2023 Budget in Brief - Continued

Sales & Use Tax Revenue

Sales and use taxes comprise 35% of the city’s total revenues, including utility revenues. Sales and use taxes are transaction taxes levied on all sales, purchases, and leases of tangible personal property and taxable services sold or leased by persons engaged in business in the city. The tax is collected by the vendor or lessor and remitted to the city. For every retail tax dollar collected in Boulder, the city retains 44 cents, which is distributed across the city’s General Fund, Open Space Fund, Transportation Fund, .25 Cent Sales Tax Fund (which supports Parks & Recreation), and the Community, Culture, Resilience and Safety Tax Fund (which supports capital infrastructure).

Projected sales and use tax revenues total $173.3 million in the 2023 Approved Budget, including revenues within the General Fund, Open Space Fund, Transportation Fund, .and 25 Cent Sales Tax Fund. In addition, the General Fund total includes revenues received from the 3.50% recreational marijuana sales and use tax. The Community, Culture, Resilience and Safety Tax Fund revenues are also included in the 2023 Approved Budget which Boulder residents approved in November 2021. Projected sales and use tax revenues in the 2023 Approved Budget exceed 2022 projected revenues as the city continues to experience economic growth.

Over the next 15 years, the projected sales and use tax rate will include several changes, including:

• 2025: Overall sales and use tax rate declines due to expiration of a portion of General Fund tax.
• 2030: Portion of transportation tax shifts to General Fund.
• 2035: Portion of open space tax shifts to General Fund.
• 2036: Overall sales and use tax rate declines due to expiration of teh .25 cent tax supporting Parks & Recreation.
• 2037: Community, Culture, Resilience, and Safety Tax expires.

Property Tax Revenue

Property values are reassessed in odd years, and are collected at their new assessed rate the following even year.

Recently, two pieces of legislation will impact future property tax revenues. SB21-293, reduced the assessment rates for residential property and some classes of non-residential property for 2023 collections. Through the adoption of SB22-238, the Colorado State Legislature further reduced select assessment rates for the 2023 reassessment year which will further reduce collections in 2024 and 2025. It also requires that the state provide a partial reimbursement to local governments for reductions in property tax revenue.

The calculation of property tax is:

Market Value of Property x Assessment Rate x Mill Levy = Property Tax

For taxes payable in 2023, the single-family residential assessment rate is 6.95% and the multifamily residential assessment rate is 6.5%. For taxes payable in 2023, the commercial assessment rate ranges from 26.4% to 29%. For example:

Single-Family Residential: For every $100,000 of home value, homeowners pay $83.27 in property tax to the City of Boulder.

$100,000 x 6.95% x 0.011981 = $83.27

Commercial: For every $100,000 in commercial value, business owners pay $347.50 in property tax to the City of Boulder.

$100,000 x 29% x 0.011981 = $347.50

Subclasses of commercial property used for agriculture, hotels/lodging, or renewable energy production will be assessed at a lower 26.4% rate.

For every dollar of property tax collected in Boulder through the general citywide tax rate, the city receives 14 cents. Of these 14 cents, 9 cents goes towards general city operations, 2 cents goes towards Public Safety, less than one cent goes towards the Library, 1 cent goes towards Parks & Recreation and 1 cent goes towards the Community Housing Assistance Program.

In addition to the general citywide property tax, which is paid by every taxable property in the city, there are several special districts within the community that levy a separate mill rate. The revenue received from the Downtown Commercial District and the University Hill Comercial District are still restricted to the Denver-Boulder Consumer Price Index (CPI) and a local growth factor, as provided by the Taxpayers' Bill of Rights (TABOR) Amendment to the Colorado Constitution. In the November 4, 2008 election, city voters approved the removal of the remaining TABOR restriction on the general property tax with a phase-in period and without any specific restriction on the use of the "de-Bruced" funds. Forest Glen Special District supports Eco Passes for residents of that district and collects only enough to pay for that program.

The property tax chart below shows the past 3 years as well as the current year and next-year projected property tax collections.

Key Budget Assumptions

The summary of key assumptions table documents global budget assumptions that govern cost estimates provided by each department.

Citywide Summary of Sources & Uses, by Fund