As town officials come to terms with a shortage of revenue for their highest goals — affordable housing, transportation, climate action and so on — they’re turning to one of their few untapped funding sources: the seventh penny of sales tax.
If they get the additional cent on the ballot in November, and if voters approve the measure, it will be the first time Teton County has levied all 7 cents of sales tax allowed under state law, generating an additional $16.5 million each year for local government.
The conversation is still in its earliest stages, after town councilors broached the subject at their annual retreat this month. The town is drafting a letter to send to the Teton County Board of County Commissioners in the near future, as both governing bodies must agree to put it to a vote.
Advocates say the status quo for town and county funding simply isn’t enough, between basic services like public safety and infrastructure maintenance, and the various priorities the community has set to preserve the area’s ecosystem and improve the quality of life here.
“The list is long,” Town Manager Larry Pardee said. “It’s greater than our current resources that are available to us. So the question becomes: Can we live with where we are today? Or do we want to begin to build tomorrow’s vision by putting the resources in place?”
The seventh cent is so called because it adds to the other 6 cents of sales tax already charged for every dollar spent in Teton County, except on groceries. Sales tax accounts for more than two-thirds of the town’s budget.
The first 4 cents are mandated by the state Legislature. The fifth was approved by voters in the 1990s and has been in place ever since. The sixth is the single cent of specific purpose excise tax, which voters must approve to fund specific projects. The seventh penny would be like the fifth penny, both of which elected officials can use at their discretion as needs arise, unlike the SPET.
It would also be uncharted territory — officials have never asked the electorate to max out sales tax potential in Teton County (though in 2016 they did unsuccessfully ask voters to swap the SPET for a penny of the more predictable and flexible general sales tax).
Without unlocking that funding, some say the town and county will be unable to tackle the ever-looming shortages in housing and child care, the rise in traffic and carbon emissions, and other problems the Comprehensive Plan seeks to address.
“These are all things our community is asking [us] to provide and take action on,” said Susan Scarlata, the town’s community engagement specialist. “What’s missing is the funding source and revenue to make any of it a reality at the level that our town really needs and deserves.”
Sales tax, though somewhat regressive, is often touted as among the fairest ways to fund local government. Visitors pay a large share — as opposed to the completely local burden of property tax — and it keeps pace with inflation.
“It’s the one that most accurately captures not only the economy, but all the components thereof,” Councilor Jonathan Schechter said.
Town Manager Larry Pardee acknowledged that the request for more tax money could feed into the “longstanding notion that government is bureaucratic, it’s bloated. It’s a national mindset.” But, he argues, “it’s not necessarily a local reality.”
Councilor Jim Stanford underscored that idea during the retreat, saying that depriving the town and county of funding will hinder the community’s efforts to address housing, transportation and other challenges.
“It makes all the sense in the world,” he said of the seventh cent. “There’s this view that if we somehow starve the government and don’t let it deal with the effects of growth, then somehow we’ll stop growth too.”
To help make the case for more funding, Pardee compared Jackson’s budget to peer ski towns like Park City, Utah, and Aspen, Vail and Breckenridge in Colorado. In terms of dollars per resident, Jackson has just one-half to one-third the amount of all those communities.
If voters were to approve the seventh penny, elected officials could create a resolution to keep it in place indefinitely. Some attorneys argue that voters must approve it a second time, in the following election, before such a resolution is possible. After that, elected officials must either reverse the resolution, or 5% of voters must petition to repeal the tax for it to go to another vote.
July 16 is the deadline for town and county officials to get the seventh cent on the ballot for the November general election, which, as a presidential election, is sure to see high turnout.
The town also has the ability to levy property tax, as the county does, but the councilors agreed not to pursue that, at least for now. Schechter worried it could “muddy the waters.”
“My gut is that it isn’t worth it,” he said. “It’s an arrow we can keep in our quiver.”
The councilors also considered other, more far-fetched ideas for local funding, including a tax on real estate transfers, which Rep. Andy Schwartz has tried unsuccessfully to pass in the state Legislature several times over the years.
Though they agreed a real estate tax would have no chance of passing this year, they did discuss looking deeper into what it would generate for Teton County and for the state, perhaps to show other legislators how it can benefit their districts.