Colorado’s rural communities, once the state’s economic backbone, are struggling. Scattered across the state are small towns and farming communities that are losing population, struggling to maintain services, and grappling with an uncertain future. 

 

It’s time to empower these communities and help them chart their own course. And we can do this by getting creative with the tax code.

 

Traditionally, the state’s role in supporting Colorado’s smaller communities has followed the tax-and-spend approach. We collect taxes statewide and spend the money on grant programs that communities compete for. 

 

Instead of creating another grant, I propose we give communities a choice—with their own money.

 

How It Works

Colorado’s state sales tax is 2.9%, and I propose that economically challenged communities shouldn’t have to pay it. 

 

With my proposal, cities and counties that meet objective economic-distress criteria will be granted a one-year exemption from the state sales tax. During that period, these communities will decide how to use the excess funds.

 

These communities can vote to replace the state tax with their own temporary local sales tax of up to 2.9%. 

 

Such a tax must have an explicit purpose. Community leaders—whether it is the town board of trustees or the county commissioners—must explain how the money will be used. Some possible options include:

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• Hiring new teachers for the local school district

• Repairing roads and bridges

• Improving water infrastructure

• Expanding EMS coverage

• Supporting economic development projects

• Preventing cuts to essential county services

 

Ultimately, voters—thanks to the Taxpayer’s Bill of Rights—make the final decision. If voters approve the local tax, the revenue stays in the community to fund their local needs. If the voters reject the local tax, they pocket the savings.

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It may not seem like much, but a nearly 3% revenue increase will be a much-needed lifeline for communities already facing desperate times. 

 

Who Qualifies?

 

Eligibility should be based on objective measures of economic distress, such as:

 

• Population decline

• Long-term stagnation

• Median household income below the Colorado median

• Above-average unemployment rate

• Recent loss of major employer

 

The goal is simple: provide struggling communities with a temporary opportunity to keep tax dollars local and invest in their own priorities.

 

Why This Approach?

 

Colorado’s challenges are not the same everywhere. What works for Denver may not work for the San Luis Valley. What works for the Eastern Plains may not work for the Western Slope. This proposal trusts local voters to make local decisions and gives communities the flexibility to solve the problems they uniquely understand. 

 

Moreover, this breaks away from the traditional tax-and-spend policies that haven’t moved the needle economically. It breaks up the endless cycle of competition for limited grant programs and the political favoritism inherent in the process. This shifts accountability away from faceless, distant bureaucrats hundreds of miles away toward the Main Streets of hundreds of communities scattered across the state. 

 

Building thriving, resilient communities doesn’t require a faceless, top-down bureaucracy. It means trusting the good people of these vibrant communities with the power and resources to help themselves. Local priorities require local funding, and the fewer dollars the state can extract from them, the better.

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