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Opinion: Paul Tiger-Financial Secrets

Before 1967 Longmont was a sleepy farming town. Serving food just south of town there was a Johnson’s Corner truck stop. Beyond that, there was little to serve locals with a desire to eat out, away from home.
Typewriter opinion
Photo by Alexa Mazzarello on Unsplash

This content was originally published by the Longmont Observer and is licensed under a Creative Commons license.

Before 1967 Longmont was a sleepy farming town. Serving food just south of town there was a Johnson’s Corner truck stop. Beyond that, there was little to serve locals with a desire to eat out, away from home. That year both the FAA and IBM began construction on buildings that would house technology and the people to do the work. The high tech boom that has lasted over fifty years.

Longmont became a home rule city and began to apply taxation and fees in order to pay for the growth. It was a tough and expensive race to have housing and infrastructure available as hundred of new employees moved here. Like towns across the county, Longmont’s council was able to add new taxes by themselves without a vote of the citizens. In this new city, everything that could be taxed was and decided by seven representatives. Certainly no one likes overt high taxation, and for out town this happened literally overnight in the summer of 1968. Not the summer of love for Longmont. Things that were not taxed by the state or fed were now being taxed by the new city.

As with all changes, some residents left because of them. Too much growth; too many new people; high taxation; and moving from agrarian to technology put local people out of work. The Bracero program that had guest workers from Mexico since the 1940s was shut down, causing grief for farmers and retailers across the west. As the base of consumers was diminished in our town, the council increased the taxes. Many of the new residents that came to work in high tech came from places where overt taxation was the norm, and tended not to notice taxes on everything. I moved here thirty years ago and didn’t notice, but I was young and high tech.

A number of areas within Longmont have chosen not to be annexed into the city. Residents of these islands were at odds with the city about taxation. They had not moved to a new area with higher costs, the new high fees and taxes were put on them by seven people who wanted to include their wallets. They refused and remain a part of unincorporated county.

The taxation on homes and property was clearly not enough for the city’s need of income. Taxes were raised. Unlike other nearby towns, Longmont has never repealed or reduced a tax. The Rainy Day principal was given priority. When a need for increased income to build a water treatment plant was no longer needed, the city stuck with the tax for future unknown needs.

This saving and investing of tax income came to a halt in 1992 with the statewide passage of the Taxpayer Bill of Rights. The immediate effect in Longmont was for the city to ask voters to raise taxes and keep the income indefinitely. Our city was among the first to de-TABORize. Thirty years later, every ask of voters for new or increased taxes contains features that exempt Longmont from adherence to TABOR. The TABOR hiccup was brief, until the city engineered a way to ignore TABOR. Getting approval from voters for taxation remains, but else about TABOR is lawfully ignored. Longmont rules.

Recently a city administrator recalled finding two Mexican and one Chinese restaurants for dinner when she moved here over twenty years ago. There are over 200 restaurants that serve dinner.

What is unfortunate and obvious, is that the city doesn’t know where the tax income comes from. One could hope that with fifty years of taxation, that the city would have excellent accounting methods. It has not. When the city asks voters to approve an increase, city administrators, particularly finance, would have a very sharp idea on what is needed and for how long. We trust that the city knows its business. We’d be wrong.

Among the many things that Longmont began taxing in 1968 was food. Since neither the state or federal governments tax food, I imagined that the city would have accounting details on this exceptional tax. It doesn’t. Lacking this information is not a slip-up. The city intentionally doesn’t keep track of classes of income with the idea that competitive businesses could use that information for their own gain. Requests for public information on tax income are denied. It’s a secret. It is not a secret in other cities. The Denver Chamber has copious amounts of tax and finance information easily available. New developing businesses don’t have to guess. The Denver Chamber gets its data from the city. Not available here, and a cause for concern with our chamber of commerce. The Longmont Chamber, just like anyone else, can’t get decent figures from our city. Not only a secret, but established public policy. The policy of dumb.

Let’s return to food taxes, because this issue has made the financial policy of dumb recently showed up in a very public way. When food taxes were instituted fifty years ago, there was one grocery store and three restaurants. The assumption that a grocery store would produce more tax income than three eateries was factual. There wasn’t a lot of opportunity to eat out, so few did. The city lumped food in a store and restaurant food in the same financial category, with the idea that restaurant tax income would be low and inconsequential. Sleepy Longmont pre-tech thinking.

Longmont has instituted a tax on food that the city itself does not know the amount of. Intentionally not keeping track is a good business practice, really? A private business would have to report it’s income sources and amounts in detail, or suffer. Intentionally hiding income could be criminal. Accounting practices that can result in jail time.

The city has been unable to provide an accounting of food taxes; can’t tell the press; can’t tell the voters. In the fall of 2017 the city gave a guess at $14.4M. When the issue was brought into the public eye, the city claimed the income was over $20M. The last figure given was $11M. Huh? Okay, let’s break out grocery stores from restaurants. The city cannot do that. It does not know what the total income from food taxes are, and thus cannot know what the split is. In point of fact, the city asked grocery store chains to report total tax payments to the city that has been reported before – but the city was intentionally not paying attention.

Is this an issue about food taxes? Hardly. Quite a few of us have an interest in repealing groceries that are taxed here, but not elsewhere. The city should be a definitive source for information about its own income and expenditures. It’s not because it doesn’t want to be.

This is just food. If there has been an effort to keep secret the food tax income, what else is a financial secret? Are these really secrets, or just poor financial reporting?

Longmont is a high tech town with fifty years of experience as a home rule city. At close to 100K population, we appear to be using the same accounting methods of the village of Longmont with an 8K population in 1967.