Climate Tax Frequently Asked Questions

The new Climate Tax combines and replaces the Climate Action Plan (CAP) and Utility Occupation (UOT) taxes. It will raise $6.5 million per year to fund city-level climate resilience efforts that center equity and work toward systems change in and beyond Boulder.

Boulder voters have also given the city authority to borrow against the Climate Tax. This option, called “bonding authority,” will allow the city to accelerate investment in climate action and wildfire resilience by issuing debt that would be repaid with future Climate Tax revenues.

We are in a climate emergency. As a community, we must do our part to mitigate our role in causing this crisis, while also preparing for the challenges it brings. Through past tax investments, the city has been able to support the community’s climate work through programs, services, regulation and advocacy.

The Climate Tax will fund ongoing programs and new projects that tackle the climate crisis and strengthen the wellbeing of everyone in our community.

Climate Tax dollars will support the city’s ongoing climate and resilience efforts. $1.5 million of the collected revenues will be used each year to accelerate wildfire resilience measures. Council will make specific funding decisions during its annual budget process, but the city has outlined general areas that will be targets for investment.

Climate projects and programs:

• Direct cash assistance to homeowners, landlords and businesses to fund energy efficiency upgrades.
• Projects such as microgrids and energy storage to support resilience and renewable energy development.
• Residential and commercial building electrification.
• Expansion of transportation electrification projects and electric vehicle charging stations.
• Tools to measure and track progress.
• Implementing the city’s partnership with Xcel Energy.
• Advancement of nature-based climate solutions.

Example wildfire resilience projects:

• Funding for a dedicated fire risk assessment team.
• Grants to support residential wildfire risk prevention measures like vegetation management, fence reconstruction and roofing/siding replacement.
• Strategic undergrounding of power lines.
• Ecosystem restoration.
• Expanding current work to address wildfire risks on city open space.
  • Tree thinning in targeted, strategic areas.
  • Prescribed, targeted cattle grazing that may help reduce the risk of catastrophic fire while also delivering ecosystem health benefits.
  • Weed management and invasive species removal.
  • Prescribed burning to reduce fine fuels.
• Supplementing debris and vegetation removal work along irrigation ditches.
• Updating and implementing a revised community wildfire protection plan for open space properties.

Boulder has long led on actions to preserve the environment, reduce greenhouse gas emissions and tackle climate change, with City Council and the community consistently demonstrating support for these efforts. However, now is not the time to rest on past successes. The climate crisis demands even more urgent action at all levels of society.

The Climate Tax will support the city’s work to reduce emissions, cut down pollution and help build a resilient community. The funds will also allow the city to have the biggest impact possible by playing its role in creating systems change. In addition to actions within the community, like installing solar gardens, expanding access to clean transportation and investing in nature-based climate solutions, the city uses funds to enact change at the state and federal levels, and through the courts.

After the Marshall and NCAR fires, it’s clear that wildfire preparedness is top of mind for Boulder leadership and community members. The Climate Tax will allow the city to make urgent investments to better protect our community from increased fire danger caused by a warming climate.

Both the CAP Tax and the UOT were regressive taxes; they have no variation for income level, so people with lower incomes paid a higher percentage of their incomes on the tax than those with higher incomes. The new ballot measure offers the opportunity to address equity concerns by:

• Potentially exempting customers who participate in income-qualifying energy assistance programs;
• Setting a minimum use level for electricity or natural gas before the tax is triggered; or by
• Allowing residents with lower incomes to receive an energy tax rebate, similar to the food tax rebate currently offered by the city.

The city’s programs and services are guided by a commitment to advance racial equity and incorporate tools that further strategies to ensure racial equity is a priority. Policies and financial decisions are informed by a racial equity instrument. City staff will prioritize using the tool to develop, implement and evaluate programs, policies and budgets in the context of racial equity. For instance, the city will increase development of low-income solar gardens and expand coordination with climate justice groups, such as the Climate Justice Collaborative and FLOWS, to support these efforts.

The tax will be levied on the provider(s) of natural gas and electricity – currently Xcel Energy – who will pass it on to their customers within city limits. This is the same mechanism as the Utility Occupation Tax.

On average, the Climate Tax will charge residential customers about $50 annually. Other types of customers, like commercial and industrial businesses will pay more, about $490 and $1,800 annually, respectively. These taxes will be collected on electricity and natural gas bills.

Not exactly. The Climate Tax replaces two taxes, the Climate Action Plan and the Utility Occupation taxes.

The Climate Action Plan (CAP) and Utility Occupation (UOT) taxes will both be repealed on Jan. 1, 2023.

Yes, participants in the Low-Income Energy Assistance Program will not pay the Climate Tax.

The city will collect the Climate Tax from Jan. 1, 2023 to Dec. 31, 2040. Future City Councils may seek to extend the tax’s expiration date.

Boulder voters passed ballot item 2B, which gives the city authority to borrow against the Climate Tax to accelerate investment in climate resilience efforts.

Bonding authority allows the city to ask for a loan to receive money upfront. The city would pay back this loan over time using funds generated by the Climate Tax. The maximum loan, or “bond,” the city asked voters to approve is $52.9 million. City Council will make the ultimate determination on the exact bond amount; the voter-approved amount is the ceiling.

The ability to issue debt allows for accelerated investments in community resilience efforts, including nature-based climate solutions, expanded building energy efficiency upgrades and electrification.