Loveland council leans toward broad cuts if voters OK food-tax exemption

LOVELAND – Presented with what they saw as some alarming consequences to the city’s budget if Loveland voters in November pass a ballot issue that would remove purchases of “human food for home consumption” from the city’s sales tax base, City Council members at a Tuesday meeting appeared to learn toward a contingency budget making across-the-board cuts to city services as opposed to leaving funding for public safety intact but imposing steeper cuts in other areas.

Steeper cuts to core services and city amenities would be an example of “how to destroy a thriving community in 30 days or less,” said Mayor Pro Tem Don Overcash. “I’m kind of wondering what this would do to property values? This is quality of life. This is stuff you can’t put a dollar value to.”

Added Councilor John Fogle, “We are hurting the very people this proposal is going to give $10 back to” on their grocery bills.

Councilor Steve Olson described across-the-board budget cuts including less money for public-safety services as “the worst approach,” and Councilor Dana Foley said the city’s response to some of the line items should be “Is it something the private sector can come in and do?”

But Fogle asked Brian Waldes, the city’s chief finance officer, and his staff to come back to the council with a scenario for across-the-board cuts “with programmatic costs so we can make a decision about how to make a hybrid model.”

Waldes told the council at an August budget workshop that if the city couldn’t collect the 3% sales tax on those food items, it would have an estimated $10.5 million downward impact on sales-tax revenues in 2024, since food taxes make up 16.1% of the city’s total sales-tax collections. About half of the city’s total general-fund revenue comes from sales-tax revenue, he said, and the impact to the city’s general fund would be “severe and permanent.” He returned Tuesday night to ask the council members whether they wanted to allocate the cost reductions evenly based on program expenses or if other methods should be used in a contingency budget in case the ballot issue passes. He and his staff would then return with some final numbers.

City Manager Steve Adams reminded council members that it would be impossible for city staffers to come up with final numbers by the regular meeting next Tuesday, Oct. 3, as originally planned, but that a final vote on the ordinance would have to be done no later than Oct. 17 because he’d need to send out notifications to city departments — and that voters will receive ballots by mail around Oct. 16.

Waldes said the $10.5 million gap would grow with inflation and the increase in dollar volume. “Increases from other revenue streams such as property tax serve to allow the General Fund to keep pace with inflation and merit increases for personnel costs,” he wrote to the council. “However, such increases cannot realistically be expected to both cover the $10.5 million loss and allow the city to keep pace with normal annual cost increases.”

Supporters of the measure to repeal the city sales tax on food, many of whom also have mobilized to oppose city subsidies for new developments such as the Centerra South project, have said the impact on city revenue won’t be as severe as city staff predicts because the money shoppers save would largely go back into the economy for other purchases.

Developer McWhinney Real Estate Services has said the anchor retailer for the Centerra South mixed-use residential and commercial project would be a Whole Foods grocery store, which it had counted on to provide tax revenue.

Last Friday, a group calling itself Protect Loveland’s Future announced it was organizing to oppose both municipal Ballot Issue 300, the food tax repeal, and Ballot Issue 301, which would mandate a citizen vote on future Urban Renewal Area plans in Loveland.

“We really want to ensure that Loveland voters understand what the passage of these two items would mean for Loveland’s future,” said Alyssa Wells, a spokesperson for the group. “Food tax and URA procedures are two very different issues, but both proposed measures could be quite harmful to our community, so we’ve created a website to educate the public on what could be some grievous unintended consequences in Loveland’s future.”

Wells’ LinkedIn profile identifies her as coordinator of the Loveland Business Partnership and in charge of public relations at Imprint Digital. She had been director of marketing at the Madwire social-media firm and an associate broker at Roots Real Estate.

According to a news release issued by the group, its primary concern with the proposed food tax exemption “is that it will have immediate and permanent consequences to the city’s General Fund, with no plan for replacement revenue.” If Question 300 passes, it said, “Protect Loveland’s Future warns that serious cuts will be necessary, and that city services will be noticeably impacted, while citizens will see only nominal savings in their grocery bills.”

Wells also warned against passage of Question 301 because it “would be detrimental to housing affordability in Loveland. The process of approving urban renewal agreements is already complex, and there are rigorous statewide policies in place to ensure that any public-private agreements are well-informed and fair to all involved entities. The Loveland Urban Renewal Authority board works fairly and transparently, allowing public input every step of the way. Since we elect representatives to make a vast array of other decisions on behalf of the public, we see no reason to single out URAs for a special election.

“Some consequences of the passage of Question 301 would be greater expense and a more cumbersome process for public improvements in Loveland, without necessarily better outcomes than we have in the current system.”

on Facebook on LinkedIn