In early August, the City Council of Denver approved a 0.25% sales tax increase proposal. Colorado has a state-wide sales tax of 2.9%, and allows local governments to collect a local option sales tax of up to 8%. The purpose of the tax is to generate revenue to support the City’s efforts to eliminate emissions and air pollution and adapt to the effects of climate change. Denver hopes to achieve a 30% reduction in emissions by 2025 (below 2005 levels), which is more ambitious than the statewide 26% emissions reductions goal in Colorado. To achieve these reductions, the city plans to decarbonize three sectors where there is the most potential for significant greenhouse gas reductions: buildings, electricity grids, and transportation. Therefore, the revenue from the tax will also be beneficial in reaching Denver’s goal of 100% renewable energy by 2030. It will be left up to voters whether or not the tax will pass on November 3, 2020.
Denver is one municipality among others in Colorado introducing strong climate policies due to the difficulty faced in passing bills at the state level. Aspen and Boulder have carbon fee programs in place, the Renewable Energy Mitigation Program (REMP) and Climate Action Plan (CAP) tax, respectively, which have been very successful in reducing emissions and financing transitions to renewable energy sources. These strategies involve charging residents or businesses in specific emissions sectors, including building and home energy and/or electricity use. Alternatively, Denver’s approach is to tax goods and services that residents pay for to generate revenue.
Denver’s Climate Action Task Force
When a carbon fee initiative failed in Denver last year, the city established the Climate Action Task Force, which was the group responsible for developing the sales tax recommendation.
The Climate Action Task Force consisted of 26 members from a variety of environmental advocacy and community groups such as the Sierra Club, Resilient Denver, Energy Outreach Colorado, Xcel Energy, International Indigenous Youth Council, and many more. Their specific responsibilities include engaging with communities and residents to define goals and potential solutions, and recommending policies and investment opportunities for reaching the city’s climate goals. This research was compiled into a detailed recommendations report that was released in June 2020.
The report highlights the importance of addressing the city’s impact on the environment, and how to best push forward changes in the following sectors: buildings and homes, transportation, electricity supply, consumption and waste, and adaptation and resiliency.
The task force considered many different funding sources to achieve the goals outlined, and ultimately calculated that a 0.25% sales tax increase would provide approximately $45 million per year for initiatives in these sectors. The people responsible for collecting the sales tax will remit it to the city on a monthly basis.
In November 2018, a similar ballot measure was approved by Denver voters that supports the improvement and expansion of parks and open green space. The Department of Parks and Recreation created a five-year plan detailing what investments would be made and to what parks and programs specifically. So far, the plan has been successful in increasing urban tree coverage and providing for equitable investments, beginning to enhance climate change resiliency in the city. The Executive Director of Denver’s Office of Climate Action, Sustainability, and Resiliency will submit a five-year plan to the city council and Sustainability Advisory Council on planned revenue uses if the sales tax passes this November.
Equity provisions in the tax
Denver customers will pay an additional 2.5 cents on every $10 purchase on goods and services if the sales tax passes, with exemptions on food, fuel, water, and medical supplies. The increase is projected to bring in around $36 million in the first year (2021-2022), accounting for the economic burdens caused by COVID-19.
Revenue from the tax will be allotted to the Climate Protection Fund, where decisions will be made about distributing funding among various environmental and climate programs. As the bill outlines, all of the revenue acquired from the tax must be spent on the following six areas:
- Job creation for under-resourced individuals in renewable and clean energy technology
- Increased investments in solar power, battery storage, and other renewable energy technology
- Neighborhood-based environmental and climate justice programs
- Adaptation and resiliency programs
- Services that provide affordable, clean, safe, and reliable transportation choices (walking, biking, transit, electric vehicles, and neighborhood-scale transit)
- Improved energy efficiency of homes, offices, and industry
The Task Force report emphasizes that climate action in Denver must value equity, and must not put low-income residents at risk. Thomas Riggle, a member of the Task Force from Resilient Colorado reported to Climate XChange that if approved by voters, 50% of the revenue from the tax will be focused on social and environmental justice. This could mean investing in targeted job creation in the clean energy sector, building upon the low-income solar program, and increasing forest canopy in neighborhoods that do not have many trees.
“There will be a focus on using those dollars to improve housing for low-income households through energy efficiency and weatherization” Elizabeth Babcock, Manager of the Climate Action Team in Denver, told Climate XChange.
As November quickly approaches, it will be imperative for voters to be in favor of this tax for Denver to move forward in reaching its climate goals in an equitable way. Other Task Force members represent the Denver Area Labor Federation and Denver Streets Partnership, who value the inclusion of diverse interests and concerns. Some members of the Task Force and environmental advocacy groups in Denver have been meeting with neighborhood organizations and businesses to gather input and feedback related to the tax measure.
“So far we are getting really strong support and several other organizations have come together to create a campaign to get a ‘yes’ vote,” Riggle encouraged.
Regardless of whether or not the ballot measure passes, Denver is fully committed to reaching its climate goals through strengthening a variety of renewable energy and green transportation programs. “We leverage whatever resources we have to have the greatest impact that we can,” Elizabeth Babcock assured.