Jeff Huff for Mayor

Home Rule Analysis by Dave Pearson

By Jeff Huff  

Dear Fellow Residents,

Recently the City of Castle Pines North released a study recommending adoption of ‘home rule’ and I felt that I ought to share my knowledge of how these things work with everyone before we are asked to vote in the upcoming elections.  For your information, I have made my career implementing tax administration systems for State and Federal Governments and am currently engaged managing a project to replace the tax administration systems for the Colorado Department of Revenue.

Home rule offers several capabilities, most notably the ability to expand the Sales and Use tax base (i.e. tax things that are currently tax-free like food).  It is this ability to tax more stuff that I would like to talk about.  While the potential for additional revenue might be appealing it comes at the expense of having to administer and collect the taxes ourselves; a cost not identified in the City’s published study.  Currently as a non home-rule City we leverage the Colorado Department of Revenue, to administer and collect on our behalf.  The cost of administering and enforcing tax laws is considerable and there are some unpleasant consequences that accompany it.  Firstly we are unlikely to have sufficient resources (people and tools) to fully enforce our own taxes and consequently our collections would lag as they do for many small home-rule cities.  Secondly, if a business does not pay its tax, the city would have to wage the legal battle to recover the taxes due and potentially even shut it down the business whereas, with the State administering for us, it would be the State waging the collection battle and local officials wouldn’t have to worry about directly upsetting a local business with whom they may be friendly.

Advocates for home-rule say that the State doesn’t know a local municipalities taxpayers well enough and consequently does a poor job of ensuring full collection.  To address this concern, the State offers a program of shared auditing, where local municipalities can send their own auditor into the Department of Revenue and can use the Department’s computer systems to access their municipalities taxpayers to ensure full compliance.  This would be a far lower cost than taking on the full costs of administration.  We could even share an auditor with the County and other Douglas County cities that might be interested in such a program.

Discussion is also taking place regarding legislation that would allow cities to expand their tax base (should they desire to be taxed more) without having to make a home-rule election and take on the additional costs of full administration.  Again this would be a far preferable solution.

For these reasons I think that the home rule option should be approached with significant caution and the study prepared for the State should have addressed these consequences in its analysis.

As far as dissolving the Metro District goes, I feel that the City is still a work in progress.  If we decide in a few years that we don’t want to continue as a city then it will be harder to unincorporate if the City has taken over the responsibilities of the Metro District.  My preference would be to leave the Metro District as it is and seek any changes to their administration that might be desirable via the processes we already have in place to do so.  They are elected after all just as the City officials are.

Sincerely,

Dave Pearson

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