Bayfield officials are looking at new revenue sources and possible staff cuts after town voters rejected a sales tax increase twice in 2014.
The money, estimated at $260,000 a year, would have been designated for street and storm water drainage-related projects.
Town Manager Chris La May presented his list of possible new revenue sources to town trustees on Jan. 6. The list included allowing marijuana businesses, although La May didn't consider that likely.
The town board passed an ordinance several years ago banning any medical marijuana businesses, and more recently an ordinance banning any recreational marijuana businesses. Both of those issues drew large meeting attendance, although many of the attendees lived outside town limits.
La May estimated that a recreational marijuana business in Bayfield might have $500,000 in sales, generating around $10,000 with the town's current 2 percent sales tax. Plus the town could opt in to receive a share of the state sales tax on recreational marijuana.
Also on La May's list of possibilities are a franchise fee increase for Source Gas and a new franchise fee on La Plata Electric Association. These are for use of town right-of-ways, and both fees would presumably be passed on to town customers - versus the sales tax, which also would be paid by people living outside town limits and people passing through.
The current Source Gas franchise fee, charged per 100 cubic feet of customer use, generates around $10,000. The town can renegotiate that fee with the gas company. Doubling it would bring in another $10,000.
La May estimated that a 5 percent franchise fee on LPEA bills would generate around $80,000. That would apply only to LPEA customers in town.
His list also includes raising parks and recreation fees, implementing street impact fees with building permits, implementing overweight vehicle fees, and creation of a storm water enterprise fund that treats storm water management as a utility.
There are around 22 such enterprises around the state, he said, with an average monthly fee on residential properties of $6.01. The average non-residential rate is $1.30 per 1,000 square feet. These are based on the amount of impervious surface on a property, such as roofs and paving, that causes more storm runoff to leave the property.
He estimated the residential storm water fee might generate around $40,000 per year and the non-residential fee around $78,000.
La May also presented the option of reducing the level of street maintenance. In his written memo, he said, "The majority of those participating in the election apparently do not believe the town needs the additional funds to maintain the roads. ... One option for the town is to reduce the level of service consistent with the available financial resources," such as reducing maintenance from level B to level C, with higher priority maintenance to high traffic roads.
"I hate to offer that as an option, because the longer we prolong maintenance, the more it costs," he told trustees. "The goal was to avoid that. ... We start having a (funding) shortfall around 2020. If we add the franchise fees, marijuana, overweight vehicles, etc., we still end up with not enough resources, so we have to reduce costs."
In his written memo, he said, "...staff is of the opinion that the best long-term solution is a dedicated sales tax..."
Mayor Rick Smith commented, "You have three things. Either get the sales tax increase or increase fees in other areas attributed to residents and businesses, and some reduction of services. We can't generate enough revenue from these other sources to cover the problem. It's a hard thing to look at, but that's the position we're in."
Trustee Ed Morlan wants to try again for voter approval to raise the town sales tax from 2 percent up to 3 percent. He and Smith said the town needs an outside volunteer committee to promote this, as the school district has done successfully.
La May noted that the county might also be seeking voter approval this fall for a property tax increase. Smith suggested a work session with the county on this. He also wants more discussion at the Jan. 20 board meeting. He doesn't want the marijuana option.
Trustee Matt Nyberg said town residents "should know the reality that we are looking at everything." Trustees Matt Salka and J.J. Sanders agreed.
La May also presented a new idea on Jan. 6: if town voters don't agree with a sales tax increase for roads, maybe they would go for a recreation district funded by property taxes. If approved by voters, the town would eliminate its recreation programs and shift that money to streets.
Efforts to get voter approval of a larger Bayfield area recreation district in the 1990s went down in flames. No one has made a serious effort since then.
La May also suggested seeking approval for a sales tax increase, with the additional money dedicated to recreation instead of streets. Again that would free up money for streets.
Yet another option is to reduce general operations expenses by around $100,000. "Our biggest expense is personnel. We'd probably have to look at some reduction in force or benefits," La May said.
