This April, Paonia voters will decide on the fate of a ballot measure to increase the local sales taxes.
Referred Measure 2G calls for increasing town taxes from the current two percent to three percent, which would bring in "up to $150,000 annually" in the first fiscal year. The town estimates the increase will raise an additional $130,000 in its first year. The in-town rate on taxable goods is 6.9 percent, which includes a two-percent town tax, two-percent Delta County tax, and a 2.9-percent state sales tax.
The proposal was first suggested as a way to fund street repairs. Since the cost of paving streets would far exceed any revenues raised by a tax increase, trustees voted to seek grants and other funding for street repairs and direct the additional revenue, should the measure pass, to the general fund, allowing for future boards to determine where funds are most needed.
That revenue can still benefit the streets, said trustee David Bradford, who argued for allocating increased revenues to streets. "Getting the sales tax increase will allow, if we have the discipline and fortitude, to make sure some of that goes to street repair and we can start moving ahead."
Mayor Charles Stewart said the additional revenue is needed after declines in coal mining activities resulted in losses in recent years in mineral leasing and severance tax revenues. In 2011, combined general fund mineral leasing and severance tax revenues totaled $90,974; in 2017, they totaled $16,920.
To make up for those losses, the board has considered other funding mechanism, including increasing the property tax mill levy, which currently generates about $103,000 annually. Additional revenue, noted Stewart, would not be realized for at least a year and would put an unfair burden on property owners.
The current board believes the sales tax "is the fairest way to deal with the issue," said Stewart.
In looking at cost-cutting measures, "The town has done about all it can to reduce costs," said Stewart. "The last two boards have been fiscally conservative and eliminated all unnecessary spending before seeking a tax increase."
Since 2014, general fund expenditures have steadily declined through the elimination of excessive staffing and salaries, double pensions, and overtime benefits for exempt employees. In 2014 the town had 20 employees -- 16 full-time and four part-time; in 2018 the town budgeted for 15 employees -- 11 full-time and four part-time. Staff, said Stewart, "is at a bare-bones level."