Denver mayor proposes raising sales tax to over 9% for affordable housing

DENVER (KDVR) — Denver Mayor Mike Johnston unveiled a proposal Monday to raise $100 million a year for affordable housing projects by raising the sales tax in Denver by 0.5%.

The proposed 0.5% tax will account for about 5 cents on a $10 purchase, according to a release sent by the mayor’s office.

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There would be exceptions for many of the everyday essentials people buy including food, fuel, medical supplies and personal hygiene products, meaning the new tax would not apply to those purchases.

Because it involves raising taxes, the proposal will need to be approved by the City Council and then by voters in November before being implemented.

If approved and put on the ballot, the proposal would be the second sales tax measure that will be put to Denver residents in November.

What would Denver’s sales tax be if it’s approved?

If voters only approve this measure, the current sales tax rate of 8.81% in the city would rise to 9.31%.

The current 8.81% sales tax rate includes the 2.9% state sales tax rate, a 4.81% city and county of Denver sales tax and a 1% sales tax for the Regional Transportation District, which Denver is part of. A 0.1% sales tax for the Scientific and Cultural Facilities District is also included.

Currently, Boulder has the highest sales tax rate among the major cities in Colorado at 9.045%. However, many smaller cities, mainly in the mountains, have higher sales tax rates than this.

Winter Park, for example, has an 11.2% sales tax rate, the highest in the state. Aurora, the second-largest city in the Denver metro area, has a sales tax rate of 8.5%. The affordable housing tax increase is not the only one Denverites may have to consider, however.

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In June, the Denver City Council approved a proposal to put a 0.34% sales tax increase on the November ballot. This 0.34% increase would help Denver Health cover costs for patients with unpaid medical bills.

If both sales tax increases are approved, Denver would have the eleventh-highest sales tax rate in the state at 9.65%.

What would the new tax go to?

According to the mayor’s office, with local and federal funding, the city is on track to create 19,000 affordable units by 2033, which is 25,000 short of the 44,000 needed for households earning less than 100% of the area median income.

The new fund would give housing opportunities to people across the income spectrum, including extremely low-income, low-income and middle-income earners. This includes things like preserving existing income-restricted condos and rental units and the construction of new multifamily rental units, among other things.

According to the mayor’s office, the estimated $100 million annual fund would complement existing funding projects such as the Affordable Housing Fund and the Homelessness Resolution Fund.

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