Longmont City Council seeks information on possible food tax rebate program

July 12--Longmont'sCity Council has directed the city staff to provide a report on a possible food-tax rebate program that might offset the municipal sales tax amounts that elderly, disabled and low-income residents now pay when they buy food.

Councilman Aren Rodriguez on Tuesday night moved to have the staff generate the report and received unanimous support from the council members at the meeting.

Longmont's council has not formally discussed -- at one of its weekly meetings, at least -- UnTax Food, a proposed ballot initiative that would ask voters in November to end collecting the city's 3.53 percent sales tax on groceries.

Supporters of that idea are circulating petitions to gather the required 5,567 registered Longmont voters' signatures needed to put the item on the ballot.

Former City Councilwoman Sarah Levison, one of the leaders of that effort, said Wednesday that a food-tax rebate program would require "creating a new program or a new government bureaucracy."

"How much money is the city willing to budget?" to design and staff a rebate program, Levison asked.

She predicted it could take as long as a year for Longmont to design and implement such a program, making any rebates unavailable until 2020.

However, Rodriguez said Wednesday that he wants more information about possible options to reduce the grocery tax's impact on groups such as low-income Longmont residents, "before I can either support or oppose the UnTax Food initiative."

He said that would include projections of the potential costs of marketing and administering a rebate program, the revenue-reduction impacts of rebates as opposed to a full grocery-tax exemption, and how many people might be expected to benefit.

A number of municipalities have some form of a rebate program, including Boulder. This year, Boulder offered an $83 rebate for individuals, and a $253 rebate for families, who met certain financial eligibility guidelines.

In addition to meeting those financial guidelines, an applicant had to have been a Boulder resident for the entire 2017 calendar year, and be 62 or older for all of last year, a person with a disability, or a family with at least one child under age 18 who lived in the household all of last year.

The income for an individual applicant for a Boulder food-tax rebate must have been less than $34,400 last year. Family income eligibility is based on a sliding scale tied to the family's size. The maximum 2017 family income for a three-person Boulder household was $44,200, and for a four-person family, $49,100.

During public comment at the city council's Tuesday meeting, Paul Tiger, an organizer of UnTax Food, thanked Rodriguez "for moving the conversation along" with the councilman's call for a staff report on the rebate option.

Jim Golden, the city's chief financial officer, estimated last month that such a tax exemption could reduce city sales tax collections by at least $7.2 million next year -- a figure he said in a Wednesday email he's working on updating after he gets additional information from grocers.

Golden also wrote he'd probably be updating his tax-repeal impact estimates and include them with a report he plans to make to the council on July 24 about the possible impact of a food-tax rebate program.

Longmont resident Jim Ruff, a retired electrical engineer who has analyzed city sales tax data for the UnTax Food campaign, said Wednesday that his analysis shows a potential $8.2 million reduction in municipal sales tax collections next year if the exemption were to win approval.

Levison said Wednesday that UnTax Food's projections represent "a worst-case scenario," and she contended that the City Council could adjust its 2018 budget to account for the lower sales-tax revenues "with very little impact" on city services, programs and projects.

Levison told the City Council Tuesday night that she and then-Councilman Gabe Santos were able to do just that with city budget's in the low-revenue years that followed the 2008 recession.

She also said Longmont can expect additional tax revenue from a special voter-approved 3 percent tax on sales of recreational marijuana and marijuana products once the four recently selected shops open for business later this year.

It's been projected that the special tax could generate as much as $1.3 million annually when it's collected for a full year from the shops, although half of the revenues from the marijuana sales tax are to be earmarked for affordable-housing programs.

Levison also suggested Longmont stands to benefit from being able to charge municipal sales taxes on online retail sales after a U.S. Supreme Court decision last month that allows states to collect taxes on such internet sales even if the retailer has no physical presence in the state.

John Fryar: 303-684-5211, jfryar@times-call.com or twitter.com/jfryartc

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