Boulder, CO

Boulder considers raising climate tax on businesses, lowering for households

Matt Whittaker
The Flatirons just outside of Boulder.Richard Schneider/Flickr

By Matt Whittaker / NewsBreak Denver

(Boulder, Colo.) Boulder's mayor and at least two other City Council members have shown initial support for raising the city's climate tax on businesses while lowering it for residents.

On Tuesday, the council is scheduled to hear staff recommendations that the city pursue a 2022 ballot initiative to replace existing climate-related taxes with a new tax that would bring in at least $1.1 million more in annual revenue and allow the city to borrow money against future climate tax revenue.

That would raise average annual costs for commercial customers by $133.61 and industrial customers by $685.06 while lowering residential expenses by $4.75.

As is, the city's commercial and industrial sectors account for about three-fourths of the city's energy-related emissions but pay less than 37 percent of a climate tax that was approved by 60% voters in 2006, paving the way for Boulder to became the first municipal government in the nation to impose an energy tax to combat climate change directly, a city staff report said.

Climate science has changed since then. The staff said raising the climate tax would enable more significant greenhouse gas emission reductions and an expanded emphasis on making the community more resilient and adaptable in the face of climate-related shocks like last year's poor air quality because of California wildfires and the Marshall Fire, which destroyed more than a thousand homes and businesses in Boulder County.

Initiative would be on the ballot in November

If the council approves, voters would decide in November whether to replace the existing Climate Action Plan tax, which is based only on electricity usage, and Utility Occupation Tax, which applies to electricity and natural gas usage, that currently result in $3.9 million in yearly revenue with a single tax on electric and gas utility revenues that would bring in a minimum of $5 million annually.

The city would spend the extra money trying to hit climate targets adopted last year that include reducing greenhouse gas emissions 70 percent by 2030 from 2018 levels. That would mean reducing emissions at a rate of roughly 5.8 percent per year, but the city has been averaging about 1.3 percent in annual reductions.

Staff also recommend extending the tax until 2040 so the city could borrow money against future years' taxes to pay for infrastructure development. The existing climate tax expires in 2023, and the utility tax sunsets in 2025.

Initial support from some council members

"I haven't made a final decision yet, but at this time, I'm supportive of Boulder city staff's proposal to modify and extend the climate tax," Mayor Aaron Brockett said. "Climate change is an existential threat to our city and our entire society, and the additional revenues should enable us to meet our ambitious emission reduction goals for the city, as well as be simpler and more understandable for our residents and businesses."

Council member Bob Yates said the staff recommendation "seems sensible."

The staff's recommendation proposes that current recipients of energy assistance funding be exempt from paying the new tax and that the city develop a rebate system for low-income residents and perhaps certain types of businesses.

"If Tuesday's discussion confirms that modifying this tax will result in investments in our community that address health, promote green jobs and economic development, prioritize our local ecosystems, and address the growing inequities that climate change perpetuates, then I am likely to support a modification of the current tax," council member Nicole Speer said. "This will particularly be true if, as I understand it, many individuals will see a net decrease in taxes."

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Matt Whittaker writes about natural resources industries, including oil and gas, mining, renewable energy, agriculture and cannabis. He's been based in the Denver metro area since 2013. You can follow him on Twitter @mattswhittaker.

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