Lafayette considers sales tax increase to fund city projects with potential economic impact

The Lafayette City Council convened on April 30, 2025, to discuss key financial matters, primarily focusing on the city's sales tax revenue and potential adjustments to funding strategies.

The meeting began with a detailed overview of the current sales tax rate, which stands at 3.87%. The majority of this revenue, approximately 3%, is allocated to the general fund, while the remaining 0.87% is distributed among various dedicated funds. When combined with state, regional, and county taxes, the total sales and use tax rate in Lafayette reaches 9.055%. This breakdown indicates that for every dollar collected in sales tax, about 44 cents is retained by the city, with 34 cents going directly to the general fund.

Comparative analysis revealed that Lafayette's sales tax rate is among the highest in similar Front Range communities. Officials noted that as the sales tax approaches 10%, it tends to attract a more tourist-based economy, which is not the primary focus for Lafayette.

The discussion then shifted to the implications of a potential sales tax increase. City officials estimated that an increase of at least 0.85% would be necessary to cover projected debt service costs of approximately $5.9 million for upcoming projects. This adjustment would raise the city’s sales tax to 4.72%, bringing the total sales tax to about 9.9%.

Concerns were raised regarding the impact of higher sales tax rates on attracting businesses. It was noted that increased sales tax could deter high-volume sales operations from establishing in Lafayette, as businesses often seek locations with lower tax burdens. The council acknowledged the challenge of balancing revenue needs with the desire to foster a business-friendly environment.

The meeting concluded with a commitment to explore alternative funding options, including property tax adjustments, to support city projects without overly burdening sales tax rates. Further discussions on these topics are expected in future meetings as the council seeks to address the financial needs of the city while promoting economic growth.