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Trustees split on vendor fee; proposal to eliminate 2.22% vendor discount fails
Summary
After staff explained the state's and county's moves to eliminate the 2.22% vendor 'discount' and estimated local impact (~$15,000/month), trustees debated fairness and burden on small businesses. The resolution to repeal the vendor fee failed on a 5-2 roll-call vote.
The board debated and declined to repeal the town's 2.22% sales-tax vendor discount Tuesday, rejecting a staff proposal designed to align Berthoud with the state and county.
Financial Director Cindy Leech explained that the state eliminated the vendor discount to reduce administrative burden and to equalize treatment across businesses that do and do not collect sales tax. "It's more equal to all vendors who collect any kind of sales tax," she said. Leech told trustees the town collects roughly $750,000 per month in retail sales tax and that eliminating the discount would increase town receipts by about $15,000 per month (an estimate staff offered during the presentation). She also said the town historically aligned its exemptions and discounts with the state.
Trustees pushed back on the local-business impact. One trustee called the change a "backdoor way to raise taxes," and others said that while the discount began as an administrative offset for paper filings, modern software makes remittance easier and the benefit is small but meaningful to local retailers. Multiple trustees said they were sympathetic to fairness arguments but were wary of removing a long-standing vendor benefit without clearer data on how many local businesses used the discount.
When the board voted on Resolution 2020-25-22 to eliminate the vendor fee, the roll call was: five trustees voted no and the two mayors voted yes; the resolution therefore failed.
Outcome: Resolution to eliminate the vendor fee was not adopted. Staff said alignment with the state is optional and no penalty attaches if the town chooses to retain the discount. Several trustees asked staff for information about how many local businesses currently claim the discount and the exact annual revenue effect before considering revisiting the issue.
Next steps: Staff will provide a follow-up packet with the count of vendors who claim the discount (if available), clearer revenue projections and any implementation implications.
