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Keystone’s vote to break away from unincorporated Summit County and become its own home-rule municipality is likely to mean $6 million in lost tax revenue next year, according to county Finance Director David Reynolds.
In an update to county leaders during a Sept. 26 Summit Board of County Commissioners meeting, Reynolds said the separation will be “very impactful to the county’s general fund.”
Reynolds estimates there will be roughly $3.2 million in lost sales tax revenue, $1.2 million lost in service fees and $1.6 million in lodging fees in the 2024 budget due to the incorporation.
Keystone residents who led the vote to incorporate have said they would push to reinstate the lodging tax for unincorporated parts of the county in order to retain as much revenue as possible.
The separation comes as county officials prepare to unveil a draft budget for next year amid uncertainty over property tax revenues and decisions on mill levies.
Record-high home values led to a 63% average increase in property valuations for county homeowners this year, which is all but certain to raise property taxes in 2024. In June, the Summit County Assessor Lisa Eurich said her office was flooded with the most property valuation appeals in nearly 15 years as a result.
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In response to the tax hikes, state lawmakers approved Proposition HH for the November ballot, which could lower statewide assessment rates and slash tens of thousands of dollars in property value from taxation in a bid to deliver some relief to homeowners. The measure’s passage remains uncertain, however, as criticisms continue to mount over how it could lower Colorado Taxpayer’s Bill of Rights refunds.
On top of that, county officials are mulling what, if any, reductions to mill levies should be made to help offset the rise in property taxes. All of it has contributed to uncertainty around the budgeting process as county officials remain unsure how much revenue will actually be coming in.
“We’ve got our hands full trying to pull together something that will satisfy everyone,” Reynolds said.
On the lost revenue from incorporation, Commissioner Tamara Pogue asked what “services can we reduce to correlate with that?”
Pogue said she’d be interested to investigate how Arapahoe County dealt with the issue after an unincorporated area, Centennial, voted to incorporate in 2000.
“I’m not sure how we figure that out. But, obviously, if there’s going to be a reduction in geography there should be some corresponding reduction in service,” Pogue said.
Ken Riley, president of Incorporate Keystone and Keystone Citizens League and a major driver of the incorporation effort, said he believed the transition of county-led services over to the new town could take about a year.
That will include identifying road maintenance and plowing contractors, law enforcement services, short-term rental licensing, among other priorities.
“The work that we’ve done in the past has been the easy work,” Riley said on Sept. 26 shortly after Keystone voters approved a home-rule charter.
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