Lame-duck Denver Auditor Dennis Gallagher is finally retiring after 44 years in public office, but he’s not waddling off quietly into the sunset.
The term-limited Gallagher will be succeeded by former state auditor Tim O’Brien July 20, but as the days dwindle down he’s looking out for a taxpayer who rarely inspires sympathy: the tourist and conventioneer from out of state. That hapless soul is usually considered a goose to pluck.
Historically, most cities keep taxes on hotel rooms and rental cars as high as possible, deterred only by the fear that convention planners might take their business to less greedy locales. (Locals also rent hotel rooms and cars in Denver, but apparently they’re not enough of them to matter.)
Gallagher, in a recent blog, said he was generally in favor of Denver’s recent proposal to extend an existing tax on hotel rooms and car rentals in order to finance improvements to the stock show. After all, as he modestly put it in his blog, the proposal “mirrors one I developed for the Stock Show in 2011.”
However, he does have one concern: “There is nothing that requires the tax to sunset when any bonds are paid off,” he wrote. “It is the indefinite extension that gives me pause. When the tax has done its job, it should end.”
Such an old-fashioned approach. Many public projects were financed that way. But now local government’s goal is to find a new project for the expiring tax to fund — or better yet, make it permanent.
Not even outgoing Denver City Council’s token conservative, Republican Jeanne Faatz, could bring herself to worry about the permanent extension of the lodging and rental-car levy.
“It’s a tax paid largely by people from out of state,” said Faatz. “I am vey protective of my own constituents.”
The city’s current car rental tax is 7.25 percent and the lodging tax is 10.75 percent. Add on the state’s 2.9 percent, the Regional Transportation District’s 1 percent and the culture district’s 0.1 percent and you get a total tax of 11.25 percent on car rentals and 14.75 percent on lodging. Only the rate on marijuana is higher: 21.12 percent.
The local lodging and car rental taxes include a 1.75 percent levy that Denver voters approved in 1999 to finance bonds expanding the Colorado Convention Center. They are scheduled to expire in 2023. What voters will be asked to approve this fall are a permanent extension of them for improvements mostly to the stock show but also to the convention center. The rest of the tax is already permanent.
The 1.75 percent levies are supposed to fund bonds that would finance $476 million worth of improvements. Another $200 million is supposed to come from asset sales, stock show revenues and wastewater funds. And according to Deputy Mayor Cary Kennedy, the city is hoping for an additional $117 million from the administrators of the Regional Tourism Act. She conceded the stock show expansion would have to be downsized if the city doesn’t get that money.
Denver City Council’s Finance and Services Committee unanimously approved the tax extension last week. The full council is expected to put the tax issues on the November ballot before the new members take their place July 20.
The committee was told that no estimate of the additional revenue raised has to be mentioned in the ballot proposal since it’s a continuation of an existing tax. That issue has been argued before the Colorado Supreme Court which, as usual, ruled against the apparent mandates of the Taxpayer’s Bill of Rights.
Voter approval of the tax extensions is also necessary in order to make state aid to the stock show possible. Last session’s House Bill 1344 authorizes the state to issue $250 million worth of “certificates of participation” to finance structures that will be used by Colorado State University, which seeks to operate a horse hospital, new livestock buildings and an outdoor venue that can be used all year.
COPs are a dodge that enable governments to issue debt without going through a popular vote. They are not general obligation bonds guaranteed through tax levies but government agencies won’t let them fail because it would hurt their credit ratings.
A few years back the stock show threatened to go to Aurora but it seems to have piled up enough government aid to stay in Denver. It plans to expand from 95 acres to 270, Supporters hope to increase attendance and expand the number of events to 100 a year.
National Western Stock Show is becoming more and more a city and state enterprise, rather than a private nonprofit. The city would own the additional land it buys and the show would be operated by a board appointed by the mayor.
Gallagher objects to that system, claiming the show should be managed by the city itself.
In all likelihood Denver voters will continue the two taxes in perpetuity because they think it’s being paid mostly by outsiders. Sunsetting is only necessary as a selling point when the tax is to be paid by Denverites themselves.
It’s the government equivalent of the motto said to be favored by 19th Century Colorado con man Soapy Smith: “We cheat the other guy and pass the savings on to you.”
Longtime Rocky Mountain News political columnist Peter Blake now writes twice a month for CompleteColorado.com. Contact him at firstname.lastname@example.org You may re-publish his work at no charge and without further permission; please give full credit to Peter Blake and www.CompleteColorado.com.