Tax & spend stalks Centennial

(Updated, May 6) By becoming a home rule city, Centennial will be well positioned to achieve its desired 25% revenue increase. Editor: So warns Susan Bockenfeld. Impartial? No; she is the elected treasurer of the City of Centennial and will be the last individual to hold that position if voters approve the proposed Home Rule Charter on June 10. Factual and worthy of your consideration? Yes; in my book this is one more reason to vote no on the charter. Below is Treasurer Bockenfeld's full analysis of the city's potential easy-spending future, along with a subsequent contrary view from charter commissioner and former councilwoman Andrea Suhaka, and concluding with Bockenfeld's rebuttal thereto:

Treasurer's Article, first posted May 1

There are many misconceptions being circulated concerning Centennial sales tax and how it would benefit us as a home rule city to collect and audit our own taxes. Some of those misconceptions will be addressed here.

Supporters of the Centennial Home Rule Charter propose that as a home rule city Centennial will do a better job of collecting sales tax and that revenues will actually increase by upwards of 25% - possibly an additional $4.7 million per year. The truth is these numbers are untested and unfounded.

Becoming a home rule city will open the door to a wide variety of new taxes that the city cannot currently impose. These taxes include a general use tax, a hotel room tax, and an employee head tax. It's my belief that imposing a general use tax is the real objective of home rule. The general use tax is a tax paid on purchases made outside the city and delivered to homes within the city. Usually these purchases are internet sales or large ticket item sales such as furniture and appliances. It should be noted that all these taxes would require a vote of the people; however, they cannot even be considered by a statutory city. By becoming a home rule city, Centennial will be well positioned to achieve that desired 25% revenue increase in the future.

Supporters say the City can collect and audit sales tax more efficiently than the State can. The truth is that until recently the City has not used the tools already available to them to properly monitor the sales tax the State collects. The City is aware of new and existing businesses and can make sure businesses are licensed and that they understand the filing process. This would reduce the number of audits and improve efficiency without home rule status.

Supporters say when the State collects the sales tax there is a lag time of 30 to 45 days from the time the tax is collected and when the City receives the revenue. The truth is businesses must be given time to close out their books at the end of the month. The City would be able to decrease the deposit lag time by 10 business days at the most, the exception being those few businesses that file prior to the deadline. An overwhelming number of businesses in Centennial are small businesses. These small businesses would be impacted because additional reporting would be required. Currently retailers file one return to report state, county, RTD and city sales tax. If the City collects its own sales tax, they would require a separate return to be filed with the city.

Supporters say not to worry about the expense of collecting and auditing our own taxes because the return would outweigh the investment by a 3-to-1 margin. The truth is the State collects sales tax and performs audits FREE OF CHARGE so the return on investment is essentially infinite.

Supporters say the City cannot increase the tax base without a vote. The truth is the City can impose a tax increase on small business without a vote of the people. Currently retailers are required to deposit only 97% of the sales tax they collect as an incentive to pay sales tax timely. By removing this incentive, the City would increase annual revenues by over $500,000 per year. It should also be noted that Centennial can remove this incentive today, if desired, without having home rule status and without a vote of the people. This is truly a stealth tax increase to the citizens because more than likely these costs would be passed through to the consumer.

Supporters say that only four audits have been completed by the State resulting in roughly $340,000 in additional revenue to the City. The truth is that the State has done a great job for the City. Over the last three years the State has completed or is in the process of performing 88 reviews. Eight audits resulted in $370,547 in additional revenue and there is at least one business that has been assessed a large amount but has not yet paid. Twenty-five of the 88 audit requests could have been resolved with a simple phone call to the State. The remaining reviews are still being worked on or resulted in no additional revenue to the City. It is important to note that the State performs audits free of charge because they benefit not only the City but also the State, the County and RTD.

The supposed goals of the Home Rule Charter are Transparency, Efficiency, Protection for Citizens and Lean Government. Let’s start now by providing the citizens with clear and accurate information on which to make a very important decision – whether or not Centennial should be a home rule city.

Charter Commissioner Andrea Suhaka's counterpoint, submitted May 4

Ms. Bockenfeld makes several unfounded conjectures in her paper.

1. [She alleges] the city will institute a general use tax. At no time has that been discussed. The city does hope to collect the sales tax it's due from retailers that are outside of Centennial but deliver goods into the city.

2. For a slightly different problem, Centennial has found retailers within the city that are collecting and remitting sales tax to the entity that has the original ZIP code in which they reside, e.g., 80015 is also an Aurora ZIP code, 80111 is also an Englewood ZIP code. Those cities charge 3% sales tax to our 2.5%. That means those retailers have been charging a higher sales tax and remitting to the wrong city since incorporation and far be it for the cities to correct the situation. Centennial would be able to correct them, collect the owed sales tax from, say, Aurora and Englewood, (back three years from when the system is set up) and lower the sales tax rate that's being charged to our citizens!! That's a win for the consumer.

3. The sales tax information is neither unfounded nor untested. Our city manager has taken some cities through the home rule process and is using factual numbers from direct experience.

4. 2005-2007 saw the city request 74 sales tax audits of which only 6 were performed. The city received $343,390. These are numbers directly from the Finance Dept.

5. Ms. Bockenfeld is using complete conjecture to support her idea that the city would increase the taxes on small business. I could as easily declare that the city would never consider doing such a thing.

Ms. Bockenfeld is using scare tactics to support the downfall of home rule. The Home Rule Charter Commission has been trying to put forth facts, not conjecture. Transparency, Efficiency, Protection for Citizens are deeply grounded in this Charter.

Treasurer's Rebuttal, submitted May 5

I believe Charter Commissioner Suhaka has made my point for me. Tax collected by retailers that are outside of Centennial but deliver goods into the city would be a general use tax. She may want to refer to the website which has a lot of information on sales and use taxes. Since Centennial does not currently have a general use tax, these taxes are essentially collected illegally. Can the City go after use tax that was collected illegally by another jurisdiction?

After reading Ms. Suhaka’s comments, I find that the 25% increase in revenues is still untested and unfounded. Has she defined any facts to support her position? I will let the readers decide for themselves.