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As the Town budget is developed each year, Town staff evaluates more than 6,000 line items to identify areas of potential savings and adjusts the budget accordingly. This includes evaluation of the Town’s fleet of nearly 450 vehicles, trailers and other equipment to determine optimal replacement schedules for the best cost benefit. Additionally, Town leadership has consistently said “no” to potential service expansions, choosing to focus on core services like fire and police. For instance, the Town has not pursued adding an arts center, public internet service, a public transit system or a number of other services offered by other area municipalities, keeping its focus on community-supported priorities.
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One way to attempt an apples-to-apples comparison of police departments’ staffing is a ratio of the number of police officers to 1,000 residents. Castle Rock is at the low end of the scale locally using that metric, with 1.05 officers per 1,000 residents. By comparison, Parker has 1.31 and Lone Tree 3.47.
Looking a bit further away, to other communities of 50,000 to 100,000 residents, Broomfield has 2.01 officers per 1,000 residents, Longmont has 1.64, and Loveland has 1.51.
Castle Rock Fire and Rescue Department’s 2021 Master Plan foresees a need for a sixth fire station, to serve northeast Castle Rock, within the next five years. Additional stations may also eventually be needed to serve west central Castle Rock and possibly also southwest Castle Rock. New stations benefit the entire community because they help alleviate call volumes at existing stations. It costs about $2 million annually to staff a fire engine, which a new station would house.
The average new home built in Castle Rock is about 2,200 square feet. At $7 per square foot, the new housing construction tax would add $15,400 to the cost of that average home. It's important to note that market factors determine the price for which homes sell, and not the actual cost of construction, which includes land costs, construction materials, labor, permits, taxes, fees and other expenses.
Recent single-family home sales prices in Castle Rock are on the lower end of the spectrum when examining data for other communities in Douglas County and other similarly sized communities along the Front Range. Median August 2021 sales prices, according to REColorado:
Castle Pines: $830,000
Castle Rock: $610,000
Commerce City: $500,000
Highlands Ranch: $655,000
Lone Tree: $1,095,000
Source data: https://www.dmarealtors.com/news/market-trends/city-and-county-market-trends-reports-sep-21
The funding being requested would cover not only the 75 positions but also various equipment, training and operational needs for CRPD and CRFD.
In 2021, the average CRPD Officer’s salary is $82,238. The Town also pays an average of $29,381 per officer in payroll taxes and benefits – including retirement and healthcare. Additionally, an average of $10,707 is budgeted per officer to cover training, uniform and vehicle costs, for an average annual budget need of $122,326 per officer hired.
For CRFD firefighting/prevention/EMS staff, the average salary is $82,103. Benefits average $28,813, and $17,000 is included for training, uninforms and overtime, for a total cost of $127,916 per firefighting/prevention/EMS position.
Growth helps pay for growth, but it doesn’t generate sufficient sales tax revenue to fund the Town’s fire and police needs. Looking back a decade, in 2011, the Town collected $19.5 million in sales tax revenue into its General Fund, where fire and police expenses are budgeted. 2017 was the first full year major stores in the Promenade were open. That year, the Town collected $30.7 million in sales tax into its General Fund, so that development substantially increased the Town’s capacity to fund general service needs. But, the revenue trajectory has declined, with $37.6 million in sales tax revenue collected into the General Fund in 2020.
To fund fire and police needs over the next five years and beyond, the Town needs $76-$80 million in revenue annually into the General Fund. Sales tax currently accounts for 65% of the fund’s revenue, so $49-$52 million in sales tax would be needed. Budget projections include 8% growth in 2021, 4.5% in 2022 and 3% in each year from 2023-2026. That would mean sales tax revenues of $42-$46 million – less than the $49-$52 million needed. The new housing construction tax would be used by the Town to meet fire police needs, as well as other general service needs, over the next five years and beyond.
The Town is anticipating receiving grants and other financial contributions to construct the I-25/Crystal Valley Parkway interchange.
If the Town obtains $40 million in intergovernmental and developer contributions toward the interchange, its total TABOR revenues for 2023 could be about $120 million, or roughly $30 million over its projected TABOR revenue limit for the year. In the absence of a TABOR timeout, that means the Town would have to stop the interchange and return the contributions or cut expenses elsewhere – like in fire, police, parks and rec, or roads – by $30 million so it could issue TABOR refunds.
Further, strong sales tax revenue thus far in 2021 has created the possibility that the Town will exceed its TABOR revenue cap for this year. Granting the TABOR timeout would allow the Town to use all funds collected in 2021 – and in any year through 2030 where financial performance is strong – to meet needs while still preserving other aspects of TABOR that require voters' approval for tax increases or multiyear financial obligations.
The new housing construction tax would take effect Jan. 1, 2022, and would be applicable to any building permits pulled after that time. The lodging tax would also take effect Jan. 1, 2022, while the sales tax increase would take effect April 1, 2022, to allow adequate time to educate retailers. The TABOR timeout would apply to all of 2021 and would last 10 years, through the end of 2030.
Colorado voters in 2020 repealed the Gallagher Amendment, which set residential and nonresidential property tax assessment rates in the State Constitution. Now, the State’s General Assembly sets the rates.
The residential assessment percentage for 2021 is 7.15%. At that rate, the owner of a median-valued home in Castle Rock ($449,947.50) pays $38.48 in Town property tax.
The General Assembly has temporarily lowered the assessment percentage for 2022 and 2023 to 6.8%. 2022 is not a reassessment year, so if the Town’s mill levy rate remains at its current 1.196, the owner of a home valued at $449,947.50 would instead pay the Town $36.59 in property tax next year. The Town’s mill levy rate could decline, however, due to this year’s reassessment and a provision in the Town Charter that restricts annual growth in the Town’s property tax revenue to 5.5%. In that instance, the homeowner in the example would pay the Town even less than $36.59 in property tax in 2022. The Town expects in 2021 to bring in only $1.4 million in property tax revenue.
Currently, the total sales tax rate in Castle Rock is 7.9%, with 4% of that going to the Town. Here’s how that compares to other municipalities within Douglas County:
Castle Pines: 6.75% total, 2.75% of which is local
Larkspur: 7.9% total, 4% of which is local
Lone Tree: 6.8125% total, 1.8125% of which is local*
Parker: 8% total, 3% of which is local
*Lone Tree City Council has referred to this fall's ballot a question to ask that city’s voters to increase this to 7.8125% total, 2.8125% of which would be local.
It’s true that the Douglas County Schools, Douglas County and the Douglas County Libraries all receive more property tax revenue from Castle Rock homeowners than the Town. And, in many areas, a neighborhood-level metropolitan district receives the most significant portion of the property tax Castle Rock homeowners pay.
Each of these entities, like the Town, provides an array of local services and is wholly independent, with a governing board whose interest is meeting the entity's own funding obligations. The Town cannot compel these groups to contribute funds toward the Town's needs, nor force them to negotiate. Given these dynamics, it’s not feasible to simply reallocate the property tax homeowners pay to these other entities to meet the Town’s needs.
The Town charges impact fees – as well as water-related system development fees – for every new home built. View current impact and system development fees. Of these fees, $1,052 goes to the Fire Capital Fund, and $526 goes to the Police Capital Fund. These one-time payments can be used for one-time purposes, like toward building a new fire station. Impact fees cannot be used to fund ongoing operational costs, like paying a firefighter or police officer’s annual salary. It's because of this that impact fees are not a revenue source able to meet the growing staffing needs of the Fire and Police departments. A video helps further explain this information.
This would have been more of a concern in the past, before a 2018 U.S. Supreme Court decision ruled that states can charge sales tax on purchases from out-of-state retailers. Since that ruling, most online retailers – including major ones, like Amazon – have been collecting and remitting sales tax to the Town when purchases are shipped to Castle Rock addresses.
The one-time funds provided to the Town through the American Rescue Plan Act only can be used through 2024 for specific, federally authorized purposes, including:
These funds cannot lawfully be used to meet the Town's public safety staffing needs; toward construction of the needed Interstate 25/Crystal Valley Parkway interchange; for Parks and Recreation purposes; nor toward trail and open space acquisition and maintenance.
The Town manages its finances conservatively and generally spends millions less each year than it brings in – this held true even during the Great Recession. Fire and police positions are in the General Fund, which had a 2020 year-end balance of $21.1 million – about $9 million of which wasn’t committed to a specific purpose. It’s not prudent for the Town to use those funds to hire additional fire and police personnel, however, because they can’t necessarily get replenished each year. CRFD and CRPD’s needs will add about $5 million in expenses in 2022 and another $4 million in 2023. (Additional costs in outgoing years are $3 million in 2024, $8 million in 2025 and $4 million in 2026.) One can see that simply using savings would not allow the Town to meet these needs, not to mention it would exhaust the Town’s savings, which is intended for use during difficult financial times or for funding extraordinary opportunities.
The Town received almost $3.5 million in federal CARES Act funds in 2020. Those funds could only be used for specific purposes related to the COVID-19 pandemic. Town Council elected to award over half of the funds, more than $1.8 million, to support small local businesses during a time of great need, rather than use those funds to support Town financial needs. The Town's funding needs are long-term in nature and require reoccurring sources, not one-time grant funding.
That’s not true. In fact, in two separate rulings, the Colorado Supreme Court – both in City of Aurora v. Acosta (1995) and in Havens v. Board of County Commissioners of the County of Archuleta (1996) – affirmed that voters can allow their local governments to keep revenues in excess of TABOR limits using parameters as broad or as narrow as they may choose.