Cortez City Council officially approved the lodgers tax increase question for the November ballot Tuesday evening. This winter, Cortez voters will decide whether the city should increase its long stagnant 2% tax on hotel, motel and short-term rental bookings to 6%.
The current lodgers tax, which has remained unchanged since 1981, is uncharacteristically low for the region. Durango levies a 5.25% tax on visitor bookings, Rico charges 7% and Denver’s is 10.75%.
City officials estimate that the 6% lodgers tax, if approved by voters, could bring in $750,000 a year in revenue for the city, compared to the current average of $250,000 annually. According to the now-approved ballot language, the city could divert these increased funds toward tourism marketing, economic and infrastructure development and arts and culture.
“We’re trying to be specific enough to limit the use of this money but broad enough to give our elected officials leave to use it appropriately for the time,” City Manager Drew Sanders said in an address to council members.
However, the purpose of the new funding is a point of contention for the City Council. Councilor April Randle opposed the ballot language approved by the remainder of her colleagues minus Councilor Kathleen Swope. Randle argued instead the city should commit 50% of any lodgers tax revenue to water infrastructure in the ballot language.
According to the city’s preliminary master plan for municipal water repairs and replacement, tens of millions of dollars will be needed over the next 20 years to fix aging pipes and build out infrastructure capacity.
“We’re going to have to take out low interest loans, we’re going to have to ask for grants and the list will go on and on. But in order to do that we have to have seed money,” Randle said. “And this is a demonstration of a good faith earnest effort on the citizens' part and on the council's part to say we're going to dedicate a portion toward water because we recognize it's important to us.”
Other councilors expressed their disagreement, arguing that the lodgers tax revenue would be too low to significantly contribute to water funds, instead suggesting the tax should fund smaller, more visible projects.
“This is potentially $750,000. Compared to what we need with our water treatment plant, it is minimal,” Councilor Bill Lewis said. “I really think we need to take this money that's being generated by people staying here and reinvest it back into Cortez by [ …] maintaining the green space that we have or maintaining the buildings that tourists use.”
According to Sanders, under the approved language, the funds could still be directed to water infrastructure. He said the money could also go to sidewalks, or the beautification of downtown or the cultural center as well as numerous other projects. However, he added, the specifics would need to be decided annually.
Ultimately, councilors agreed they should establish an advisory committee to seek community input and determine the exact beneficiary of the funds each year if the increased lodgers tax is approved.
“We really need to get some public input and council input when we get toward budget time on that,” Sanders said “Those needs are going to change over time.”
Still the funding is not guaranteed and must be approved by voters. The city will hold public information sessions on the ballot question as the election approaches with dates yet to be announced.
avanderveen@the-journal.com
