BRECKENRIDGE - With strong opposition, the Breckenridge Town Council gave an initial nod Tuesday to a measure raising the mill rate by .351 mills in 2012. The move is meant to offset a decrease in property values and related tax revenues that will hit next year.
The tax hike will bring in approximately $171,000 in 2012, which supporters on the council said would help prevent cuts to the town's child care scholarship program.
The measure passed on a 5-1 vote. Councilman Mike Dudick opposed the rate increase, saying the town does not need the extra money.
"In the last two or three years, thanks to great management, we are running a surplus of revenue relative to expenses," Dudick said. "We are putting more money in the bank year over year. I cannot support something that says your house value went down and we're going to make you pay the same amount in taxes."
The town will hold a public hearing and a second, final vote on the measure in late November. Several council members were against the rate increase and indicated they would look at an amendment to remove the proposal from the mill levy ordinance at a future meeting.
Due to the overall decrease in property values, the town's total property tax revenue will decrease at least $400,000 next year, even with the rate increase.
The .351 rate increase equates to $2.79 per every $100,000 in value for residential property and $50.90 per every $500,000 in commercial property, according to Summit County Assessor Beverly Breakstone.
The rate increase, which will raise the town tax from 6.945 mills to 7.296 mills, is based on a mill rate, pre-approved by voters, that will be sufficient to pay the town's debt service.
"When we issued the bonds to build the Breckenridge Recreation Center and (Stephen C. West) ice rink, it was a general obligation bond," town manager Tim Gagen said. "You ask the taxpayers if it's OK to levy a tax to ensure the debt is paid, so then you always have the option, once the voters say yes, (of increasing the mill rate to cover) the amount that's necessary to pay the debt service."
Breckenridge voters approved the tax more than a decade ago, Gagen said.
In general, Colorado's Tax Payer's Bill of Rights (TABOR) does not allow governments to increase tax rates without voter approval.
Next year's property tax collections will be the first to reflect the impact of the recession on the housing market, because tax collections are based on property values two years ago.
Summit County's property tax collections will not be impacted by the Breck measure that got preliminary approval Tuesday.
County property taxes will decrease 17 percent on average, causing an approximately $4 million drop in Summit County government's collections for 2012 and 2013. The county prepared for the reduction with deep budget cuts in the 2011 and 2012 budgets.