Steamboat's heavy dependence on sales tax has a negative effect on lower-income people. As any economist will tell you, the city's current tax burden falls most heavily on those who can least afford it. While median- and upper-income people and tourists think little about the sales tax, it is so onerous on the underclass, that when they consider making any large purchase they often think of buying elsewhere as for instance, in Craig where the tax is 1.5 percent less.
Almost all Colorado cities rely on two sources of income: sales taxes and property taxes. Only Steamboat and eight other towns in Colorado have no property tax, but all have a much lower sales tax than Steamboat's. This fact gives our town the dubious distinction of having the most regressive tax policy in the entire state of Colorado. How has it happened that Steamboat, one of the wealthiest towns in the state, has the most regressive form of taxation?
Between 1975 and 1980, the City Council with the strong agreement of the Chamber Resort Association reduced the city property tax, which had been as high as 15 mills, to zero, and raised the sales tax accordingly. The selling point at that time was that the tourists would pay most of the tax, but a recent study by one of our local bank presidents has concluded that tourists pay only one-third of the total sales tax revenue and that Routt County residents pay the other two-thirds.
The city has become more than ever dependent on this highly volatile and quite unpredictable income. The city's addiction to the sales tax base has also become alarmingly apparent as it, with the chamber's delighted encouragement, promotes the increasing commercialization of Steamboat, even to the extent of presently considering enlarging the Triple Crown summer circus. That circus is rapidly becoming one of the most distasteful events to the average Steamboat citizen. And just recently, we've been told, the Chamber wants even more sales tax dollars to promote summer marketing than it ever had before. Is this really the best way to raise money for city government blindly following the chamber's lead to great sales?
Some people apparently think otherwise, including some members of the council who are cautiously suggesting a return of the city property tax. But who would vote for such a proposal? It is hardly likely that the chamber would endorse such action. They already find county property taxes much too high. And won't they be far more interested in keeping the city dependent on, and aligned with, their own interest the promotion of tourism?
What do the residents of Steamboat really want? Nobody ever wants another tax. However, if the city could wean itself away from the total dependence on sales tax, perhaps a compromise might come about. Could the city grant a sales tax exemption on basic necessities like food, gas and electricity, in exchange for a reinstatement of the city property tax? If so, then perhaps the voters would go along with it. I believe most lower-income people, as well as many others, would welcome such an exchange.
This year, 2002, I see as especially significant in terms of future directions. Is the city going to continue as it has for 20 years to follow the chamber's initiatives to provide it with revenue? Or will the city ask its residents what they truly want? If the city asks them to consider property tax, shouldn't it also ask how they want their taxes spent, especially regarding summer marketing?
Finally, I would suggest that nobody underestimate the intelligence of our citizenry. Steamboat's electorate is one of the best-educated, well-informed publics you can find anywhere in the country. In past years, some chamber people have suggested that the complexities of the financial situations are too difficult for the average citizen to understand. On the contrary, in my view, the people know exactly what is going on. And they could be of considerable help when it comes time to broaden the tax base by placing it more directly on those who can afford to pay.