All forms of local governments have the ability to collect property taxes. County and Municipal governments are able to collect sales and use taxes. While property taxes are usually the main source of a county's revenue, counties may also collect other sources of revenue at the local level and receive state and federal dollars. Municipal revenue sources primarily include sales and use taxes as well as property taxes. Special Districts receive revenue from property taxes.1
Types of Revenue Sources
There are local, state, and joint (federal and state) revenue sources. Listed below are descriptions of mainly local government revenue sources.2
Property Tax: Property taxes are paid on a part of a property’s assessed value. A property's assessed value is determined by multiplying the actual value by the assessment rate, The property tax is determined by multiplying a property's assessed value by a mill levy. A mill is one-tenth of a cent; or $1 of taxes for each $1,000 of assessed value.
Sales Tax: A sales tax is an additional fee imposed by a local government on the sale of goods and services. A conventional sales tax is levied at the point of sale, collected by the entity providing the goods or services, and passed on to the government.
Excise Tax: Excise taxes are taxes paid when purchases are made on a specific good, such as gasoline or marijuana. Excise taxes are often included in the price of the product.
Use Tax: In Colorado, a counties’ authority to collect a use tax is limited to construction and building materials and motor vehicles. The purpose of a use tax is to equalize competition between in-county and out-of-county vendors making wholesale purchases. If a county has a use tax on construction and building materials, for example, a vendor is required to pay use tax on the building materials purchased outside of the county and used within the county. When this circumstance occurs, the county sales tax is not collected.
Lodging Tax: The revenue collected from a tax on lodging services is used solely for funding tourism boards. Lodging services could include hotels, motels, short term rentals, and camping spaces.
Fees/Interest: There are a variety of fees that can be applied to services provided by a local government. Examples of fees may include but are not limited to:
- adoption reports;
- the sheriff’s service of process;
- the treasurer’s collection of property tax receipts for other taxing entities than the county;
- the clerk and recorder for a variety of activities;
- real estate transactions supervised by the public trustee; and
- the board, itself, for its licensing and regulatory activities.
General Obligation Bonds: The Board may issue general obligation bonds to pay for the acquisition, construction, reconstruction or major repair of airports, buildings, mass transit systems or roads or bridges. Indebtedness may not exceed three percent of the actual value. Such bonds require the approval of the electorate at a general or special election and may not run for more than 20 years.
Revenue Bonds: The Board is permitted to issue revenue bonds or repayment of specific guaranteed revenue sources other than the general property tax. Examples of revenue bonds may include but are not limited to:
- Airport revenue bonds C.R.S. §41-5-101, et seq.;
- Capital improvement trust fund bonds C.R.S. §30-26-501, et seq.;
- Local improvement district bonds C.R.S. §30-20-601, et seq.;
- Public project warrants (bonds) C.R.S. §30-20-301, et seq.;
- Sewer and water district bonds C.R.S. §30-20-401, et seq.; and
- Sales tax revenue bonds C.R.S. §29-2-112.
Refunding Bonds: The Board may issue refunding bonds without an election when there are no funds available for payment of outstanding bonds. The term of refunding bonds may run for 25 years.
Lease-Purchase Authority: The Board is authorized to enter into lease-purchase agreements to provide financing for a courthouse, jail or other county building and equipment used, or to be used, for governmental purposes. The agreement may include an option to purchase, transfer or acquire a title for such a property.