Commerce City, other cities, sue state

New law 'violates home-rule status,' cities claim

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COMMERCE CITY — Commerce City joined other area cities in challenging a new law that could have an impact on city coffers and the construction of public schools.

The new law expands an existing sales and use tax exemption to home-rule cities for construction and building materials used for public school construction. It takes effect in August.

Under existing law, the sales of those materials were exempt from state tax and from taxes "from certain local governments." 

Commerce City, the city and county of Denver and the cities of Boulder, Pueblo and Westminster filed the suit in Denver District Court.

Fort Lupton Mayor Zo Stieber-Hubbard and city of Brighton spokeswoman Linda Ong said their cities were not a party to the claim.

"Commerce City opposes this new law due to its unconstitutionality in forcing home rule municipalities to follow a state-imposed use tax exemption for projects involving the construction of public schools," Mayor Benjamin Huseman said in a statement.

Commerce City requires contractors pay a use tax to be consistent, Huseman said.

"The city’s tax code requires contractors to pay use tax on any construction project for consistency of enforcement. The city does not oppose the concept of exempting public school construction from such tax and already shares use tax back with the school district," he said. "However, the city has serious concerns about this new legislation dismissing settled law and the taxing authority of Colorado’s home rule municipalities, including ours."

In the statement, Huseman also noted that the city doesn't want to see the Adams 14 School District "incur additional costs from use tax."

 “The city’s stance on this matter does not reflect a desire to tax or otherwise impede public school construction," he said in the statement. "Rather, this lawsuit challenges the notion that the state of Colorado has grounds to dictate such decisions in our home rule city when those decisions rightfully should remain with local voters through their local elected officials.”

Huseman said voters added the home-rule concept to the Constitution "to preserve the ability of municipalities to self-govern without having the state dictate matters of local and municipal concern."

"The city’s ability to set its own sales and use tax policies is central to our home rule status, which is undermined by a law that gives the state authority to dictate such matters to municipal governments," Huseman said in the statement.

House Bill 12-1024, home rule, school construction, tax exemption for school construction

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