Over-collected revenues from a sales tax for the Cortez Recreation Center cannot legally be used to fund parks in the city of Cortez. Officials explained that several times during Tuesday’s meeting of the city council.
At the meeting, the board voted unanimously to pass an ordinance allowing the refund of a portion of the recreation-center sales-tax revenue collected from 2022 through 2025.
Voters had passed a measure in 2018 to lower the existing rec-center sales tax rate from 0.55 to 0.35 percent, but the city did not pass an ordinance to implement the reduction. It has collected approximately $2.8 million in extra taxes. Staff found the error late last year.
The refund will be given by eliminating all city sales tax from Oct. 18 through Dec. 31 of this year.
City Manager Drew Sanders explained that that time was chosen so that the tax break would provide the maximum benefit for local residents, as few tourists will be here during that period.
Charles Borchini, who is running for the council in April’s election, asked during public comment why the extra revenues can’t be spent on the city’s softball complex, which needs work.
“I think this tax holiday is a ridiculous idea,” he said.
Morgan Head, the treasurer for the Montezuma Cortez Softball Association, raised the question of “de-Brucing,” a measure that allows voters to pass measures to opt out of TABOR restrictions.
“I’m all for sales-tax reductions, but I’m not convinced it’s going to affect our community as much as it’s maybe being presented,” she said.
The city sales tax is currently 3.85 percent, so when that is lifted, it means a shopper will save 38 cents on every $10 spent.
State sales tax, as well as taxes for the hospital district and fire protection district will continue to be collected during the tax holiday. On Jan. 1, 2027, the city taxes will resume again, with the rec-center tax at the correct rate.
Both Sanders and city attorney Patrick Coleman explained that re-purposing the over-collected funds is not allowed under the laws of TABOR.
The original ballot measure specified that the monies would go to the rec center, not for other purposes, Sanders said.
Even if city voters passed a measure to de-Bruce the sales tax for the rec center, Coleman said, “it would only apply to revenues that have yet to be collected. It’s not retroactive,” he said.
Council member Dennis Spruell agreed.
“That was the first question I asked when I found out,” Spruell said, adding that several other councilpersons also raised the idea of funneling the money to the parks.
“But the TABOR attorney goes, ‘no no no, you can’t do that.’ It’s not because we didn’t want to, it’s because we couldn’t.”
During public comment, Borchini also asked why the new council that is elected in April shouldn’t decide the issue, “not the people that were asleep at the wheel that caused this problem.”
Coleman said the city consulted a TABOR expert “and one of the problems with an over-collection is, if you don’t refund it fairly quickly, the public has the right to sue the city. If they win, then we have to pay their attorney’s fees.”
“We have to show the court that we’re acting in good faith and in an expedient manner,” Coleman said.
Therefore, city officials decided to move forward fast.
Council member Rob Dobry pointed out that the current members weren’t on the board when the over-collection began.
“This is a mistake that was made in 2018. We are the ones in the seats now trying to fix it as quickly as possible,” Dobry said.
Mayor Rachel Medina said discussions need to continue about adequately funding the park system.
“This tax is specifically for the rec center,” she said. “We are all well aware of how important our whole park system is and how underfunded. . . How do we fund our park system in its entirety moving forward? That’s going to be for the next council to discuss, but we really need the public to stay engaged.”
Five council seats are up for election in April. There are also four city ballot questions regarding amendments to the city charter.
The League of Women Voters will have a forum for the 10 council candidates on Wednesday, March 11, at 6:30 p.m., in council chambers in City Hall.
The city will have informational sessions on the ballot questions on Wednesday, March 19, and March 26, at 5:30 p.m., at the Cortez Public Library.
