How is the City Funded?
The City of Centennial strives to maintain a strong, diverse and balanced revenue structure, recognizing that a dependence on any individual revenue source may cause revenue yields to be vulnerable to economic cycles.
This document is intended to provide City Council, Staff, and the community a comprehensive guide of the City’s major revenue sources. Within this manual, readers will find the City’s revenue sources categorized by fund, a description of each revenue and pertinent data visualizations for major revenue sources. Additionally, this document is designed to educate readers on the types of revenues the City receives, how they are collected, for what purpose they are intended, and the financial forecast of each revenue.
View the 2020 Revenue Manual(PDF, 677KB)
Following are specific revenue sources that contribute to the City's diverse revenue structure:
Automobile Use Tax
The City collects 2.5 percent use tax on all motor vehicles purchased outside City boundaries and registered to owners who reside in the City. In November 2003, voters approved a 2.5 percent auto use tax effective January 1, 2004. Revenues generated from this tax are to be used solely for the acquisition, construction, operating, maintenance and financing, including debt service financing if subsequently approved by the voters, for transportation system improvements. Auto use tax is collected by the Arapahoe County Treasurer with a five percent fee paid to the County as the collecting agency. Private sales of vehicles made to residents in the City are reported as sales tax collected by the County.
Automobile use tax represents approximately six percent of the City’s total revenues.
Building Materials Use Tax
The City requires that use tax be paid on construction and building materials used or consumed in Centennial. All projects in the City in which building and construction materials are used are subject to the City’s use tax.
For projects requiring a permit, the use tax is collected at the rate of 2.75 percent (2.5 percent to the City .25 percent to the County) at time of permit is obtained. Use tax is calculated based on 50 percent of the entire project valuation; the use tax paid on a permit is an estimate and/or a deposit.
Once a contractor or owner pays the use tax, no other City or County sales tax should be paid when building material purchased. Contractors should provide their subcontractors and suppliers with a copy of the permit as proof the appropriate taxes have been paid.
For projects which a permit was not required, the use tax is due on the actual value of construction and building materials used and is due to the City no later than the 20th following the end of the month in which the materials were used. Download Use Tax Return Form(PDF, 148KB) .
Building materials use tax represents approximately three percent of the City’s total revenues.
The State of Colorado taxes 84 cents per pack to wholesale tobacco distributors. State tax stamps are issued to the distributors as evidence of payment. Each year an amount of State funds from the tax on tobacco products is distributed to counties and municipalities that do not impose any fee, license or tax on cigarettes. The amount received is based on the proportion of State sales tax collected in each municipality.
Cigarette tax represents less than one percent of the City’s total revenues.
Fines & Fees
Fines and fees are established by City ordinance. City fines and fees are associated with services related to municipal court, animal services, pavement degradation, right-of-way usage and liquor licensing. City fees will not exceed the overall cost of providing services for which the fee is imposed. In calculating the cost of providing a service, both direct and indirect costs may be included. The City reviews all fees for licenses, permits, fines and other miscellaneous charges as part of the annual budget process.
The most significant source of fines and fees for the City are related to the Municipal Court. Municipal Court fines and fees represent approximately three percent of the City’s total revenue.
The City receives franchise fees for cable television, gas and electric services. Franchise fees represent approximately eight percent of the City’s total revenues.
Cable Television Franchise Fee - This fee is compensation for the benefits and privileges granted under the Cable Television Franchise Agreement. The fees are in consideration of permission to use City streets and rights-of-way for the provision of cable services. Throughout the duration of the Agreement, the fee is established at five percent of gross subscriber revenues.
Gas/Electric Franchise Fee - The City currently has a nonexclusive franchise agreement with Xcel Energy and Intermountain Rural Electric Association (IREA) for the right to furnish, sell and distribute natural gas and/or electricity to residents and businesses within the community. The agreement provides Xcel Energy and IREA access to public property to provide these services. In consideration of this franchise, the companies pay the City a sum equal to three percent of all revenues received from the sale of natural gas and/or electricity within the City.
Highway Users Tax Fund
The Highway Users Tax Fund (HUTF) is a state collected locally shared revenue. HUTF revenues are based on a variety of formulas that include revenues based on motor fuel taxes, driver’s licenses and motor vehicle registration fees. The Highway Users Tax is distributed monthly among the state, counties and municipalities based on a formula that takes into account the number of vehicles registered and the miles of roads in each municipality relative to the same data in other municipalities. These funds must be spent on new construction, safety, reconstruction, improvement, repair and maintenance and capacity improvements of streets and roads.
In July of 2009, Funding Advancements for Surface Transportation and Economic Recovery (FASTER) revenue resulting from Senate Bill 09-108 began to be distributed in the same method as HUTF revenue.
HUTF revenues represent about eight percent of the City’s total revenues.
Licenses & Permits
Licenses and permits are established by ordinance allowing the City to collect various licenses or permit fees.
Total license and permit revenues represent approximately four percent of the City’s total revenues. There are several types of licenses and permits required within the City. The following are the more significant licenses and permits required within the City.
- Building Permit Fees - Building Permit fees are based on the dollar valuation of the construction work to be performed. The valuation is determined using the cost per square foot published in the International Building Code (IBC) Building Standards guide and the Colorado regional modifier for all new construction. Permit fees are established by ordinance.
- Contractor’s License Fees - Contractor License fees represent an annual license fee for all construction contractors doing business within the boundaries of the City.
Motor Vehicle Registration Fee
Motor vehicle registration fees are State imposed on the registration of a vehicle. Fees are primarily based on the weight of the vehicle (as published by the manufacturer). The registration fee is $1.50 or $2.50 for apportioned vehicles. These fees are collected by the Arapahoe County Treasurer and remitted to the City on a monthly basis after deducting a five percent collection fee.
Motor vehicle registration fees represent less than one percent of the City’s total revenues.
Other Intergovernmental Revenue
Other Intergovernmental Revenue primarily includes Arapahoe County Open Space Funds and Conservation Trust Funds from the State of Colorado. In January 2004, voters approved a County-wide 1/4 cent sales tax to acquire additional open space or park land and to make improvements to parks and trails. Conservation Trust Funds are received from the State of Colorado totaling forty percent of net lottery proceeds to be used for the acquisition, development and maintenance of new conservation sites or for capital improvements or maintenance for recreational purposes and is distributed to local governments primarily by population.
Other intergovernmental revenues represent approximately four percent of the City’s total revenues.
Property taxes are imposed December 31 and attach as an enforceable lien on property as of January 1. Taxes are due February 28 and June 15, if paid in two installments, or April 30 if paid with a single payment. Taxes are delinquent if not paid as of August 31. If the taxes are not paid by the last day of September, the property may be sold at a public auction. Arapahoe County bills and collects all property taxes and remits collections to the City on a monthly basis after deducting a one percent collection fee and 1.5 percent for the general improvement districts. Property taxes are based on assessed valuations as determined by Arapahoe County, applying the City’s current mill levy rate.
The City of Centennial’s mill levy has been 4.982 since the City’s incorporation in 2001, with the exception of the mill levy for 2008 which was temporarily decreased to 4.906 mills due to higher than anticipated residential property valuations. A mill is one-tenth of one cent. In other words, one mill represents $1 for every $1,000 in assessed property value. The mill levy is multiplied by the assessed valuation of a property to calculate the property tax.
Property tax represents approximately twelve percent of the City’s total revenues.
Road & Bridge Shareback
Arapahoe County imposes a separate County-wide mill levy for the construction and maintenance of roads and bridges. Funds are shared with local governments and are distributed based on the percent of assessed value to total County-wide assessed valuation.
Road and bridge shareback revenues represent approximately one percent of the City’s total revenues.
As a Home Rule City, Centennial administers and collects its own sales tax. The Centennial Municipal Code imposes a sales tax upon the purchase price paid for tangible personal property and certain taxable services purchased, sold, leased or rented in the City.
Retailers are responsible for collecting the City sales tax and remitting it directly to the City of Centennial on the City’s sales tax return. Even those retailers without a commercial establishment in Centennial may be engaged in business and responsible for the collection and payment of Centennial sales tax.
Combined Sales Tax Rate
The following is the breakdown of the combined sales tax rate for Centennial. The total rate is 6.75 percent which is comprised of the following:
|City of Centennial
|State of Colorado*
|Regional Transportation District (RTD)*
|Scientific and Cultural Facilities District (CD)*
* This tax is collected and remitted to the Colorado Department of Revenue. Additional information may also be obtained on the Colorado Department of Revenue’s website.
Every business required to collect sales tax must file a sales tax return monthly, quarterly or annually; depending on their average tax liability. Generally, sales tax returns are due on the 20th of the month following the end of the period unless that date falls on a weekend or holiday in which case the due date is the next business day. Please note that if a return is not received by the 20th, timely filing is only evidenced by a USPS Postmark. The City does not accept a meter mark as proof of timely filing. As the USPS does not usually postmark metered mail, the taxpayer who uses a private postage meter must ensure that the returns and payment are received on the due date by placing such privately metered mail in the USPS in sufficient time to assure timely delivery. Returns must be filed with the City even if the tax liability is zero. A minimum penalty of $15 is applied on all late returns, including zero returns filed late.
Sales tax represents approximately fifty three percent of the City’s total revenues.
Specific Ownership Tax
Specific Ownership Tax is paid by owners of motor vehicles, trailers, semi-trailers and trailer-coaches in lieu of taxes based on the value of motor vehicles. The amount of the tax paid is a function of the class, age and value of the vehicle. Generally, the amount of tax paid decreases with the age of the vehicle.
Specific Ownership Taxes for Class A vehicles, includes any motor vehicle, truck, truck tractor, trailer or semi-trailer used to transport persons or property over public highways for compensation, are paid to the State. Specific Ownership Taxes are distributed to each city/district based on the entity’s percentage of the total property tax dollar warrant as a percent of the total tax dollar warrant for the entire County.
Specific ownership tax represents approximately one percent of the City’s total revenues.
The City of Centennial does not impose a general consumer use tax. However, the City of Centennial does impose a use tax of 2.5 percent on the following:
Construction and Building Materials – materials used or consumed within the City.
Motor Vehicles – automobiles purchased outside of the City limits by a City resident.