Denverites will vote in November whether to impose a 0.25% sales tax in the city to fund services and other amenities for people experiencing homelessness, Denver City Council decided Monday.
The council unanimously approved the ballot measure proposed by Councilwoman Robin Kniech.
Kniech acknowledged that a sales tax is an imperfect tool to combat the city’s problems, but it’s one that could help expand Denver’s approach to homelessness, she said.
“We have a chance to make a difference,” Kniech said.
Several council members voiced concerns that the tax would hit low-income residents harder, but they also acknowledged the need for additional funding for the issue.
The move comes with the blessing of Mayor Michael Hancock, who announced his support for the proposal and the creation of city-sanctioned homeless encampments in July. While the measure is now cemented on the city’s November ballot, officials have yet to find a site for the city’s first sanctioned encampment.
If voters approve the measure, the tax will charge customers an extra 2.5 cents for every $10 spent and raise an estimated $40 million a year.
While the idea of passing a new tax during a recession might trouble some voters, Kniech said the economic downturn and the pandemic have underscored the need to take action now. Were it not for the recession, the proposed tax increase might have been greater, she said.
“Could we use twice as much money? Yeah, sure,” Kniech said.
But money alone can’t solve Denver’s homelessness problem, she said. The community must also buy in to new approaches, such as building additional housing options and shelter spaces, and welcome them into different neighborhoods.
Money from the tax could only be spent on things such as housing, shelters, catalytic projects and programs and services for the unsheltered, Kniech said. That’s a broad framework which would give city officials some flexibility with how the money could be spent.
More details on that framework would be developed before the money would begin to flow at the end of January 2021, if the tax passes, Kniech said. The idea for the city to invest in “proven solutions” and “scale them up,” she said.
Those types of solutions include expanding access — and capacity — to 24-hour shelters, more individualized support for people experiencing homelessness and case management, said Laura Brudzynski, deputy director of Denver’s Department of Housing Stability.
They would also be meant to make shelters a more attractive option for those living on the streets and to “expand pathways out the back door and into housing stability,” Kniech said.
The Department of Housing Stability would provide annual reports on how the money is being spent and whether the investments are working, Brudzynski said. Plus there would be additional reports every other month to an advisory board, which could recommend changes or additional investments.
So far the measure hasn’t sparked any organized opposition. But members of the conservative Independence Institute do believe it’s the wrong approach, said Ben Murrey, director of the institute’s Fiscal Policy Center.
“Putting aside the question of whether Denver needs more funding for homelessness programs, it’s rather stunning that Denver Democrats plan to raise new revenues by making an already regressive Denver tax even more regressive,” Murrey said in a statement. “It’s no secret that an increase in the local sales taxes hits low-income people hardest.”
Kniech’s proposal is now the second proposed tax increase on the city’s November ballot. The other is another 0.25% sales tax increase which would have to be spent creating jobs in the areas of renewable and clean energy technology and management of natural resources, among other things. That proposal would exclude food, water, fuel and medical supplies from the increase and would raise an estimated $36 million in its first year.
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