Timnath asks for sales tax bump, fueled by Costco and Walmart shoppers

Timnath will try again to raise its sales tax to help pay for $84 million in infrastructure improvements, including widening Harmony Road and for parks, trails and a new town hall. 

If passed during the Nov. 7 election, the town's sales tax will go from 3 percent to 4.3 percent and the sales tax on food purchased for home consumption from 2.25 percent to 3.45 percent. 

That means the local sales tax on $100 spent at Costco would go from $3 to $4.30.  

The increases are expected to raise $3.9 million a year, according to Mayor Jill Grossman-Belisle. 

Timnath voters last year handily rejected a similar sales tax increase that would have increased both the sales and use taxes."Residents were not sure they understood how the use tax increase would be implemented so they were understandably reluctant to support that piece of the ballot question," Grossman-Belisle wrote in a letter to Timnath residents explaining the ballot initiative this year. 

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This go-round, the town is not seeking an increase in use taxes. 

Timnath is expected to generate $5.97 million in sales tax revenue this year with a growing sales tax base including Starbucks, Taco Bell, Freddy's, Les Schwab Tires and soon a Chik-Fil-A.

However, its largest sales tax generators remain Walmart and Costco, which draw shoppers from throughout Northern Colorado. Costco attracts consumers from Wyoming and Nebraska as well as north Denver and Northern Colorado.

More than 90 percent of people paying sales taxes at Costco and Walmart are not from Timnath, Grossman-Belisle said, "but they are using our roads and our stores, in part causing the need for these improvements. Everyone pays their fair share rather than (an increased) property tax, which would impact only residents and negatively." 

The mayor said the town has been more aggressive in explaining the need for a sales tax hike to residents.

Last year, the tax increase went on the ballot too late and with an inadequate explanation of the need, she said. "We have a much more likely chance of it succeeding now." 

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The city faces a $22 million shortfall in funding its five-year, $84 million capital improvements plan without the additional annual revenue increase, Grossman-Belisle said. 

If voters approve the increase, the town will be $1 million short. "It's easier to figure out how to adjust for a $1 million shortfall than it is to cover the full $22 million, or eliminate needed projects from the capital improvement plan, she said. 

 A small portion of the sales tax increase would be used to finance part of building a new town hall. "We don't have a place for people to meet now," Grossman-Belisle said. "If we want to have a meeting and a council meeting at the same time, it's impossible."

The new town hall is still in the design phase and will be built on land owned by the town adjacent to the new fire station in the Riverbend subdivision. 

The highest priorities are finishing the Harmony Road widening, parkway construction and infrastructure for County Road 1.