Three Sources of Municipal Revenue in Colorado
| Jurisdiction | Colorado,United States |
| Citation | Vol. 19 No. 10 Pg. 2065 |
| Pages | 2065 |
| Publication year | 1990 |
1990, October, Pg. 2065. Three Sources of Municipal Revenue in Colorado
Voltaire said that the art of government consists in taking as much money as possible from one class of citizens to give to another.(fn1) Although Voltaire's characterization reflected the particular inequities of his era, it retains a kernel of truth. Funding---for local government operations and the construction of improvements---is perennially the concern of local government officials.
In the current political and budgetary climate, with opposition to taxes manifested at every election,(fn2) the concern is exacerbated. The same population which demands public infrastructure and services also objects to further taxation. Thus, in the November 1990 general election, voters will be offered both a proposed amendment to the Colorado Constitution(fn3) limiting taxes and several major capital expenditure projects proposed by local governments.
This article examines three of the primary funding sources available to Colorado local governments---taxes, assessments and user fees---and discusses the various legal objections they typically raise.(fn4)
A tax is the most familiar form of governmental exaction. The term "tax" may be broadly defined to include amounts collected on the occurrence of some event or the exercise of a privilege by the taxpayer, but which are not necessarily imposed to provide a specific service or facility for the taxpayer. Most often, taxes are imposed to raise revenue for general governmental purposes. Taxes differ from assessments or user charges in that it generally is not a defense to payment of a tax that the taxpayer did not receive an equivalent benefit or service.(fn5)
While the power to tax is one of the most basic governmental powers, the imposition of taxes is subject to strict limitations. It often is said that a tax must be based on a "plain and unmistakable grant of power."(fn6) In Colorado, such grants of power are found in (1) the state Constitution, (2) acts of the General Assembly and (3) home rule charters. The most common forms of taxation in Colorado include ad valorem property taxes, excise taxes and income taxes.
Ad valorem property taxes are imposed on real and personal property as a percentage of value. A uniform statewide system of property taxation is provided by statute. Property taxes are imposed by virtually all types of local government entities, but the administration of the property tax system is primarily the responsibility of the county governments.(fn7) Ad valorem taxes are subject to a constitutional requirement that they must be imposed uniformly within the taxing unit.(fn8)
Excise taxes are imposed on the exercise of particular privileges, such as the sale of tangible personal property at retail or the transfer of real property. They generally are calculated as a percentage of the value of the transaction being taxed. In Colorado, various excise taxes are imposed by the state as well as by county and municipal governments.(fn9)
Under the Colorado Constitution, the power to impose income taxes is reserved to the...
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