Town facing lawsuit over excise tax ballot language

Tight timeline for council to make any adjustments

by Mark Reaman 

A Crested Butte citizen last week filed a lawsuit in Gunnison County District Court over the town council’s move to ask voters to approve an excise tax on homes owned by non-primary residents along with vacant lots in town.

The council scheduled a special meeting for Wednesday evening, August 26 to discuss the lawsuit with the town attorney and then decide how to proceed under the circumstances. Some of that discussion could take place in executive session. Based on meeting information materials released Tuesday, it appears the town attorney recommendation will be for the council to approve a resolution holding off on any implementation ordinance until after the November election. Thus, there would be no formal council document indicating any exemptions to the tax. Council has repeatedly discussed exempting some non-primary homes from the tax based on how long they have owned the property in Crested Butte.

The 24-page lawsuit was filed August 20 by resident Marcus Martin. His primary legal complaint is that the ballot title does not adequately describe to voters what they are voting on as required by state law. He said the council has also not provided a “good-faith revenue estimate” which is also required under Colorado’s Taxpayer’s Bill of Rights (TABOR).

He said that “state law gives only five days to challenge a ballot title after council approval, which is the reason for this expedited court filing.” The council approved the ballot language on August 17.

“The council has baked the exemption into the ballot through its inflated revenue target, without telling voters that is what the number reflects or that the exemption exists,” Martin wrote in an email statement. “In effect, the council is taking the decision of who should and should not be taxed out of voters’ hands… The town council also built its tax structure around a fixed intent to net $1 million in revenue. Rather than disclosing that to voters, the council inflated the ballot’s stated revenue figure to $1.25 million to silently absorb the 12–28% revenue loss expected from a “longevity” exemption the council plans to adopt for long-time second homeowners.”

The council had scheduled discussion starting at the September 8 council meeting over a so-called implementation ordinance detailing exemptions expected to be tied to how long a second homeowner has owned a Crested Butte property. They have said those exemptions could add up to $250,000, thus the council reasoning for having the ballot language allow for tax collections of up to $1.25 million the first year.

The complaint filed in court states that “Town Council is playing hide-the-ball with the Town’s voters: the ballot title set by the Council tells voters there will be a generally applicable tax on non-primary homes and vacant property. But the Council is not telling voters in the ballot issue and title is that there will be a categorical exclusion from the tax of a significant number of otherwise qualifying properties because of the longevity of their ownership, so much so that the anticipated (and targeted) tax revenue will be approximately 12 to 28 percent less than the amount stated in the ballot title… What the Town Council has done is unlawful. It violates TABOR’s requirements that a ballot title include a “good faith” estimate of the projected tax revenue and the requirement that a title accurately and fairly inform voters of the question they are being asked to decide… The Town violated TABOR by placing an intentionally inaccurate statement of the projected tax revenue in the ballot title.”

Martin’s suit claims the reason for some of the ballot language is that according to a poll paid for by the town, a majority of voters polled (69%), “said they didn’t support a longevity carve out.”

When asked to comment on the lawsuit, town officials said they have not determined any action at this point. “The Town of Crested Butte is aware of the lawsuit filed by Marcus Martin challenging the ballot title for the proposed non-primary home and vacant land excise tax,” town manager Dara MacDonald wrote in an email this week. “Because this matter is now before the court, the Town will address the specific legal claims through that process rather than attempt to litigate them in the press.”

A proposed resolution in the special meeting packet from town attorney Karl Hanlon states that “WHEREAS, Council has taken no legislative action regarding an implementation ordinance for the Ballot Question; and WHEREAS, in light of the pending litigation, and in due consideration of the cost associated with that litigation, Council finds that taking no legislative action regarding an implementation ordinance for the Ballot Question prior to the November 3, 2026, election is in the best interest of the Town… (Therefore,) Town Council for the Town of Crested Butte will take no legislative action regarding the adoption of an implementation ordinance until after the November 3, 2026, election, and then if and only if the electors of the Town of Crested Butte approve the Ballot Question.”

The council is expected to decide how to officially move forward with the issue at the August 26 special meeting. Given the timing that the meeting will be held after the News goes to press, we will post an online update on the situation based on council action taken at that special meeting. District Court judge Kellie Starritt has set a hearing on the matter for September 1 given that final ballot language must be approved by September 4.