August 27, 2015 Vol. 14 No. 40
Pot tax revenues flowing to flood control projects
Written by Jeanne Davant   

Mustangs reunite

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The Class of 1965 reunion dinner was held at the Garden of the Gods Trading Post on Saturday evening. Top, members of the Class of 1965 gathered at the Garden of the Gods Trading Post on Saturday evening; front row, from left: Janine Giles and Donna Guenrich. Back row, from left: Tom Giles, Georgia Court, Deanna Wright and Kit Schorer. Second from top, Jennifer Juth, left, and Kayle Higinbotham catch up on old times. Third from top, Dennis Bartley, left, Danny Wheeler and Bob Nakai enjoy their reunion. Fourth from top, D’Esta Harris, right, was a key organizer of the reunion weekend. She is joined by her daughter, Danielle, and classmate Janeen Fritz. Second from bottom, a framed photo of the Vietnam memorial wall shows the name of Emmet J. Peters, a classmate who died in Vietnam. Bottom, Gerald Boyd leafs through the old high school yearbook.

Photos by Casey Bradley Gent

Manitou Springs is enjoying a windfall of tax revenues from recreational marijuana sales. The city is using those revenues for capital projects, mostly related to flood mitigation, and other special projects, Finance Director Rebecca Davis said.

Davis reported last week that, through June, the city has collected more than $1.75 million in total sales taxes, including all retail sales — an increase of 80.4 percent over the same period in 2014.

She cannot, by law, disclose how much of that amount came from the city’s two recreational marijuana stores, because there are only two vendors in that category.

“But I can say that our regular sales are up, too,” Davis said. Non-marijuana retail sales, and the taxes the city collects on them, have increased every month through June when compared with the same months of last year.”

The decisions on how to spend the city’s revenue fall to City Council, and Davis said she thinks it’s being spent in the right places.

“Council has been doing a wonderful job of not letting this extra money go to unnecessary projects; they’ve been prudent,” Davis said.

So far this year, Council has approved $375,785 in expenditures that were not in the city’s 2015 budget, Davis said. Here’s how that money is being spent:

  • $29,864 for a new roof for the Fire Station;
  • $25,900 for repair of the Fire Station floor and installation of a sand and oil interceptor;
  • $51,410 for office supplies, furniture and equipment for the Flood Recovery Team’s new office. The lease for the modular office adjacent to the Public Works Facility and team members’ salaries and benefits are being covered by grants from the state Department of Local Affairs.
  • $40,000 for pothole repairs;
  • $72,826 for a modular bridge at Spring Street and Ruxton Avenue. The original bridge was undermined by the flooding in May. Council decided to install a temporary bridge rather than a permanent structure, which would have cost up to $500,000.
  • $35,000 for a geotechnical study and structural design to repair the retaining wall on Manitou Terrace above the sediment pond at the top of Cañon Avenue. The wall collapsed after May’s heavy rains.
  • $9,368 for a structural engineering plan for repair of the Mansions Park retaining wall behind City Hall, damaged during the September 2013 flooding and now near collapse;
  • $26,000 for purchase of a portion of the property at 517 Cañon Ave. The Williams Canyon culvert cut off access to part of the property. The owner agreed to sell the parcel to the city rather than having a footbridge constructed, which would have been considerably more expensive and possibly dangerous during high flows in the culvert.
  • $50,000 for structural assessments of the city’s bridges;
  • $4,667 to support the Ruxton Canyon Use and Impact Study, which is collecting data on foot and vehicular traffic in the Ruxton corridor;
  • $1,250 for participation in the Fountain Creek Watershed Protection District;
  • $29,500 for a three-month contract with Strategic Alliance Security to assist police in patrolling the downtown area.

The city may be able to recoup some of these expenses. For example, the city could get back 75 percent of its expenditures on the Manitou Terrace wall and Spring Street bridge through the Federal Emergency Management Agency.

Not all of the revenue from the marijuana sales tax is available for these expenditures, Davis says.

The city collects 10.4 percent of each retail marijuana sale. Of that percentage, 3.9 percent is the city’s regular retail sales tax, 5 percent is the special tax on marijuana sales, and 1.5 percent is a portion of the state tax on marijuana that is returned to Manitou.

Since the two retail marijuana stores are within the Urban Renewal Authority district, the city must remit the percent retail sales tax to the URA. That means that 37.5 percent of the marijuana tax collections go to the URA, and 62.5 percent remains for other uses.

Besides paying for some of the flood projects, the extra cash is helping to build the city’s reserves. But the revenue is not an endless fount. Pot revenues likely will level off eventually and could drop precipitously if Colorado Springs approves retail marijuana stores.

“I told City Council that it should not be considered an ongoing revenue stream,” Davis said. “So it should not be used for ongoing operating expenses like payroll, but for special capital needs and projects.”

The city has many more capital needs stemming from the May flooding that will be very costly. Flood Recovery Manager Shelley Cobau and her team have identified 60 projects that need to be addressed.

“Although the city is applying for disaster grant funding from FEMA, the FEMA grants require a 25 percent match, which the city has to come up with,” she said. The FEMA projects could total as much as $24 million, meaning that the city would have to find $6 million to complete them.

“This requirement will more than use up all extra revenues that the city can obtain,” Davis said.