Searching for Dollars, County Considers Tax Capture Plans

Lamar and Prowers County loses approximately $80 million in leakage sales each year. That’s from shoppers buying out of town, either when traveling to a destination point or online shopping.  In an effort to reclaim some of that leakage, if only in sales tax on construction materials purchased outside the county, the Prowers County Commissioners have been discussing a means of gaining some of that lost 1% tax on materials.  The idea for tightening the sales tax leakage developed from a recent meeting held with LuAnn Pyatt, Local Government Liaison from the Colorado Department of Revenue.  She suggested an arrangement in which the City of Lamar would collect the tax for the county for a pre-determined fee on new construction materials.

Prowers County does not issue a building permit for construction the way the City of Lamar does. As such, they have no way to claim any taxes on construction materials.  Lamar charges residents a percentage of the value of the construction work when issuing the permit.  The County does require a zoning permit, which, according to Land Use Administrator, Keith Siemsen, is a permission to build. He added, ”Whenever we have a permitting process, any kind of project, we have a county permitting and development pamphlet this is issued.  It has an intake form which goes to all departments and elected officials.  Theoretically, nothing is finalized until those involved in the construction have been made aware.”

The discussion, which included Clerk and Recorder, Jana Coen and County Attorney, John Lefferdink, focused on when the county could collect the 1% tax on construction materials purchased from a business not located in the county, such as La Junta, Pueblo or Garden City. Coen explained that if you have your purchase shipped to your address in the county, you’ll only pay the state tax at your point of purchase and be expected to pay the county tax at some point in the future.  Coen stated, “You’re paying the state tax in Pueblo or in Lamar, there’s no difference there, the 1% tax depends on whether you haul it back yourself or have it shipped from where you bought it.”  She added the Department of Revenue is not telling the county how to collect their own tax, “It’s not an exemption, but there’s no means in place of collecting by the county.”

One manner in which the county can recapture some of that tax is on property improvements when the county assessor is made aware of new construction, but that may happen only when the property receives an assessment. Attorney Lefferdink suggested that about 90% of the county taxes are collected, and that most purchases, with some exceptions for construction materials, are recorded locally.  “We may lose some odd lots, but overall, we collect most of our taxes.  He cited one instance in which Bent County asked for construction fees in advance of a wind turbine project which netted $500,000, “But we aren’t looking at anything that size right now for Prowers County,” he stated.  The commissioners agreed that the City of Lamar should be contacted to explore some possibility of splitting a percentage of the tax which they could capture for the county.

By Russ Baldwin