Local Government Pledging Sales & Use Tax Capital Improvement

Local government pledging sales and use tax for capital improvements - statutory reporting requirements – repeal of obsolete provisions. Statutory Revision Committee. Current law specifies that a county, city, or incorporated town may include the creation of a sales and use tax capital improvement fund (special fund) when they seek voter approval to levy a sales or use tax. Before the adoption of section 20 of article X of the state constitution (TABOR), the statute provided that a county, city, or incorporated town needed to create the special fund in order to issue revenue bonds payable solely from the fund for financing capital improvements. Also, if a county, city, or incorporated town wishes to create a special fund after it has already obtained voter approval for the levying of a sales or use tax, then they must seek voter approval for the creation of the special fund.

The creation of the special fund does not have a purpose for a county, city, or incorporated town post-TABOR because the question of using sales or use tax revenues for financing capital improvements is asked when voter approval for the bond issuance is sought. Thus, the language regarding the creation of the fund is unnecessary.

Furthermore, the requirement to seek voter approval for the creation of the special fund after a county, city, or incorporated town has already obtained voter approval for the levying of a sales or use tax predates the adoption of TABOR. Because TABOR requires voter approval for the issuance of any revenue bonds, the requirement to seek voter approval for the creation of the special fund is unnecessary and duplicative.

The act repeals the unnecessary and duplicative law and clarifies that the use of sales and use tax revenue bonds for capital improvements requires voter approval under TABOR.

(Note: This summary applies to this bill as enacted.)