HomeMy WebLinkAbout751072.tiff 4
MEMO
TO: FINANCE COMMITTEE •
FROM: WILLIAM L. WEST
SUBJECT : ALTERNATIVES TO AD VALOREM TAX
The answer to the question of what alternatives the county has
to ad valorem taxes is -- virtually none . At least without some
legislative help.
The constitutional amendment allowing for county home rule does
not, contrary to the constitutional provisions relating to home
rule cities , grant to a home rule county any powers which it -
did not previously have . In essence a home- rule county has the
same powers as any other county and these powers derive basically
from the legislature .
In my opinion , most alternative taxes that I could think of would
need enabling legislation before they could be imposed. Among
the taxes which I considered and which fell into this catagory
were : income tax, occupational tax, employee occupational priviledge r
tax, excise taxes , and inheritance and gift taxes .
In addition I considered a tax on severed minerals , a tax on
intangible personal prooperty and sales and use taxes.
The authority for a sales and use tax exists . The tax cannot
exceed 7% and the statute states that it must apply to all towns
and cities within the county, except home rule cities . The sales
subject to tax and the exemptions are set forth in the statute .
The tax is collected by the state .
A tax on intangible personal property would be an ad valorem
tax, but would require legislative action . At the present time
a tax on personal property is not authorized .
Collection of the tax on severed minerals is possible . This
is not a new or alternative tax but simply the application of
the existing ad valorem tax to these interests in real estate ,
if they can be determined and valued.
Respectfully submitted,
ism: L. est
75 /G'7 .
tak
WEST Be WINTERS
(Attorneys at _Cale
WILLIAM L. WEST P. O. BOX 127
JERRY D. WINTERS UNITED BANK BUILDING
1000 TENTH STREET
GREELEY. COLORADO 8O631
January 14 , 1975 PHONE 303 . 352.4805
Ralph Waldo, Esq.
Finance Committee Chairman
Home Rule Charter Committee
1019 - 10th Avenue
Greeley, CO 80631
Dear Ralph :
Following the meeting January 11th
you asked two additional questions
relating to the County Sales Tax : (1) Whether it must apply
to all towns and cities within the County , and (2 ) Whether there
could be some sort of distribution other than the location of
where the tax was paid, for example the use of car registrations
for purposes of distribution.
A copy of the statute is enclosed with pertinent sections under-
lined. In my opinion , the tax must apply Countywide to all incor-
porated and unincorporated portions of the County, (C.R. S . 29-
2-103)
except home rule cities (29-2-107) .
With regard as to the distributive formula, reference is made
to 29-2-106 (3) (a) . This section provides that the Executive
Director shall make monthly distributions of sales tax "under
the distribution formula established in accordance with this
article . " As nearly as I can determine article 2 does not establish
any distribution formula. Apparently the Executive Director
has been making distributions on the basis of where the tax revenues
come from. 29-2-105 (b) provides that all retail sales are consumated
at the place of business of the retailer. This might imply that
this is the area to which the tax should be returned.
Reference is made in the Statute to 39-26, relating to the state
sales tax, which does give the administrator broad powers to
adopt rules and regulations and it is very possible that under
this power the state administrator could adopt a formula based
on auto registrations .
I hope this answers your questions .
Very truly yours , •
WEESTT & WINTERS
W� We st�
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MEMO
TO : FINANCE COMMITTEE - ..". �`:.
r:
FROM: WILLIAM L. WEST
SUBJECT: COUNTY ASSESSOR
The question asked is whether there is any way under county home
rule that the county assessor could be independent of state control
and state supervision of his functions as county assessor . •
The answer, under present legislation, is no .
State control and supervision of the assessor stems , for the most
part, from Article X Section 15 of the constitution . This section
creates the State Board of Equalization, and gives it the power
to• review assessments and "to perform such other duties as are
prescribed by law" .
C. R. S . (1973) 39-9-106 provides :
"The State Board of Equalization shall have supervision
of the administration of all laws concerning the valuation
and assessment of taxable property and the levying of property
taxes " .
The constitutional provision relating to home rule counties did
not create or grant to the home rule county any power which it
did not already have . The county assessor ' s duties are prescribed
by statute , and by statute and the constitution he is subject to
supervision and control by the State Board of Equalization .
•
Respectifully submitted,
c 4
,2) INCREASED LEVY--PROCEDURE
La) .if the board be of the opinion, the amount of tax limited by the
preceeding section will be insufficient £orthe co mty needs for.the
current year. It may increase the amount of revenue up to but not
more than an additional five per cent under the following conditions;
1. The additional increase must be specified in the notices of budget
hearings and the specific reason or need must be given in notice of
budget hearings.
2. The electors of Weld County have the right by petition to call for
a referendum in regard to extra ncrease within twenty One days after
the first budget hearing. kProcedure as outline on page 6u Section 15-4-t1)
3. If a referendum petition is not filed, the board will be allowed this
- increase. If petition is filed people will decide by vote.
,b) se board needs more than this it must go to vote of the people as out- 0
lined page 53 Section 14-7 \2,
•
•
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REPORT OF THE
FINANCE AND TAXATION COMMITTEE
of the
WELD COUNTY HOME RULE COMMISSION
The Finance and Taxation Committee of the Weld County Home
Rule Commission was assigned the task of making a study in depth
of the application of ad valorem taxation in the county, its
justification and limitations, alternative forms of public revenue,
and to determine whether under Home Rule a county can be freed of
some of the state controls of county finances.
We were also assigned the task of studying the functions of
the Assessor and Treasurer in the county government and a study of
the problem of untaxed and severed mineral interests together with
the costs and methods of placing them on tax rolls. A further task
assigned to the committee was that of studying the control of funds
through the purchasing procedures , the budget and control procedures
as well as audit procedures.
The committee was composed of five members as follows: Ralph
E. Waldo , Jr. , Chairman; Harold Fahrenbruch; Bob E. White; Edward
L. Dunbar; and Walter Bain. The committee met numerous times , in-
cluding two all-day-Saturday meetings°
In an effort to obtain the thinking of some of the best minds
of Colorado on taxation, Mr. Palmer Burch, the out-going State
Treasurer of the State of Colorado, and Mr. Clark Buckler, formerly
head of the Public Expenditures Council in Colorado and presently
Director of Colorado Counties , Inc. and chief legislative lobbyist
; for the County Commissioners of the State of Colorado, were invited
to attend a meeting of the committee. The meetings with Treasurer
Burch and Clark Buckler were very rewarding and furnished a great
deal of background information and "food-for-thought" and study on
the part of the members of the committee.
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The committee finds that the chief and main support of county
general fund is ad valorem taxation which can be justified, so far
as these funds are spent for roads , bridges , enforcement of laws and
protection of property, and the necessary county functions of the
clerk and recorder, the county commissioners , treasurer, assessor,
for these all render services to the land affected and the land
taxed. It was felt that it was a bit difficult to justify ad valorem
taxation for the support of welfare which is presently supported 55%
by the state, 25% by the federal government , and 20% by the county.
One school of thought believes that the taxation of real property
for the support of welfare when welfare recipients can come from
all fifty of the states of the United States of America and can move
here and there frequently is not proper, as it is a bit difficult
to justify taxing real estate in Weld County for welfare under
those circumstances. It is however felt desirable that the admini-
stration of the welfare be strictly in the local hands.
The committee finds that there is only one alternative form
of taxation available under the present state statutes and the
Constitution of the State of Colorado and that is the county-wide
sales tax. County-wide sales tax was strongly recommended by
Treasurer Burch as a fair tax and a popular tax; however, he
recommended that such tax exclude the necessities of life from
the payment of the sales tax which are tax on food, clothing,
shelter, and prescription drugs. Under the present state statutes ,
this tax could be collected by the State of Colorado without ex-
pense to the county, provided the county taxed all items taxed
by the state,and could be distributed by the state along with the
tax for each of the incorporated municipalities having their own
sales tax in the county.
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• The county-wide sales tax could only apply to the City of
, Greeley, a home rule city, in the event the City of Greeley would
acquiesce in such a procedure. Mr. Burch also recommended that the
distribution of a county-wide sales tax be based upon motor vehicle
registration as a more equitable way of dividing the tax between
the incorporated towns and communities and the county.
In considering the offices of the assessor and the treasurer,
the committee found that there were some alternatives available
under County home rule. The office of assessor and treasurer could
be combined into one official , either elective or appointive, who
would carry out the functions of both of the present offices. The
two offices could become appointive or they could remain as they
are, as elected officials , supervising and operating their own
respective offices. •
Both the County Assessor, Mr. Hansen, and the County Treasurer,
Mr. Loustalet , were very cooperative in answering questions and
assisting the committee in its study of the two offices and the
functions thereof. The committee found that there was a very
limited turnover or change in the employees in these two offices ,
even with a change in political party control. The two offices
have been able to retain their employees and their employees have
been good conscientious workers over the years.
There is apparently some controversy between the Commissioners '
office and the County Treasurer' s office and the County Assessor' s
office over pay grades and pay of the various employees of these
two offices. Under the present system, it appears to be wise
that the Assessor and the Treasurer defend their budgets before the
County Commissioners. That , having defended their budgets the
Assessor and the Treasurer feel it is desirable that each of these
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elected officials , who are responsible to the people of the
county for the operation of their offices , be given full
authority to spend their respective budgets as they see fit
in the operation of their offices.
The question of untaxed severed mineral interests was
investigated and the committee found it would cost approximately
$50.00 per chain of title to determine the present ownership of
many of the severed mineral interests in the county and that this
cost for an estimated 44,000 schedules in the county would be
excessive when compared to the revenue that it would bring into
the county. In the discussion of the problem of the taxing of
severed mineral interests , the committee suggests that it might
be advisable to place the burden of placing severed mineral interests,
including interests in property in general, upon the owner of the
property; and require that any severed mineral interests that had
not been placed on the property tax rolls by the owners after a
reasonable time period could then be placed on the tax rolls and
sold at tax sale with the surface owner of the lands having the
priority right to redeem from the tax sale and purchase those
severed mineral interests. This suggestion is being investigated
and suggested to members of the legislature as a possible solution
to this problem.
In the area of assessed valuation of property, the committee
found the Assessor is obliged to work with the state-wide taxing
and assessing manuals which are used as guides over the entire
state to determine valuations. The use of these manuals necessarily
causes variations in different areas of the state in the assessed
values on properties when compared to the actual sales values of
these properties due to local conditions affecting sales prices.
It is thought this assessing manual may be the explanation, or a
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, a
good deal of the explanation, for the variety of assessed
valuations found by the author of the article recently in The
Denver Post. It should be noted that any time the County
Assessor is too low in his assessment of property, the state
Property Tax Administrator has the power to recommend to the
State Board of Equalization an arbitrary assessment which if
approved can cause a blanket increase in the assessed valuations
of certain categories of property that are felt to be too low.
From the committee' s study, it appeared the County Treasurer
is careful and prudent in the investment of county funds to obtain
the greatest income from them and to make them available for invest-
ment in the financial institutions of the county in a fair and
practical manner which is beneficial to Weld County, Colorado.
The revenue from the treasurers office for interest in 1974
amounted to approximately $750,000.
The County Treasurer advised the committee that he was being
constantly audited by auditors for the various special districts
and governmental units of the county but felt it was still advisable
to have an outside audit , perhaps every four years.
A Saturday afternoon was spent with Barton Buss , the County
Finance officer, and the County auditor. The County auditor
pointed out to us that , although the auditors were employed by
the Commissioners, they were independent auditors , carried on
the auditing procedures in a professional way, and were not
subject to the pressures of the County Commissioners in any way.
The question arose as to whether it was time for Weld County to
quet
have an elected County Auditor. Opinion was expressed both ways ,
and it is a matter for further discussion and decision as there
are agruments both for and against an elected county auditor.
Investigation was made in the area of the method of expend-
iture of funds. The committee was advised that purchases of
$100.00 or less could be made by a department head upon signing
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a voucher and submitting a statement for the article purchased.
Purchases of $100.00 to $500.00 may be made upon telephone bids
received from independent and separate suppliers to the county.
Purchases of $500.00 to $2,000.00 can be made upon written
proposals, and purchases of $2,000.00 and over are made on written
sealed bids with written specifications, with notice of taking of
bids being published in the newspaper. The committee was advised
by Mr. Buss that envelopes and office supplies are bid once a year.
In studying the county fiscal procedures, purchasing procedures
' and accounting procedures, it became evident that Barton Buss, as
the present County Finance officer, had a myriad of duties and
responsibilities, causing members of the committee to wonder how
he could perform all of the functions assigned him in a satisfactory
manner. The committee wonders if the duties of Barton Buss should
not be divided up in some fashion to release him from some of the
responsibilities.
In the area of controlled funds, purchasing procedures, and
budget control procedures, it would appear it might be advisable
to have both an internal audit and an external independent audit.
There should be a controller in charge of all disbursements and
the man actually making payment of the money should be someone
other than the controller or the disperser.
I
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ir. * • •L J • r. .
The committee held a public hearing on January 21st, 1975,
at the Commissioners' office at which seventeen people appeared.
Invitations were sent specially to all of the incorporated towns
of Weld County, inviting them to send representatives to the
meeting. Most of the people attending the meeting were agriculture
oriented and there were representatives (two ladies) from Dacona,
two gentlemen from Fort Lupton, one representative of the Golden
Years group, and numerous farm people representing the Ag Council
including Norman Carlson, the President of the Weld County Ag
Council.
A good discussion was held concerning taxation. Most of the
matters contained in this report were discussed during the evening.
A county-wide sales tax appeared to have acceptance with the group.
A recurring question was, "Will the county-wide sales tax be used
to reduce some other tax?" The suggestion with regard to the
taxing of severed mineral interests met with favor with the group
also.
The committee was disappointed that more of the incorporated
communities of the county were not represented at the meeting but
felt a good discussion was held with the people who did attend.
The committee would submit this report with the request that
it be permitted to amend the report and make recommendations at a
later date.
Respectfully submitted
FINANCE and TAXATION COMMITTEE
Weld County Home Rule Commission
Walter Bain
Edward L. Dunbar
Harold Fahrenbruch
Ralph E. Waldo, Jr.
Bob E. White
By
Chairman
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