Aurora moves ahead with restoring 1963 cigarette tax, precluding voter approval

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AURORA | For the first time since 1963, Aurora will tax cigarettes, allowing the city to collect about $2 million each year. 

Aurora City Council members made the 6-4 decision Monday during its regular meeting. Council members Marsha Berzins, Francoise Bergan, Bob Roth and Charlie Richardson voted against the measure. Richardson, Bergan and Berzins specifically said they’d like voters to decide whether to revive the tax.

In the past, cigarette purchases in Aurora came with an occupation tax of 5.4 cents per pack. Beginning in December, cigarettes will instead be charged the city sales tax rate, 3.75%.

Passage of Colorado House Bill 19-1033 this past legislative session allows local governments to regulate and attempt to tax cigarettes without losing the state share back of cigarette tax revenue they were previously receiving. The state allocates 27% of the 20 cents per pack cigarette tax to local governments. Aurora was anticipating $633,713 from that program this year.

Some members were uneasy about restoring the tax, as it may be in violation of the state’s Taxpayer Bill of Rights, which mandates that voters get to decide new taxes. Denver anti-tax pundits say the move is an end-run around the state’s TABOR laws.

But staff argued that case law upholds that ending the exemption is not introducing a new tax, but rather re-establishing it.

“I want council to consider the optics of going around the voters for money. It’s a terrible optic,” Berzins said.  “We want this money so we’re not going to put it on the ballot so we could get the money. I don’t want any part of that. I’m a big proponent of asking our citizens what they want.”

Council member Allison Hiltz countered that the city council often goes around voters for money, like when it decides to increase water fees.

It’s unclear whether Aurora will still get state cigarette from the state when it reinstates the city sales tax on the cigarettes, but staff who crunched the numbers say the city stands to net about $1.7 million in revenue.

That money has already been built into the budget. City staff warned that if council members referred the question to a ballot or waited for more clarification from the state about the share-back dollars, they’d have to find other ways to balance the budget, which is up for discussion later this month.

“We do have in our charter that we have to balance the budget,” council member Nicole Johnston said. “$1.7 million is a lot of money, and I don’t want to have to eliminate that.”

Hiltz said this proposal and integration into the city budget has been before council for weeks.

“We as a council moved this forward knowing that this money was built in (to the budget),” Hiltz said. “So to act as if we’re surprised this money is built in, it’s just not true.”

Bergan said while she’s never smoked a cigarette and doesn’t condone it, she worried about re-implementing the tax on smokers, who are typically low-income and less likely to be able to afford the tax.

Berzins shared that concern, saying hiking prices won’t change smoking habits. It might just mean smokers spend less money on necessities, like food. 

But city staff cited research that shows for every 10% price increase of cigarettes, sales can decrease by more than 5%. 

The Tri-County Health Department was in favor of returning the tax for that reason. 

“Raising the price of tobacco helps reduce initiation of tobacco use among youth, reduce the number of people who use tobacco, reduce the total amount of tobacco consumed, increase quit attempts by people who smoke, and support people quitting,” Tri-County executive director Dr. John Douglas wrote in a letter of support of the measure last month. “In turn, this reduces tobacco-related death and disease in our communities and reduces the financial burden to communities and the state related to healthcare costs, lost productivity, and other community impacts of early death and disease.”

Hiltz asked city staff to work on a plan to increase education about tobacco-use with the passage of the ordinance. City staff said they would return to the council with the ordinance on its next reading with more information about an education campaign.