Deborah Channel and her staff began fielding calls from merchants a few weeks ago.

The requests were the first of their kind in decades: How do you adjust a cash register or point-of-sale system for the upcoming increase in city sales tax?

"I know it's been a long time because (the last time) we were at the other location and that's been almost 20 years," said Channel, co-owner of Colorado Retail Systems at 1121 W. Northern Ave.

On Jan. 1, the city of Pueblo's sales tax rate will rise to 3.7 percent from 3.5 percent. The change follows voter approval in November of a one-fifth of a cent (0.2 percent) increase to fund the hiring of more police officers.

According to the city, it is believed to be the first increase in the city sales tax since 1987, when Pueblo voters approved the half-cent sales tax for economic development.

The change is causing some businesses to reach out for technical help to adjust their cash registers but the merchants aren't grumbling, Channel said.

Reflecting the tax hike's nearly two-to-one margin of voter support, "I think most everybody from what I'm hearing is pretty excited about this tax increase," she said.

The city of Pueblo began reaching out to merchants about the tax change soon after the election.

The city has published and distributed an informational flyer about the change and is encouraging merchants to provide their emails to receive the revised sales tax return form.

The flyer was mailed to every business contact in the city's tax system, local chambers of commerce, the Southern Colorado Small Business Development Center and third-party tax preparers known to work with businesses.

Merchants also are encouraged to call the city's Sales Tax Division office at 553-2659 with their questions.

Recognizing the rarity of the tax hike, the city also has asked employees "to make it part of their conversation with each and every taxpayer they speak with during the normal course of their work,' Pueblo City Manager Sam Azad said.

The sales tax increase applies to special events such as the Colorado State Fair and the Chili & Frijoles Festival.

It also applies to the use tax.

The use tax is an alternative to the sales tax that is imposed on purchases made outside the city limits for use, storage or consumption in the city. It is most frequently associated with one-time construction and equipment purchases.

The use tax rate mirrors the sales tax rate and is currently set at 3.5 percent. It will rise to 3.7 percent on Jan. 1. This year, the use tax is on pace to generate about $3 million for the city.

The sales tax is on pace to generate about $57 million this year. The total includes $48.5 million from the general sales tax and $8.5 million from the half-cent sales tax for economic development.

The 0.2 percent hike starting next year will bring the city an additional $3.4 million annually, based on this year's figures. The money will go primarily toward hiring an additional 24 police officers to increase the police department's staffing level to 231 by 2020.

QUESTIONS?

Merchants and others with questions about the Jan. 1 increase in the city of Pueblo's sales tax rate are encouraged to call the city's Sales Tax Division office at 553-2659, city officials say. Starting that date, the city sales tax and use tax rates will rise to 3.7 percent from 3.5 percent.

ddarrow@chieftian.com