{"id":15249,"date":"2025-12-12T22:16:52","date_gmt":"2025-12-13T05:16:52","guid":{"rendered":"https:\/\/dh.durangoherald.com\/tj\/cortez-seeks-legal-guidance-after-overcollecting-2-8-million-in-recreation-tax\/"},"modified":"2026-03-30T21:46:46","modified_gmt":"2026-03-31T03:46:46","slug":"cortez-seeks-legal-guidance-after-overcollecting-2-8-million-in-recreation-tax","status":"publish","type":"post","link":"https:\/\/dh.durangoherald.com\/tj\/cortez-seeks-legal-guidance-after-overcollecting-2-8-million-in-recreation-tax\/","title":{"rendered":"Cortez seeks legal guidance after overcollecting $2.8 million in recreation tax"},"content":{"rendered":"

\"Cortez
Cortez Recreation Center locates at 425 Roger Smith Ave. Cortez City Manager Drew Sanders updated the council an overcollection of sales tax for the years 2022-2025 during a Tuesday work session. (Photo\/city of Cortez)<\/span><\/figcaption><\/figure>\n<\/p>\n

Speaking in detail for the first time about Cortez\u2019s sales tax error, City Manager Drew Sanders said Tuesday the $2.8 million overcollected since 2022 is \u201cliterally in the bank\u201d as Cortez works with attorneys to decide next steps.<\/p>\n

The city unintentionally collected a higher sales tax rate for nearly four years because a required council ordinance was never passed. Officials are seeking outside legal guidance on remedies and how to handle the excess funds.<\/p>\n

Sanders said in mid-October<\/a> that the collection rate of 0.55% \u2013 meant to be reduced to 0.35% in 2018 \u2013 had gone unnoticed for years. All money has been used to sustain the recreation center, Sanders said.<\/p>\n

City Council addressed part of the problem last month by approving an ordinance lowering the tax rate to 0.35% \u2014 the rate voters approved in 2018 to replace the 0.55% mistakenly collected since 2022.<\/p>\n

The corrected rate takes effect Jan. 1, 2026, ending the overcollection.<\/p>\n

In November, he promised to deliver<\/a> a \u201cfull autopsy\u201d of the problem on Dec. 9.<\/p>\n

However, on Tuesday he said the city cannot decide how to use the $2.8 million until attorneys clarify what\u2019s legally allowed, a process requiring more time and analysis.<\/p>\n

\u201cAs expected, it\u2019s not as easy as it sounds,\u201d he said.<\/p>\n

The attorneys are based on the Front Range. Sanders said the goal is to move \u201cexpeditiously\u201d while narrowing options. He expects to brief the council in an executive session early next year.<\/p>\n

\u201cThere\u2019s going to be a lot more we need to put into this and make sure we take the right steps and guide the council appropriately toward a final action,\u201d Sanders said. \u201cWe want to avoid making anything worse.\u201d<\/p>\n

The backstory: The two-step process had only one step completed<\/div>\n

During Tuesday\u2019s work session<\/a>, Sanders explained the estimated totals, how the error occurred, possible actions and confirmed the funds are secure.<\/p>\n

\"Drew
Drew Sanders, city manager<\/span>cca<\/span><\/figcaption><\/figure>\n<\/p>

He reviewed the two-decade history of the recreation sales tax used to build the center.<\/p>\n

Voters approved a 0.55% sales tax in November 2001 for operation, maintenance and debt service of the new building.<\/p>\n

The tax was set to end when the bond was paid off or by Dec. 31, 2021. Sanders said he believes it should have ended in 2022, but \u201cthat\u2019s neither here nor there.\u201d<\/p>\n

In 2017-18, as the original tax neared its end, the council placed a ballot question to create long-term funding for the center.<\/p>\n

\u201cWhich was a really good move and speaking to the former city manager at the time\u2026 He told me they did that, thinking, if it didn\u2019t pass they had maybe one more bite of the apple to try to go back to voters in 2020 to do that, but it passed in 2018,\u201d Sanders said.<\/p>\n

Voters approved reducing the tax from 0.55% to 0.35% in 2018, effective at the end of 2021.<\/p>\n

However, Sanders said the council never passed the required ordinance to enact the 0.35% rate.<\/p>\n

\u201cWe can\u2019t just take the vote and enact the tax measure, it has to be done by ordinance,\u201d Sanders told the council. \u201cHowever, the required ordinance back in 2018 and beyond never occurred.\u201d<\/p>\n

When the bond was paid off in late 2022, nothing triggered the rate drop, so 0.55% continued to be collected unnoticed.<\/p>\n

The issue surfaced in September during budget work, when staff reviewed recreation funding and found the 2018 ballot language. Internal review confirmed the oversight, and staff notified council and the public.<\/p>\n

\n

The numbers, steps and dates <\/h4>\n

What kind of tax is it?<\/strong>It\u2019s a sales tax, on the money spent every day when making a purchase at stores, restaurants and businesses.<\/p>\n

Which fiscal years does it involve?<\/strong>The fiscal years 2022-2025.<\/p>\n

When was the oversight discovered?<\/strong>September 2025<\/p>\n

How much tax revenue was collected?<\/strong>Amount overcollected, 2022-2024: $2,114,830. Projected overcollection for 2025: $730,066. Total projected by the end of fiscal year 2025: $2,844,896Corrected tax rate takes effect: 0.35% on Jan. 1, 2026<\/p>\n

What\u2019s next?<\/strong>Advisement from outside legal counsel, until then, Cortez City Manager Drew Sanders said, \u201cthe money is accounted for, in the bank\u201d and \u201cready to be used and disposed of as appropriate.\u201d<\/p>\n<\/div>\n

Council faces questions<\/div>\n

At the work session, Councilor Bill Lewis asked why the $2.8 million can\u2019t just be refunded.<\/p>\n

\u201cThat\u2019s a great question,\u201d Sanders said. \u201cIt would be extremely difficult to do: It\u2019s sales tax. The problem is we don\u2019t know who all those people are. Likely we could say, \u2018Well, Cortez residents or Montezuma County\u2019 \u2026 but who lived here, when, how long, where did they go, you\u2019re looking at years of work that still might not get handled properly.\u201d<\/p>\n

He noted sales tax is collected at purchases, unlike property tax tied to an owner and parcel.<\/p>\n

Mayor Rachel Medina, attending virtually, asked if the city could temporarily collect less than 0.35% to offset the overcollection.<\/p>\n

Sanders said that option could be explored with attorneys.<\/p>\n

The Cortez Recreation Center is aging and needs costly repairs, Sanders said. Funds have covered boiler, heater and shower failures. The 2026 budget includes about $2.1 million in repairs and deferred maintenance, all from the recreation fund.<\/p>\n

\u201cIs the community there? Have we been hearing a lot from the community?\u201d Medina asked.<\/p>\n

\u201cWe are not hearing an awful lot of uproar on this,\u201d Sanders replied.<\/p>\n

\u201cI mean there are some upset people, and then there are some people I have spoken to as early as today that aren\u2019t even aware of it. I think the community was waiting for us to get here tonight and give an explanation, so that may still be coming.\u201d<\/p>\n

The Rec Center responds<\/div>\n

In a written statement, Cortez Parks and Recreation Director Creighton Wright said:<\/p>\n

\u201cThis is an unfortunate issue. \u2026 It feels like we have finally gotten the Recreation Center back on track after dealing with staffing shortages and ongoing infrastructure failures that have led to closures and impacts on the community. With leadership from City Manager Sanders, and guidance from Finance Director Randy Bailey and Attorney Patrick Coleman, I am confident that we will move past this.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

steps: how to handle the excess funds<\/p>\n","protected":false},"author":1,"featured_media":15250,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"tags":[28,29,994],"naviga_topic":[],"class_list":["post-15249","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","tag-headlines","tag-newsletter","tag-trueanthem"],"acf":[],"author_name":"dh_admin","_links":{"self":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts\/15249","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/comments?post=15249"}],"version-history":[{"count":2,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts\/15249\/revisions"}],"predecessor-version":[{"id":19558,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts\/15249\/revisions\/19558"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/media\/15250"}],"wp:attachment":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/media?parent=15249"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/categories?post=15249"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/tags?post=15249"},{"taxonomy":"naviga_topic","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/naviga_topic?post=15249"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}