UPDATE: City Council Eliminates Grocery Food Sales Tax Effective Jan. 1, 2009

The Lakewood City Council has passed an ordinance to eliminate the grocery food sales tax effective January 1, 2009. The ordinance, passed at the May 12 City Council meeting, also rescinds temporary waivers of one percent of the sales tax within certain areas of the City that include the Creekside shopping center and Colorado Mills.

“This is a great success story,” said Mayor Bob Murphy as he thanked the City Council and the citizens committee that prepared the recommendations that led to the ordinance. “It’s a story of collaboration on an issue that has been percolating in the community.” The mayor appointed the ad hoc committee to look into the grocery sales tax issue shortly after taking office.

Both tax changes will not take effect until 2009, which gives Lakewood businesses time to recalibrate their machinery and equipment and to educate employees on the changes in the sales tax laws.

As a result of eliminating the grocery tax, the City faces a loss of $4 million a year in sales tax revenues. Most of that shortfall will be made up by rescinding the temporary sales tax waiver to Creekside and Colorado Mills, which will provide the city with revenue of $3 million dollars a year. The City will address the remaining $1 million shortfall in the preparation of its 2009 budget.

Earlier news items follow

UPDATE: Public Hearing Set on Grocery Food Sales Tax Elimination

April 29, 2008 - At its regular meeting on April 28, Lakewood City Council scheduled a public hearing and final vote on this ordinance to occur during the regular City Council meeting on Monday, May 12, 2008, beginning at 7pm.

Earlier news items follow

April 25, 2008 - The Lakewood City Council will consider an ordinance that would eliminate the grocery food sales tax beginning in 2009. It would also rescind temporary waivers of one percent of the sales tax within certain areas of the City that include the Creekside shopping center and Colorado Mills. First reading of the ordinance will come at the City Council meeting on Monday, April 28. A Public Hearing and a final vote on the ordinance will take place at the City Council meeting on Monday, May 12.

The ordinance is a result of recommendations from an ad hoc committee appointed by Mayor Bob Murphy as one of his first initiatives upon taking office. The work of the committee involved gathering and reviewing information about the grocery foods tax, including the impact that removing it might have on citizens, the City budget and services the City provides to Lakewood residents. The committee voted unanimously in favor of removing the tax while simultaneously eliminating the temporary tax waivers at Colorado Mills and Creekside.

It is estimated that the average person spends around $28 in grocery food taxes every year. As a result of eliminating the tax, the City will face a loss of $4 million a year in sales tax revenues. By rescinding the temporary sales tax waiver to Creekside and Colorado Mills, the city will receive $3 million dollars a year. The City will address the $1 million difference in the preparation of the 2009 budget and hopes to do so without eliminating services or employees.

“This is an elegant compromise on a difficult issue,” said Mayor Bob Murphy. Losing $4 million could have presented a major threat to the City budget and meant drastic cutbacks in services. “This is a way to continue to provide a high level of services,” Murphy said, “and there is an element of fairness too. Grocery food taxes impact those who can least afford it, as could the resulting service cuts. This makes it fair to all members of the community.”

The sales tax waivers on Creekside and Colorado Mills were part of a ballot measure in 2005 in which Lakewood voters increased the City sales tax by one percent. It provided one year temporary waivers of the sales tax increase that could be renewed on a yearly basis.

Lakewood is one of more than 80 Colorado cities which currently tax foods for domestic home consumption. Passage of the ordinance would place it with Denver, Aurora, Englewood, Littleton and Commerce City, which do not tax grocery foods.