CB STR tax collections results in utility refund

TABOR refund coming in early 2023

[  By Mark Reaman  ]

Crested Butte citizens who pay the town for water and sewer service will get a holiday gift at the beginning of 2023. Under Colorado’s Taxpayer Bill of Rights (TABOR) regulations, if a government entity collects more than is estimated to be collected the first year as stated in a ballot issue, a refund of the additional revenue is required. That is anticipated to be the case given the popularity of Crested Butte STRs (short-term rentals).

In 2021, Crested Butte voters authorized an additional 2.5% excise tax on vacation rentals beginning in January of 2022 that would be earmarked for affordable housing purposes. The ballot language stated no more than $300,000 would be collected in 2022. According to a memo to the town council from Crested Butte finance and administrative services director Kathy Ridgeway, the town is projecting the actual amount to be collected this year will exceed that figure by between $75,000 and $100,000. STRs are apparently booming in Crested Butte.

While Ridgeway said the town could stop collecting the additional tax this fall, that could be a mess given a variety of reservations systems and prepayments that have been made by renters. She said the town has various options to “refund” the money and cited how in a similar circumstance, the city of Denver once allowed access to their zoo for free for a day as a way to provide the required TABOR refund. 

Staff suggested two primary alternatives for the refund. It proposed either a one-time payment be made to those who pay property taxes in town, or the town could offer a reduction or credit on water and sewer bills in town. Ridgeway said both alternatives would be easy to calculate and administer.

Mayor Ian Billick indicated he liked the utility bill credit as it would go to both property owners and renters. “With all the talk of property tax increase implications with upcoming ballot issues, here is a way to give people some money back,” he said.

Councilmember Anna Fenerty suggested putting the over collections in an affordable housing fund but town attorney Karl Hanlon said that might not be possible under TABOR that called for a refund. She then suggested using the money for some sort of rent relief for essential workers like teachers and public safety personnel. Hanlon said given that it was a one-time fixed amount situation, that could be tricky as well.

“It is not an enormous amount of money, so I am in favor of doing something expedient,” said councilmember Gabi Prochaska. “I’m in support of the utility bill relief.”

So was the rest of the council. As a result, lucky utility users in Crested Butte can anticipate a credit on an early 2023 bill. It is expected that the credit will come in at about $100 but the exact figure remains to be determined.

Staff will return to council in early 2023 once an accurate number of the over-collection is determined. The over collection situation will not continue in future years as the ballot language only cites expected tax revenues in the first year.