Since there has been a bit of comments on my first post Warning...Colorado Springs Sales Tax Increase possible in 2008, and some new background information appeared in this weeks Falcon Herald, I thought a follow on post was warranted.

In my previous posting, I question the motivation behind so many government services being funded by sales tax instead of property tax, as is more often the case on the East Coast.  Presentatoin of some history is needed to understand how El Paso County and Colorado Springs got to where we are today because several factors beyond TABOR are at play.

There was a time (pre-1987) when property taxes provided 60% of the county's revenue, and sales tax was 40%.  So voters approved an increase in the sales tax and a reduction in the property tax.  Since then, the county and city's reliance on sales tax for their budget has grown pretty much on a yearly basis.

As budgets grew (as they always do!), the low property tax became a hinderance on the government.  Taxes on new homes built weren't enough to cover the increasing demand on services by the growing popluation.  So, here we are.  A budget mostly driven by sales taxes, a populace resistant to voting FOR increases in property taxes and not enough revenue coming in during a down economy.  TABOR and something called Gallagher place restrictions on how much taxes can be increased further complicating the equation.

So, a sales tax goes on the ballot.  I wish it lots of luck!

The article says that the county decided to go with the sales tax because in surveys it seemed to stand a better chance than a property tax increase of passing.  Deemed more 'fair' because its a consumption tax, seems it distributes the burden equally on all people.  However, I content that it actually puts more of the burden on the lower income brackets.

Its a question of proportions.  An extra hundred dollars a year or so for someone with a family earning minimum wages is a lot more of their take home pay than it is on a similarly sized family making $70,000.00.  Property tax however is more egalitarian.  People who make lower amounts of money either don't own a house, or buy lower priced homes which would see a proportionately lower increase.  People making more money then to have more expensive houses, and therefore would pay a higher precentage of taxes.

Further, I would think that if property taxes were at an appropriate level, then the increased demands on county services injected by the newly arrived community members would be covered by the taxes on the home. 

I cannot say how this would actually occur.  For something like 5 years, mil levy increases on D49 appeared on the ballot to build new schools.  It took a long time before they passed.  But they did finally pass.  And the money collected was specfically marked for new school construction and staffing. 

I ultimately agree that as responsible community members, there is a shared burden on funding our governemnt to provide sufficient services.  I disagree with making the bugets even MORE dependant on sales tax by raising them.  That just makes the problem worse.  There will be a finite cap on just how high sales taxes can go.  When they get much above 5% and closer to 10%, it matters.  It will effect where and how people shop. 

Alas, that is the boat we're in at the moment.  I'll have to ponder more deeply for a better solution because as yet, I don't have one.  But there's more information on WHY its a sales tax increase proposal and not a property tax increase.