec. 9 regular City Council meeting, he said.
“Depending on what council chooses to do with it, we may have to take future action in January.”
