Steamboat Pilot & Today

Let's get this right out in the open. There is an underlying theme behind the series of neighborhood meetings being conducted by Steamboat Springs City Council that isn't being voiced. Council members are a little shy about blurting it out, so I'm going to do them a favor and say it.

Here goes.

Sales taxes alone are no longer sufficient to support the basic city services plus many desirable programs being funded by city government. What City Council really wants to know is, would you support changes in the city tax structure, possibly including new taxes. What mix of revenue sources (taxes) would you be willing to swallow in order to ensure the city remains on sound fiscal footing and continues to have adequate funds for the programs it currently spends your sales tax dollar on? If you think the city is wasting your money on some of its programs, which ones are they? And if the city has to make some tough choices about which programs to fund, which of them are nearest and dearest to your heart?

City Council hasn't quite voiced these issues in plain English yet, in part because they know that new taxes are dirty words. But to be fair, there also is a sincere interest on the council members' part to avoid a situation where new tax proposals come from the top down. They'd like to guide their constituents into making their own decision about how they want to fund their city government and how they want the money spent.

"We're just temporary stewards (of the city)" Council President Kevin Bennett said of his and his colleagues' role on City Council. "It's really up to you to tell us how to spend the money. How do you want us to spend the tax money?"

Here's the problem. Outgoing City Finance Director Karen Feeney projects that as soon as 2005, sales tax revenues may not be enough to keep pace with the needs of the community. That might seem strange at a time when sales tax revenues are growing at 5 percent a year. Through conservative budgeting, the city ends up with tax revenues over the budgeted amount to the tune of six figures every year.

But the revenue landscape has been shifting beneath the city's feet for some time now. Winter tourism, which helps to drive several of the biggest sales tax months of the year, has been flat for at least five years if not longer. At the same time, the city has seen dramatic surges in construction that lead to increased demand for city services.

Here's another problem. Because it relies solely on sales tax revenue, the city isn't positioned to capture much revenue from the construction boom. Steamboat Springs isn't alone in this regard most of the municipalities in the state depend heavily on sales taxes.

There is growing support in Steamboat for the notion that the city should begin by cutting the roughly $800,000 it provides to the Chamber Resort Association each year to support marketing. No matter what your position on that issue is, it's fair to say it carries along with it the presumption that the city might then have to absorb some reduction in sales tax receipts from a fall-off in tourism. You might reject that assumption if you don't agree that marketing successfully drives sales tax numbers. But it's a question that must be considered.

Some cities in Colorado, such as Vail, have real estate transfer taxes in place that help them immensely. But under the Taxpayers Bill of Rights, which specifically prohibits new real estate transfer taxes, that would not be an option for Steamboat short of a statewide vote to "de-Bruce" that aspect of TABOR.

What's left?

One option the city toyed with putting before the voters in 1998 is an excise tax on new construction. It would basically be a tax per square footage of new construction, probably with some kind of exemption for local families building primary residences.

Another option the city is preparing to study is impact fees. They are a complicated alternative that requires the city be prepared to justify fees on new development in court, but they hold some promise.

Finally, there's property tax, which could tap into the growing base of real estate in Steamboat. Although every property owner in Steamboat pays property tax, the city has no property tax levy. Property tax is tough on local businesses because state law requires them to bear a proportionately heavier burden than residential property owners. And several people at the May 8 neighborhood meeting said they believe rising property taxes attributable to rising real estate values are beginning to squeeze out retired people and young families.

So what will it be? If City Council suggested a reduction in city sales taxes in exchange for a property tax, would you go for it? It's a question everyone in Steamboat Springs should be asking themselves.

The last neighborhood meeting will be held May 15, from 7 to 9 p.m. in the community center. It will be followed up by an overall town meeting sometime in June. It's your community stand up and be counted.

To reach Tom Ross call 871-4210 or e-mail tomross@amigo.net