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Communities Raise Sales Taxes to Fund Schools

By Brian Greer on Tue, Oct 24, 2017 @ 03:52 PM

Voters in small communities are deciding whether to increase local sales tax rates to fund local schools.  Many times, schools are funded through property taxes but property taxes are not always enough to meet school budgets.  In these communities, a special local option sales tax can help close the gap.  The key is getting local residents to agree to the sales tax increase.

One example of this tax increase happened a year ago in the small community of Woodland Park, CO.  The school district had been low on proper funding for many years and officials were not sure what to do about it.  The town residents were previously against a tax hike of any kind.  Attempts to raise property taxes failed numerous times.

The school board reached out to other small communities in Colorado to find out how they handled similar problems in their communities.  The board found a few examples of how other towns successfully raised taxes in otherwise “anti-tax increase” communities. The key to getting the sales tax increase passed related to how the increase was proposed.

For Woodland, CO, the proposal that was placed on the ballot asked voters to raise city sales tax by 1.09% but the ballot also proposed to lower the city's property taxes at the same time.  The ballot issue proposed a decrease in property taxes because the idea was that the sales tax increase would replenish the missing property tax dollars and provide extra money left over to fund upgrades within the school system.

The ballot issue passed mainly due to the fact that the locals paid less in property taxes.  The sales tax increase effected the local tourism market and was viewed as having a less direct impact on local residents.  This type of ballot would likely not work in every local community as not every community has a sustainable tourism industry like Woodland Park.
Brian Greer

Written by Brian Greer