The Cortez City Council on Tuesday will give its first reading of an ordinance temporarily reducing city sales tax to zero percent in an effort to refund residents $2.8 million in overcollected taxes. Groceries, restaurants and car sales are among the taxable goods to be affected by the “Sales Tax Holiday.”
Shoppers in Cortez have been paying inflated sales tax from 2021 to 2025 because the city failed to implement a voter-approved reduction. According to City Manager Drew Sanders, it’s unclear who all paid the inflated taxes, so the sales tax pause is the city’s best bet at refunding residents.
“There’s just no way to know who paid that and when,” Sanders told The Journal on Monday. “The locals is who it should benefit.”
The accidental overcollection stemmed from a 2001 vote by city residents to add 0.55% to the citywide sales tax to fund construction at the Recreation Center. In 2018, residents voted to reduce the sales tax addition to 0.35% once the bonds financing the construction of the center were paid off.
However, when the time came in December 2021 to reduce the tax, the City Council did not update the city code and the original increase remained the same. Four years later, after the council was alerted of the error, it passed a late ordinance to reduce the recreation sales tax to its correct percentage of 0.35% at the beginning of 2026.
According to Sanders, the money funded emergency repairs and necessary maintenance at the Recreation Center and is all accounted for.
This new ordinance offers a remedy to the nearly four years of overcollection, proposing that the city pause the collection of the general city sales tax as well as the additional recreation sales tax for 75 days Oct. 18 through Dec. 31. The council estimates that the local population would save $40,798 in sales taxes per day with the pause, meaning the overcollection would be matched by dollars saved from the lack of city sales tax within 70 days, according to Sanders.
“We’re erring on the side of more refund than less. We don’t want to come in just slightly short,” Sanders said.The timing of the tax reduction is intended to give residents a boost during the holidays and, with the tourism season over in the final part of the year, the reduction will target locals, he added.
“This is specifically timed and designed so it benefits our locals,” Sanders said.
On Jan. 1, 2027, the city sales and recreation taxes will return to their correct levels of 3.5% and 0.35%, respectively.
After the first reading on Feb. 10, City Council plans to give the final reading of the ordinance and open the floor to public comment on Feb. 26 at 7:30 p.m. in the City Council Chambers in City Hall. It does not need voter support to pass.
Sanders said he’s heard both frustration at and support for the effort; regardless, he said the City Council welcomed public input.
“We’ve taken a lot of questions on this,” Sanders said. “We are more than happy to talk about this.”
avanderveen@the-journal.com
