Steamboat Pilot & Today

Steamboat Springs — Chris Diamond stood up in front of Steamboat Springs City Council and the Chamber Executive Board this week and hiked his sweater vest up to his chin to reveal a golf shirt bearing the logo of American Airlines.

"This is the only thing I ever got free from any of the airlines," Diamond said. His remark kicked off a big laugh from the assembled community leaders, but he was introducing a serious subject.

Diamond is president of the Steamboat Ski Area. He serves on a subcommittee of the chamber board that drafted a plan, endorsed by the entire group, asking City Council to place a question on the fall ballot calling for a new 1.5 cent sales tax. The dedicated tax would help underwrite ski season airline service at Yampa Valley Regional Airport as well as addressing other needs. Portions of the tax would also fund ground transportation such as Steamboat Springs Transit and generate about $1 million annually for city capital projects, including recreation projects. It would also generate about $430,000 in general tourism marketing funds.

The tax proposal would have the net effect of reducing the amount of money the ski corp. devotes to guaranteeing jet flights and marketing those flights by about 25 to 30 percent.

All told, the tax would generate about $4.4 million annually, varying with monthly and annual fluctuations in sales tax. The tax would not be imposed on groceries or utilities, a proposal intended to spare local residents some of the brunt of the tax.

City Council asked in-depth questions about the proposal during a meeting May 15 but stopped short of strong reactions either in favor of or against placing the sales-tax increase on the ballot. However, several City Council members made a point of reminding the chamber board members their focus for about two years has been diversifying the city's revenue sources to include more than just sales tax.

"We've always assumed that 8.5 percent (total sales tax in the city) was the high end of the community's tolerance level," Councilman Jim Engelken said. "Philosophically, we've said any future (taxes) should come from other sources. Experts tell us we need to diversify."

Currently, Steamboat Springs is one of the few cities in Colorado that has no property tax.

"I don't know if this is the answer," City Council President Kevin Bennett said. "But this is a strong reaching out and (an effort) to reach a community solution. It's got something for everybody. I'm intrigued. I guarantee each one of us on council will study it carefully and I want to offer a heartfelt thank-you for the leadership you guys have shown."

Recognizing that any new sales-tax question timed for the November ballot must be acted on by July 17, Bennett said City Council would give the chamber board an answer on a timetable that wouldn't bump up against the deadline.

Even if council were to place the measure on the ballot, and the voters approved it, the chamber will need to seek support for the airline program from its members again this year to help underwrite ski season jet flights. To date, $574,200 has been raised against pledges for last winter's airline program.

Diamond told City Council the committee, which included Bob Milne of Steamboat Resorts and John Kerst of First National Bank, looked at other options and determined a sales tax offered the best chance to raise significant amounts of money while shifting a large portion of the tax burden onto tourists, while mitigating the impacts on local residents and businesses.

In addition to weighing property taxes, the chamber committee studied forming a business improvement district and creating "business and occupational licenses and tax."

Diamond said the ski area will agree to apply the new tax to lift tickets and other recreation on the ski mountain, including ski lessons. That willingness marks the first time the ski area hasn't vigorously resisted any form of lift tax.

"We're willing to put it on the table, as long as it's part of a broader program," Diamond said.

Milne said he knows it would be difficult to convince the voters to approve the tax.

"We're not talking about a small amount of money," Milne said. "We're talking about a fairly large chunk of change. I've said, 'This plan is great, it's got something in it for everybody to hate.' But there are capital projects in this town that need to happen in order for us to remain profitable. And we need to make sure city buses are funded properly. We have to work together to meet some of these needs. I know this is going to be an uphill battle it's going to be a fight."

Councilman Bud Romberg said that when he ran for City Council, he heard loudly and clearly that local businesses felt 8.5 percent city sales tax represented a ceiling on that form of taxation. But Chamber President George Noyer said he no longer feels that's the case, and Milne said he doesn't think that guests of his lodging property would be sensitive to another 1.5 points of sales tax.

Engelken reminded the chamber board members that it's the local voters who must be persuaded to approve the proposed tax increase forward.

Chamber Executive Vice President Sandy Evans-Hall said the intent of the executive board was to present a draft proposal to City Council that would be perceived as being mutually beneficial.

"We want to help preserve and sustain an economy that we have right now," Evans-Hall said.

The new tax proposal calls for the tax to apply to the sale of lift tickets and ski school lessons at the ski area. And the ski area would continue to voluntarily collect the full amount of city sales tax of 4.5 percent on food and beverage operations.

However, the net effect will be to reduce the amount the ski area devotes annually to airline flight guarantees. The ski area supplied $1 million of the $1.6 million needed to bring the flights here last winter and spent another $555,000 on marketing in cities where flights originate, according to ski corp.

Under the chamber proposal, "Ski corp. will provide funding for airlines subsidies so that its minimum annual contribution including new taxes would be at least $750,000. Additionally, ski corp. will agree to manage and staff the air program and provide airline marketing support in a manner and at a funding level consistent with prior years."

"There will be people who will say this is a ski corp. subsidy," Diamond said. But he said the ski area must shift some of the burden for ski season flights away from its profit-and-loss statement.

"We took a $600,000 hit to our company's bottom line" last winter, Diamond said.

John Ross, a former chamber president, who has been outspoken in his criticism of using public funds for marketing purposes, said he understands the chamber's problems better after listening to their proposal.

"Fifty percent of residential assessed valuation (for property tax purposes) is non-resident, and they aren't all paying sales tax," Ross observed. "That leaves more than 50 percent of the assessed property owners out of the picture" in terms of raising funds for capital projects and tourism.

However, Ross said, having just purchased a car, he thinks raising local sales taxes to 9.9 percent will be a tough sell.

Scott Berry, a member of the public sitting in on the meeting, suggested it would be strategically wiser to look for a tax that wouldn't impact locals at all.

Berry pointed to the chamber's estimate that taking groceries and utilities out of the new 1.5 percent sales tax would place 75 percent of the burden on tourists and other visitors, and 25 percent on locals. Risking a voter turndown over that 25 percent may not be worth it, he suggested.

"If it's 75/25, why risk it for the 25 percent?" Berry asked. "Why not make it all user-based?"