Aurora is on the path to eliminating a tax that generates several million in annual revenue. While some lawmakers say the tax is an unfair burden to the city’s businesses and workforce, others see the move as a glaring fiscal misstep.
The city council voted 5-5 on Monday to give initial approval to a bill that would repeal Aurora’s occupational privilege tax. Mayor Mike Coffman voted to break the tie, giving the bill the votes it needed to move forward.
The tax collects $4 on a monthly basis for every employee in the city. Employees and employers split the dues, paying $2 each. The tax was first implemented in 1986 and originally intended to support street maintenance, police and fire services.
Councilmember Danielle Jurinsky originally brought the proposal forward, saying the city should not be placing a “head tax” on employees in the city and that it strains small businesses in particular.
Coffman later joined her as a bill sponsor. If the bill receives final approval on second reading, the city’s occupational privilege tax would be repealed in January 2025. The ordinance would prohibit trimming $6 million from the city’s public safety and transportation budgets and caps spending cuts in other areas to 4% a department, Coffman said.
As the city faces an uncertain financial future, Coffman stressed that a majority on the council can vote at any time in the next two years to either delay or halt the tax repeal. If the bill passes and does go into effect in 2025, the tax cannot be reinstated without voter approval.
“I think it’s inappropriate from the standpoint of economic development policy, to be taxing jobs that you are trying to create,” Coffman said.
Debating the plan
Councilmember Francoise Bergan originally had concerns about losing city services if the tax is repealed, but came around to supporting the bill because it gives the city time to evaluate its budget and respond to new growth, she said.
Councilmember Dustin Zvonek also said he likes that the proposal gives the city two years to prepare for the tax repeal. The city can change course if leadership decides Aurora needs that revenue closer to 2025, he said. The occupational privilege tax is “a bad tax,” he said.
But Councilmember Alison Coombs said she did not understand how the city can afford to cut the tax when it is consistently having conversations about services or programs it already cannot fund. The repeal would take a growing revenue source out of the city’s budget.
“I absolutely cannot support doing that, and there’s no way to do it without cutting some services or some infrastructure,” she said.
What equates to a $24 fee for employees is millions of dollars that the city can be spending in a coordinated way to serve citizens, she said. This bill creates a $6 million hole in the budget, she said.
Coffman rebutted, saying the budget exceeds $1 billion and it’s not clear if eliminating the tax would require budget cuts. Future revenue increases could offset the loss, he said.
Councilmember Juan Marcano said he considers the entire proposal reckless. Residents have asked the city to provide services such as recreation centers, safer streets and childcare solutions. A tax cut will make that work harder, he said.
The city also anticipates budget shortfalls in future years, he said, as Aurora continues to sprawl, demand for services increases and inflation affects communities. He later accused the bill’s supporters of using the proposal as an election year stunt so they can campaign on cutting taxes.
“What you all are doing here is just lighting the fuse on a bomb that does not need to be lit,” he said.
Jurinsky accused Marcano of what she called fear-mongering. While Colorado Springs sits at roughly 506,000 people and Aurora is pushing 400,000, Aurora offers more golf courses and more recreation centers than Colorado Springs and maintains a vacancy savings each year, she said.
“I’m sick and tired of my colleague, Councilmember Marcano, ruling this by fear. We literally go above and beyond in this city to offer services to our constituents,” she said.
Coombs has pushed back on framing the city’s vacancy savings as a good thing. She said the vacancy savings is a result of understaffing. Employees are doing the jobs of two to three people while dealing with burnout, she said.
“We don’t have just a glut of positions. It’s that we don’t have enough people to fill them,” Coombs said. “If we continue to cut our budget and we continue to rely on vacancy savings, we continue to lose more people.”
Councilmembers also discussed concerns that employees are being double taxed, as Jurinsky said some people are paying the monthly fees for each job they hold but are only required to pay it for one.
Coombs said she does not mind paying the fee for each job, but Mayor Pro Tem Curtis Gardner said he was deeply worried about double taxation. He asked if that practice should be stopped regardless of whether the bill passes.
Employees are not supposed to be double taxed, Jurinsky said, but have to undergo a tedious paperwork process to avoid paying the fee for each job they hold.
Jurinsky said it is not clear how much of the tax revenue comes from people being taxed multiple times. Staff confirmed the city does not track how much occupational income tax is collected from individuals, only the gross amount.
Councilmember Crystal Murillo opposed the bill because it diminishes diversity within the city’s revenue sources, and because she has disapproved of how the proposal was brought forward. Jurinsky had introduced the plan late in the budget process and the city does not know where it would eliminate $6 million in spending yet, Murillo said.
She also became frustrated with the council majority choosing to eliminate the city’s independent monitor and diversity, equity and inclusion staff positions from the 2023 budget.
“If we are going to try and justify this cut, which is what it is in our budget, and justify it with the removal of critical positions that we need in the city, to me that’s another reason to not support it,” she said.
An alternative proposal
Councilmember Angela Lawson said she appreciated Jurinsky’s intent to help local businesses, but could not support eliminating millions from the budget. She proposed an alternative plan at council’s Dec. 12 study session that would eliminate $1.2 million and give credits to help offset the tax burden on businesses.
Lawson said she knew she did not have the votes to pass her proposal and so did not bring it to council’s regular meeting on Monday. A council majority had expressed support for Jurinsky’s plan at the study session.
The city revenue will increase with a growing population, Lawson said, but so will demand for services. It will be up to future lawmakers to figure out how to make up for the $6 million, she said.
“I just don’t think it’s fiscally responsible,” she said. “I think we’re tying the hands of future councils.”
