Manitou Springs City Council on Tuesday night passed an ordinance to voters that could nearly triple a tax on admission tickets and door fees.

The ordinance gives the city the ability to raise its excise tax, a fee that applies to a handful of businesses like museums, tours and attractions, to as much as 14%. The tax currently sits at 5% and hasn’t been raised in more than 50 years.

The increase will be a ballot question in the November municipal election.

Councilwoman Judith Chandler described the tax increase as a way not to “spread out the pain” of the city’s $4 million budget deficit. With neighboring Colorado Springs opening its first recreational marijuana shops, the two dispensaries that constituted a significant portion of the smaller city’s sales tax revenue have lost income.

Chandler said that the city considered smaller increases in different taxes like property and retail, but said that the optics of a ballot with multiple tax increases would be difficult to overcome.

“When your average voter gets that mail-in ballot, they may say, ‘Well, I’m pretty uncomfortable about all this,” she said at the meeting.

In a meeting the night before, the Manitou Springs School District forwarded its own tax increase for the same ballot. D-14 is asking voters to approve a $37 million bond to upgrade accessibility and safety improvements.

The increase would raise the property tax bill about $500 for the average home valued at $500,000 in Manitou Springs, according to previous reporting by The Gazette.

The excise tax increase at its highest amount would raise the price of admissions most places by the price of a cup of coffee, argued Chandler.

That could still have an impact on business, said Robert Hefner, the owner and operator of the Manitou Cliff Dwellings. He said the tourist attraction off U.S. 24 already struggles with visitors balking at the price of admission.

“When you have a car load of six or seven people and they have to pay a buck-fifty per person, it’s not a cup of coffee,” he said.

The council decision comes amid a legal battle involving the city and Manitou Springs’ biggest source of excise tax revenue. The Manitou & Pikes Peak Railway Co., the company that runs the cog railway up Pikes Peak on the west side of the city, has an active lawsuit with Manitou Springs over the payment of excise taxes it says the city owes. The railway company is an affiliate of the Denver-based Anschutz Corp., whose Clarity Media Group owns The Gazette.

The lawsuit, filed in El Paso County District Court this spring, claims that the city is obligated to pay back excise tax revenues over $500,000 for a period of 50 years. The agreement is in exchange for the $97 million investment in infrastructure and the $1.25 million in payments the railway company made to the city while the railway was under construction, offsetting lost tax revenue from 2017 to 2021.

In a letter to the City Council and mayor prior to the meeting, railway General Manager Ted Johnston said the ordinance “cannot be viewed as anything but retaliation” for the lawsuit. He urged city leaders to reject the ordinance and reconsider their overall strategy.

“We have a long tradition in the West that when someone gives their word, we can all rely on it,” Johnston’s letter concluded. “MPPR gave its word and has kept its promises. The City should do the same.”

Manitou Springs, in a failed motion to dismiss in June, claimed that the payments were not due “in any particular year.” The city did not make an appropriation in the 2025 budget, and instead marked the funds as “unassigned” in the general fund.

Despite “no guarantee” on the outcome of the lawsuit, Councilmember Julie Wolfe said she felt the tax increase was a good option for the city to address its budget shortfall.

“I think this is worth a try,” she said.

Manitou Springs Mayor John Graham said that the city had been grappling with the cost of aging infrastructure and recent emergency repairs. While the city leaders had been anticipating a drop in marijuana revenue for years, he said the deficit posed a “difficult situation.”

“I can see that we need to be smarter in the future and try to diversify our economy,” he said.