Pueblo joining lawsuit challenging state law

Anna Lynn Winfrey
The Pueblo Chieftain
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Pueblo City Hall at 1 City Hall Place.

The city of Pueblo and four other Colorado towns have filed a lawsuit against the state of Colorado and Gov. Jared Polis over a recently passed state law that restricts their authority to collect taxes on school construction projects.

The state constitution grants home rule municipalities the ability to impose municipal taxes, but a recent law closed the loophole that let towns and cities tax building materials on school projects.

Pueblo is joining the lawsuit at no additional cost to local taxpayers, but Mayor Nick Gradisar previously told Pueblo City Council that the city could lose up to $4 million in tax revenue if the law takes effect.

“The state’s attempt to exempt construction materials used in public schools from taxation in home rule cities would be very costly to the city of Pueblo,” Gradisar said to The Chieftain, adding that it interferes with “the ability of the citizens of Pueblo to impose their own taxes.”

City council approved the city joining the lawsuit 4-3 in June. Councilors Lori Winner, Sarah Martinez and Vicente Martinez Ortega voted against the city signing on.

“I would just rather see that money go back into the schools for their building, I think that's more appropriate. I don't think we should be charging schools sales tax on any building supplies,” Winner said.

Councilor Dennis Flores noted that the bonds voters passed for schools under construction already took the sales tax into account. He expressed concern that not being able to collect the taxes would hurt smaller communities such as Pueblo.

State tax has not been imposed on school-related construction since 1979, according to a report from the state auditor.

The Colorado Municipal League, an organization of town and city governments around the state, urged Polis to veto the measure before he signed it into law in April.

The complaint, filed in Denver District Court, asks for a “speedy” hearing before the new law, House Bill 22-1024, takes effect Aug. 10.

Chieftain reporter Anna Lynn Winfrey can be reached by email awinfrey@gannett.com or on Twitter, @annalynnfrey. 

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