Ordinance 2008-1539 - Laserfiche WebLink

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Attachment A: The Revenue Stability Problerri The workgroup identified several problems wii:h the existing system contributing to revenue instability and poor land use decisions, following are a just a few of these issues. Colorado's Fiscal Structure Colorado state fiscal policies play a major role in local governments' ability to make decisions and meet the needs of their community. Colorado's tax structure allows for little flexibility on the part of local governments to respond to changes within their community. Local governments in Colorado face restrictions on revenue generation and expenditures and cannot raise taxes without taxpayer. In short, Colorado's public finance structure incentivize:s municipalities to focus on economic and business growth to support or expand services. Revenue Instability Communities with smaller budgets are sometimes unable to respond well to fluctuations in revenue receipts. Minor fluctuations in sales tax revenues can have a profound impact on smaller budgets, affecting the ability to provide services and further necessitating development for the sake of generating sales tax revenue. However, the retail sector has many weaknesses as a reliable source of revenue over time: competition, inflation, economic conditions, the aging of the population or other population demographics, and variability in the business cycle, so dependence on this sector does not promote a sustainable source of revenue. Meanwhile, the costs of services are rising more quickly than are the revenues that support them, due to rising fuel costs and inflation of materials, supplies, services, and labor costs. Competition and Incentives Competition for economic development is a natural and productive reality among neighboring communities. However, when regional retail is introduced at the local level, competition often results in cities and towns unnecessarily spending limited revenue to attract business development to their community at the expense of community land use and transportation goals. While developers pit local governments against one another, the amountt of resources necessary to secure the development increases. In the end, there may be a temporary gain for one city in terms of revenue, but that gain will be offset by lost revenue to incentives. Regional retail is not always consistent with desirable land use development patterns or comprehensive community planning. Most of the participants in the study stated that their communities did not need more regional retail service. In some parts of Eloulder County, basic services such as grocery stores, dry cleaners, and convenience stores are needed 1:o meet the demands of the community. However, for most, the needs of their communities can be rnet by existing nearby retail outlets. Participants indicated that they allowed for new regional retail, and even attracted it, because they need increased revenue, not because there is a shortage of retail outlets. The working group was not able to quantify the amount of money directed to incentives for regional retail, but most participants indicated that incentives played a role in their efforts to draw regional retail to their community.