Local air service tax plan hits turbulence

Candidates disagree on necessity of proposal

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— The only time City Council members will vote on Referendum 2A, a proposal to increase city sales taxes to fund transportation issues, is when they step into the voting booth themselves on Nov. 6. Just the same, voters who want to know how candidates stand on the issue will have a clear choice in three out of four council races this fall.

Asked to take a stand on the issue more commonly known as the 3-2-1 tax, five out of eight council candidates endorsed the plan during a candidates forum at Olympian Hall this week.

The 3-2-1 Tax would impose an additional 3 percent on lift tickets, including season passes It would impose an additional 2 percent on lodging, sporting-goods equipment rentals and outdoor recreational activities and instruction (activities hosted by nonprofits would be excluded). Restaurants would collect an additional 1 percent in sales tax. The additional tax is projected to generate $2.8 million that would go into a dedicated transportation fund that would support annual flight revenue guarantees supplied to airlines for ski season jet service. Of the monies collected, 20 percent, or $500,000, whichever is greater, would go to local transit. In addition, the Steamboat Ski and Resort Corp. will contribute $500,000, adjusted for inflation, to the transportation fund. A transportation board and the City Council must agree on expenditures before funds may be allocated.

The tax was conceived by elements of the local business community. They seek a permanent solution to the annual challenge of raising the funds necessary to ensure major airlines will fly into Yampa Valley Regional Airport during the ski season. Historically, the Steamboat Ski and Resort Corp. has put up the money more than $1 million and currently more than $1.5 million to guarantee minimum revenues for the airlines a step that has been necessary to entice them to fly vacationing skiers here from cities like Houston, Dallas and Minneapolis. Contending that their company benefits from just one-third of the revenues generated by the ski flights, and the balance accrues to other businesses in the community, the ski corp. has been able to enlist other sectors of the resort economy to contribute to the airline fund on a voluntary basis. The Steamboat Springs Chamber Resort Association has coordinated that effort.

This year's tax question is an effort to shift a large portion of the burden for raising that money onto the tourists themselves by increasing the sales tax the city collects on lift tickets, lodging, rental of sporting-goods equipment and restaurant meals. The City Council voted to place the measure on the ballot, but that doesn't necessarily imply endorsement of the tax.

To make the tax more palatable, the "3-2-1 Alliance" added assurances that a minimum of $500,000 of the $2.8 million the tax would generate will go to local transit most likely Steamboat Springs Transit. However, the City Council and a transportation board that would include representatives of the business community must agree on all allocations of funds generated by the tax.

Proponents of the tax say they have crafted a tax measure that would place 90 percent of the burden on tourists and just 10 percent on local residents. Detractors say locals will end up paying through the increasing cost of living here.

The only City Council race where both candidates for office support the tax is in District 2, where former Councilman Paul "Loui" Antonucci is challenging incumbent Ken Brenner. Everywhere else, the candidates split on the question.

Nancy Kramer and Omar Campbell are vying to replace Council President Kevin Bennett in District 1. Kramer called the tax "vital" on Thursday; Campbell dismissed it.

"Three-two-one is just another chamber resort maneuver to take advantage of the taxpayers," Campbell said.

"I don't think any of us feel great about being held hostage by the airlines," Kramer said, "but (ski area) competition along the

I-70 corridor" makes it vital.

Darcy Trask, challenging incumbent Kathy Connell in District 3, said she can see many strengths to the proposed tax. Although she doesn't think the issue is particularly pertinent to the council races, she acknowledged she won't vote for the tax. She said she worries that the public dollars will have declining purchasing power with the airlines in the future.

Connell said she "hates" new taxes but there is a time and place for them.

"It's a matter of survival folks, for all of us, not just for businesses," Connell said.

Steve Ivancie, aiming for a council seat in District 2, questioned the figures of 3-2-1 proponents who say 90 percent of the tax burden will be placed upon visitors to Steamboat.

"I can't support it," Ivancie said.

Ivancie's opponent, Kathi Meyer, said she was moderately in favor of the tax prior to the terrorist attacks of Sept. 11, and her support has grown since that time.

"Now more than ever," Meyer said, "I'm so glad we have an airline program in place."

Brenner prefaced his remarks about the 3-2-1 tax by pointing out that in Colorado, governments no longer impose taxes on their residents, but propose them.

"I favor 3-2-1 because, given the current airline crisis, without those guaranteed flights, we'd be in real trouble this winter," Brenner said.

Antonucci said at the same time the community seeks to diversify Steamboat's economy, it must also stabilize the foundation of its current economy.

"It scares me to death what could happen if that (tax measure) fails," Antonucci said.

John Spezia, who took the "con" position during the forum's debate over the 3-2-1 tax, contended that little will happen if the measure fails at the polls this fall. Spezia said he realizes the community can't withdraw "cold turkey" from the airline program and isn't advocating that.

"It's not a question of whether we get rid of it, but who pays for it," Spezia said.

He said he believes strongly that if the tax fails, the ski area and major property management companies, among others, will continue to fund the airline program.

"The people who benefit most from it will spend the money to keep the planes coming," Spezia said. "They may spend less because it's their money."

Tom Hopp, speaking in favor of the 3-2-1 tax, said the measure is necessary to ensure the stability of the local economy.

"Tourism is the most significant part of our local economy," Hopp said. "Sixty percent of city sales tax comes directly from tourism and a study shows that as many as seven out of 10 jobs are directly related to tourism."

Hopp said he believes that many local residents are unaware that over the past decade, the number of destination skiers coming to Steamboat has declined by 25 percent. A robust construction industry during the past five years probably explains why the decline in destination skiers hasn't been felt, Hopp theorized.

Those destination skiers stay longer but have the least impact on local infrastructure, Hopp said. For example, they generate less automobile traffic because they don't drive their personal automobiles here, he said.

Proponents of the 3-2-1 tax have estimated its impact on local residents by estimating that someone who purchased a season pass to the ski area and spent $2,000 annually in restaurant dining would pay a total of $50 in additional taxes. They also estimate that local residents who board one of the direct flights out of Hayden during ski season is being subsidized between $20 and $30 each way.

Hopp reiterated that 90 percent of the tax burden would be on tourists, not on locals.

"This is an important feature," Hopp said, "and we worked hard to make it a reality."

Spezia countered that residents would actually pay more than 10 percent of the tax because, he said, the ski area is the amenity that fuels a real estate market and resulting growth. Along with destination skiers, Spezia said, the tax will bring with it an increasing cost of living and more expensive housing that everyone in Steamboat will pay for.

To reach Tom Ross call 871-4210

or e-mail tross@steamboatpilot.com

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