The City of Boulder is working on a new climate tax it hopes voters will approve in November as part of its evolving strategy for reducing greenhouse gas emissions and preparing for the inevitable consequences of a warming planet.
Boulder voters approved one of the nation’s first municipal taxes aimed at cutting greenhouse gas emissions in 2006. With that surcharge on electricity bills set to expire next year, city officials are proposing a streamlined new tax with the goal of generating more money to help slash emissions and to double down on a new priority: preparing for record heat, air pollution, floods, drought and wildfires.
On Dec. 30, following an unusually dry start to the winter season and amid a decades-long drought in Colorado, the Marshall Fire tore across grassland and through the suburban communities of Superior and Louisville, destroying more than a thousand homes and causing more than $1 billion in damages.
“The past few months have provided a chilling reminder of the need to prepare for a new normal of more extreme weather events fueled by climate change,” said Jonathan Koehn, the interim director of the city’s Climate Initiatives Department who is helping draft the new tax proposal. “And the cost of having to adapt to climate change will be significant.”
The city currently raises about $3.9 million per year for climate-related programs through two main taxes. The first is the city’s Climate Action Plan tax, a surcharge on electricity bills set to expire next year. The other is a tax on the electric utility Xcel Energy, which then passes the costs on to ratepayers.
The utility tax, first passed in 2010, was primarily intended to help Boulder create its own electric utility, an initiative known as municipalization that residents voted to abandon in 2020.
City officials are now proposing to essentially lump those two taxes together and create a single Climate Tax. It would be paid for by energy utilities and charged to customers on utility bills.
The proposal would raise about $3.9 to $8 million per year, depending on the tax rate, according to city officials. The city hopes to use the additional revenue to help leverage more money for larger projects.
To make the tax less regressive, the city is proposing exceptions for residents enrolled in energy assistance programs or rebates for low-income residents.
Under the current Climate Action Plan tax, city officials said residents pay more in taxes than businesses, even though residents generally produce fewer emissions. Under the new plan, residents would pay fewer taxes, and businesses would pay more.
It would cost residents $30 to $61 per year and commercial businesses $292 to $600. The current taxes cost residents $43 and commercial businesses $241 a year.
Prioritizing climate adaptation
Historically, the city has used the revenue to help meet its greenhouse gas emissions targets, recently updated to zero out fossil fuel emissions by 2035. This includes spending money on lobbying for climate policies at the state Capitol, drafting new energy codes for new buildings, installing vehicle charging stations across Boulder, and investing in solar energy projects.
The city wants to invest more in these efforts. According to a staff memo, the city needs to reduce its emissions by 5.8% every year to meet its climate goals. Historically, according to officials, it has cut emissions 1.3% annually.
Meanwhile, Boulder also wants to expand the scope of its climate strategy.
The city is seeking to prioritize spending more money on resilience and adaptation to the risks from climate change. This includes planting more shade-producing trees across the city to reduce the urban heat island effect, burying power lines vulnerable to climate and weather disasters, and upgrading water systems to withstand flooding.
“This is a big pivot for many communities, not just Boulder — this recognition that yes, we need to continue to invest in strategies to reduce emissions and stabilize the climate. There is no question about that. But we also have to recognize the reality that climate change is here. It’s no longer the slow-moving, in-the-future issue that we once thought it was,” Koehn said. “We now have come to the realization that … we need to prioritize our resilience and adaptation.”
Now, he added, “What we are prioritizing are strategies that provide great value back to our community, that improve health, that improve economic vitality, that make lives happier, and healthier and safer.”
Such a shift in priorities comes amid tension over the city’s relationship with Xcel, which generates most of its electricity from fossil fuels, such as coal and natural gas. Organizers who have spent a decade or more urging the city to break ties with the utility in order generate more electricity from renewables don’t want the city to lose sight of opportunities to cut climate-changing emissions.
Leslie Glustrom, a supporter of the municipalization effort and a board member for Clean Energy Action, said closing the Xcel’s coal-fired power plant in Pueblo, for example, is the equivalent of taking 500,000 cars off the road.
“All of those things are good and useful things,” Glustrom said of the city’s climate adaptation plans. “But they pale in comparison to the first priority, which is to stop pumping carbon into the atmosphere and oceans.”
The Boulder City Council gave initial approval to a plan on Tuesday. Later this year, the council will revisit the tax and decide whether to officially put it on the ballot for voter approval. Voters may also be asked to pass a property tax to help pay for a library district in November.