The city of Cortez and Montezuma County have uncharacteristically low lodgers tax rates for the Western Slope – but that could change if recent discussions between public officials are any indication.
Cortez City Council and the Montezuma County Board of Commissioners separately considered drafting questions for the November ballot proposing increases to the lodgers tax in their separate jurisdictions.
A lodgers tax is the fee charged by the city or county to visitors booking short term rentals or hotel rooms. Cortez’s current lodgers tax rate of 2% applies to accommodations within city limits. Montezuma County’s is 1.9% and applies to bookings in the unincorporated areas of the county, which excludes the municipalities of Cortez, Dolores and Mancos.
During a workshop June 9, City Council favored proposing an increased lodgers tax rate of 6% to voters in the November election. County commissioners backed a similar proposal during their meeting earlier the same day, asking the county attorney to begin work on a ballot measure increasing the lodgers tax to 5%.
City Manager Drew Sanders demonstrated just how low Cortez’s lodgers tax is compared to other Colorado towns. He pointed to Durango’s 5.25% lodgers tax rate and Rico’s 7% rate.
Archuleta and La Plata counties are considering a hike to 6%, while the Dolores and San Juan Counties are holding at 2%.
Mesa Verde Country CEO Brian Bartlett, who provides tourism and marketing management to the city and county, said in a June 8 presentation to commissioners a 5% increase to the county’s lodgers tax would generate a projected boost of $391,000 in lodgers tax revenues.
The funds could benefit tourism in the area without raising property taxes on residents, he said.
“The long-term tourism and economic development planning would be greatly enhanced,” Bartlett said. “And it would give us an ability, finally, to create some reserve funding for tourism resiliency in case of fire events, drought impacts or catastrophic situations.”
Cortez typically allocates lodgers tax revenues to Mesa Verde Country and the city’s beautification grant that provides businesses with funding to improve their facades. Mesa Verde Country received $125,000 of the $251,000 collected in lodgers taxes last year for tourism marketing this year. This year, the city also plans to spend around $25,000 from lodgers tax revenues toward tourism data collection.
“We are self-funded for everything from schools to roads to water – you name it,” Sanders said. “We do have a sales tax and that helps, but things like a lodgers tax could also help a little bit more. And the best tax is one that somebody else pays, not our community members.”
Council discussed other uses for higher lodgers tax revenue, including upgrades to the recreation center. Council member Claire West advocated for the funds to be distributed to infrastructure and city maintenance.
“The infrastructure is a basic component of the tourism,” West said. “If we have the most beautiful advertisements but our roads are full of potholes, it's not going to encourage revisiting.”
In an interview with The Journal Tuesday, Sanders said council needs to narrow down their priorities for the allocation of revenue generated from a higher lodgers tax. He will return to City Council July 14 with specific suggestions for any future revenue uses, in the hopes that a potential ballot question would clarify the council’s intentions for the funds to voters.
“We want to be as specific and explanatory as possible in that ballot question so the voters know exactly what they're getting into,” Sanders said.
Both the county and the city advocated for language clarifying to voters that the lodgers tax increase would not affect utilities, rent or other residential expenditures.
“If they don't understand, it will likely fail,” Commissioner Jim Candelaria said, referring to county voters. “It's not the people in this county that are actually paying it unless you have a relative that you want to send to a motel room. Then they might be paying that extra $4.”
While city and county staff work toward concrete proposals, deadlines are approaching for the November election. Ballot content needs to be finalized by Sept. 4.
Sanders said putting two tax initiatives on the ballot could present potential risks if voters misunderstand who the tax hikes impact. Cortez Mayor Dennis Spruell proposed calling the potential ballot question “The Tax You Don’t Pay.”
“A cat is a cat, a dog is a dog and tax is a dirty word,” Spruell said.
avanderveen@the-journal.com
