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Boulder expands Food Tax Rebate Program

Councilwoman declares 'equity issue,' assuming not all who qualify apply

Elyse Morse picks out peas at the Natural Grocers store in Boulder.
Elyse Morse picks out peas at the Natural Grocers store in Boulder.

Boulder Councilwoman Rachel Friend this week questioned why the city taxes grocery purchases as officials approved a narrow expansion of the longstanding Food Tax Rebate Program for certain income earners.

With City Council’s initial approval, the 52-year-old rebate program, which reimburses Boulder sales tax paid on groceries to qualified households, was updated. It will allow people experiencing homelessness to show documentation they’re working with a city-approved homelessness services agency to use the program and gives eligibility to people who file as Head of Household on their taxes.

“Adding Head of Household as a qualifying category supports single parents who provide more than 50% of the care for their family but are unable to claim the children as dependents as a result of the divorce or custody agreement,” city staff stated in a memo to Council.

To receive a refund, applicants’ households must fall within area median income thresholds, have been residents of Boulder for the entire previous calendar year and be either 62 or older for the entire previous year, a family with children under 18 years of age in the household for the entire previous year, or a person with a disability.

In 2019, the city received 1,008 applications for the Food Tax Rebate Program, and 71 were denied because they were incomplete, submitted past the deadline or did not meet the qualification rules. A total of 937 rebates were processed, adding up to $102,395, of which $56,185 went to older adults, $33,800 went to families and $12,410 went to persons with a disability, according to city staff notes.

Between 2015 and 2019, a total of 4,457 rebates were processed by the city for $477,492 paid back to recipients.

“I just wonder why are we taxing food,” Friend said. “… Not everyone will apply for the rebate who is qualified. There is an equity issue there that I don’t understand.”

City Manager Jane Brautigam responded that Boulder has taxed food “forever.”

“The rebate was the Council’s answer to the equity issue,” Brautigam said.

Should Council want to decide whether to end taxing food, it would have to add that to city staff’s work plans for 2020.

“It will definitely impact the city’s budget,” Brautigam said. “There will be budgetary reductions as a result of that.”

Monthly city revenue reports for July through September give an idea of how much Boulder’s budget might shrink should Council ask to do away with the sales tax on food bought at grocery stores. In each of the three months, sales tax raised through purchases at food stores accounted for just more than 14% of total city sales tax revenue, behind only the categories of general retail and eateries, with the three combined accounting for 53% of total retail sales tax revenue. As of September, the year-to-date sales tax revenue from food stores totaled $11.8 million, the latest monthly report showed.

Brautigam and Mayor Sam Weaver said there are efforts going on through a new city partnership with Google and Boulder County to consolidate into a single website some of the social services and assistance for which low- and median-income households are potentially eligible.

“One of the efforts that’s going on through our IT Department in coordination with the county is to get a one-stop shopping website so that becomes easier because right now it is very fragmented,” Weaver said.

Longmont this year approved a similar food tax rebate program after a resident in 2018 attempted and fell short of getting enough signatures on a petition to fully repeal the city’s tax on food bought at grocery stores.