Denvers distinct sales tax obligation to eliminate environment change could be a plan for future activity across the country

Colorado News

Ballot measure 2A is part of Denver’s efforts to cut its greenhouse gas emissions in the city, but some are concerned about regressive nature of the tax

Denver voters this year could give the city a unique tool for fighting climate change that is unlike strategies pursued by other U.S. cities. Across the nation, local authorities are taking on responsibility for fighting the warming planet amid gridlock at the federal level. 

Denver’s idea is different because ballot measure 2A would use the proceeds from a dedicated sales tax increase to raise roughly $40 million a year to invest in renewable energy, clean transportation, energy efficiency and more. 

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If voters approve the tax on the Nov. 3 ballot, it could serve as a model for policy options in other cities. “We truly are pioneering this,” said Councilman Jolon Clark, who sponsored the measure to get the issue on the ballot. Clark said two other municipalities have reached out to Denver to talk about implementing a similar proposal themselves.

As fires torch the West and hurricanes slam the East, the threat of a changing climate has become more pressing, and cities are more urgently taking action. The situation is so dire that local governments are more likely to try to tackle this intractable problem, said Cooper Martin, an expert in sustainability policy at the National League of Cities.

“At this point, I think you’re seeing governments doing anything they can within their power,” Martin said. 

Cities in Colorado and across the country have implemented policies to fight climate change. Boulder, with voter approval in 2006 enacted a utility tax that charges residents extra for electricity usage and uses the funds to pay for programs that reduce greenhouse gas emissions. In Miami, voters in 2017 approved a $400 million bond issue that funds climate change mitigation tactics, like those used to combat sea level rise.

Denver’s idea is inspired by action in some other cities, Clark said, pointing to Boulder. And action by cities, regardless of the strategy, is generally driven by the lack of federal action to address the climate crisis. President Barack Obama joined the Paris climate accords and put in place emissions cutting measures through executive action, but President Donald Trump has waged a yearslong campaign to repeal many of his predecessor’s environmental policies. 

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The inaction at one level has led to action at another. “Local effort is really what we’ve had for the last 10 years, and I think that it’s been valuable,” said Mark Smith, an economics professor who studies environmental policy at Colorado College.

For Denver, that means raising the sales tax to 8.56% from 8.31% to support green projects in the city. If approved, it would take effect on Jan. 1, 2021. The money raised would be divided among six categories covering a range of environmental issues.

The categories prioritize environmental justice and include training programs to empower people to work in clean energy as well as investment in renewable energy.

Other funds will be dedicated to making the city’s infrastructure cleaner by reducing reliance on cars and improving mass transit. According to the city, transportation is responsible for 30% of the city’s emissions. Another 50% of the city’s emissions are attributed to new and existing buildings, and the tax funds would be used to upgrade the energy efficiency of office and residential spaces.

Proponents say many of the elements of the bill are intended to offset a reality of the proposal: It is fundamentally a regressive tax. That’s because sales taxes are regressive, meaning they require lower income individuals to pay a higher proportion of taxes.

The bill that put the measure on the ballot says city officials must try to invest half of the funds it raises directly into the community and prioritize efforts to steer funds toward under-resourced communities. 

Clark says these stipulations are designed to ensure lower income and marginalized communities receive more benefits from the tax than they pay into it. But critics say the city hasn’t provided enough details on how it would implement its strategies. 

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Denver lawyer Frances Koncilja, a former state Public Utilities Commissioner appointed by Gov. John Hickenlooper, wrote in an opinion piece the proposal was “light on details of exactly how these funds will be spent and who will benefit and how it fits with current programs.”

But Martin, at the National League of Cities, thought the city could offset the regressive impact by providing more benefits to poorer people than it collects from them in taxes. “You can actually still manage these effects and end up with a net result that’s better for low-income communities,” he said.

To reduce the burden of the tax, the measure would not apply to purchases of food, water, fuel, medical supplies and feminine hygiene products.

The proposal ended up on Denver’s ballot after city officials considered a handful of other options to combat climate change. Clark championed a carbon tax for the 2019 ballot, but Denver Mayor Michael Hancock opposed it. 

Other city council members were leery because it wasn’t a true carbon tax that would change consumer behavior and discourage city residents from using fossil fuels. But after the rift with Hancock, the two sides agreed to create a climate task force to come up with solutions. 

That task force set climate goals for Denver to slash greenhouse gas emissions 40% by 2025 and 100% by 2040. This year’s ballot measure is part of getting to that goal.

Local governments are searching for their own solutions 

Cities and states face varying threats from climate change and have differing levels of political will to address the issue. “There are a lot of local problems,” Martin said. 

Activists and experts say policymakers should tackle what’s politically feasible in their area and work within the legal constraints of their jurisdictions. That’s led to a mosaic of approaches at the state and local level. Democratic-run California has an emissions trading scheme. Washington state tried, but failed, to pass a carbon tax. Washington, D.C., implemented “green bonds” to fund water cleanliness and climate resilience projects. 

Even so, other cities have not yet implemented a sales tax. And the threat of climate change has become more visible with devastating disasters. 

If the local policies don’t make a discernible impact on slowing the pace of climate change,  Denver’s pollution cuts are minuscule compared to the emission slashing needed — they do offer a valuable educational element, said Smith, the Colorado College professor. That, in turn, could lead to action at the federal level. 

Ultimately, cities can only do what they have the political will to pull off. For Denver, that could mean starting with ballot measure 2A.

“I think it’s probably the tool in Denver’s toolkit,” Smith said. “I suspect that they don’t have the authority to level a carbon tax. I don’t think that’s an arrow in their quiver.”

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