Agenda Date: 08/20/2024
Subject:
Title
Ordinance 21-2024: An ordinance on second reading submitting to the registered electors of the City of Littleton, Colorado a ballot issue regarding a proposed additional increase of a 4.0 percent tax on the retail sale of marijuana and retail marijuana products
Body
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From: |
James L. Becklenberg, City Manager |
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Prepared by: |
Reid Betzing, City Attorney |
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Presentations: |
Kathleen Osher, Assistant City Manager |
PURPOSE:
The purpose of this ordinance is to determine whether city council would like to place a ballot issue on the November 5, 2024 election with those revenues generated to go directly towards expanding people-first crisis response to community members who are experiencing issues related to mental health, depression, poverty, housing instability, and/or substance use issues.
LONG-TERM OUTCOME(S) SERVED:
Safe Community
DISCUSSION:
At the July 23, 2024, study session, city council discussed whether they would be in support of bringing a ballot issue to the registered electors on the November 5, 2024, election related to increasing the additional sales tax on retail marijuana and retail marijuana products. Additionally, discussion was had on to what types of uses those additional revenues should be put towards.
City council provided direction at that study session to prepare an ordinance referring a ballot issue to the registered electors whereby the additional tax would be increased from the existing three percent (3%) to seven percent (7%). New revenues would be dedicated to maintaining and preserving the city’s efforts in proactive public safety partnerships, services, and initiatives.
Based on recent years’ growth trends for this revenue, the increased rate would generate approximately $538,000 in additional sales tax revenue its first year. However, the city recently modified its rules for marijuana retailers to allow for longer hours of operation and potentially increased retail square footage. Given the uncertain effects on associated sales tax revenues, staff estimates that revenues form this measure could total as much as $646,000, which is the amount shown in the draft ballot language for purposes of compliance with the Colorado Taxpayer Bill of Rights (TABOR).
BACKGROUND:
The city has long supported a combination of police staffing, community engagement, and enhanced partnerships with private sector providers such as AllHeath Network to promote community safety.
Sustaining Littleton’s programs that pair police officers and behavioral health clinicians has been successful in de-escalating situations and connecting members of the community in crisis to appropriate treatment and services while allowing our officers to focus on other more appropriate calls for services. The expansion of this initiative furthers the strong partnership between law enforcement, mental health provider agencies, and individuals and families affected by mental health challenges.
The additional revenues would help fund the expansion underway in 2024-25 that includes two full-time Co-Responders, one full-time Crisis Case Manager, eight- and one-half hours per week of case management, and two hours per week of supervision and the mobile response unit that helps coordinate the response to those experiencing mental health crises. This would continue as a contracted service and all employees would be employed by AllHealth Network. In addition, revenues could support the expansion of proactive policing programs and initiatives such as additional special enforcement team (SET) members to help support mental health professionals, build relationships with businesses, the community and those persons experiencing homelessness. Finally, some of those revenues could be used towards homelessness prevention and assistance in our city.
Currently at 3.00% the City’s special retail marijuana tax is the lowest in the Denver metro area. The average special marijuana sales tax rate is 5.44%, while the median rate is 5%.
Prior Actions or Discussions
Prior actions in 2023 included an ordinance to increase the retail sales tax by 3.50% which passed on second reading on August 15, 2023. Staff recommended approval of the ordinance on second reading however, considering information that surfaced regarding the need to advance Measure 3K, staff recommended deferral of further consideration of the retail marijuana tax increase. The second reading and public hearing originally set for August 22 was continued to a special meeting on August 29, 2023. Council held the public hearing on August 29, 2023, but the motion to place the measure on the ballot failed 5 to 2.
During its February 10, 2024, retreat, council expressed interest in revisiting a potential increase in the tax rate for the retail sale of marijuana.
On July 23, 2024, city council provided direction for staff to draft a ballot issue for consideration.
This ordinance passed on first reading on August 6, 2024.
FISCAL IMPACTS:
While additional revenue could vary depending on a number of factors, it is believed that an increase of the city’s additional sales on retail marijuana and retail marijuana products by four percent (from the current three percent (3%) to seven percent (7%) could generate as much as $646,000 per year.
STAFF RECOMMENDATION:
Staff recommends approval of the ordinance on second reading to place a measure on the ballot to increase the retail sales tax on marijuana as outlined above.
ALTERNATIVES:
Council could consider a phased introduction of the increased retail sales tax with an additional one to one and one-half percent being added each year. The phased increase would be an additional one and one-half percent in 2025, two to three percent in 2026, and the full increase of three to four percent in 2027.
Council could seek to dedicate revenues to some other program or initiative.
Council could consider increasing the number of retail marijuana licenses from the maximum of 3 to some other number.
PROPOSED MOTION:
Proposed Motion
I move to approve Ordinance 21-2024 on second reading submitting to the registered electors of the City of Littleton, Colorado a ballot issue regarding a proposed additional increase of a 4 percent tax on the retail sale of marijuana and retail marijuana products.