17 proposals for tax and fee hikes headed to City Council

Smokers, cell phone users, property and automobile owners, and people who work in Colorado Springs might help the city out of its financial pickle in the future.

A group studying ways for the cash-strapped city government to generate more money has identified 17 potential sources of revenue that could affect a wide segment of the population.

The group is part of the larger Sustainable Funding Committee, which is expected to go before the City Council on July 27 to present the revenue-generating proposals and a host of other ideas to help the city solve its financial problems.

It will be up to council members to decide whether to put any of the proposals into action.

Most of the ideas for new revenue, such as a property tax rate increase that would raise millions of dollars annually and extending the city's sales tax to cigarettes, require voter approval.

But a few ideas, such as a $10 or $20 automobile registration fee and a $50 license fee for all businesses, could be implemented by the council without a vote of the people.

In addition to generating money, all the proposals -- and that's all they are at this point -- are likely to generate controversy.

They include:

* A so-called Head Tax of $5 a month per employee. The tax would raise nearly $12.7 million in 2010, according to estimates. Who would pay it -- the employee, the employer or a combination of both -- hasn't been determined. In Denver, such a tax is imposed on businesses operating in the city and "individuals who earn at least $500 in a month performing services in Denver," according to that city's website. The tax is also known as an occupational privilege tax.

* A $10-a-year or a $20-a-year automobile registration fee that would generate about $3.5 million and about $7 million, respectively. The proposal comes on the heels of the state raising registration fees for most cars and light trucks by $32.

* Extend the city's sales tax to cigarettes, which would raise $1.6 million in 2010. Like the proposed automobile registration fee, this proposal comes after the state adopted a new law forcing cigarette buyers to pay the state sales tax, adding 15 cents to the cost of a $5 pack of smokes.

* Extend the city's sales tax to cell phones, raising nearly $900,000 next year.

* Increase the city's property tax rate, called a mill levy. An increase of 1 mill would generate about $5 million, and increasing it by 5 mills would raise about $25 million.

* Implement an additional 1 percent or 2 percent special sales tax on alcohol, but only on alcohol purchased at stores. The 1 percent increase would raise $3.5 million in 2010, and a 2 percent increase would raise double the amount.

* Increase the automobile rental tax rate from 1 percent to 3 percent, raising $720,000 in 2010.

It's unclear whether the council will put any of the proposals requiring voter approval on the November ballot.

But one member of the Sustainable Funding Committee, former state Sen. Andy McElhany, said he is opposed to all the proposals, at least in the immediate future.

In a survey among members of the Sustainable Funding Committee's revenue committee, "I voted against all of them in the short-run on the theory that it's just very bad policy to raise taxes in a recession," McElhany said this morning.

Take our poll about the proposals, in the panel to the right.