Flight tax to go to Steamboat voters

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■ Unanimously approved a new lease for SmartWool’s corporate headquarters at the Steamboat Springs Airport.

■ Voted, 6-1, with Walter Magill dissenting, to allow residents of the city to keep goats. “I wish we were doing it as a test program,” Magill said.

■ Agreed, 5-2, to contribute $1,000 from its own discretionary budget to help a community group obtain a Great Outdoors Colorado Grant to develop Nordic trails on Emerald Mountain, but asked the group to come up with the remaining $14,000 for the grant match.

— City voters will be asked Nov. 1 to consider adding a 0.25 percent sales tax to their shopping bills in order to bolster the ski season airline flight program that delivers some of Steamboat Springs highest-spending tourists and second-home owners to the resort.

The Steamboat Springs City Council voted unanimously Tuesday night to put the question of the tax on the fall ballot. It would increase the tax collected on purchases here from 8.4 percent to 8.65 percent. Of the 8.4 percent, 2.9 percent is state sales tax, 1 percent is county tax and 4.5 percent is collected by the city. Of the 4.5 percent for the city, 0.5 percent goes to the Steamboat Springs Education Fund.

The additional sales tax would amount to 10 cents on every $40 spent for consumer goods ranging from bread to automobiles.

If approved, the new tax would be in place for five years. The actual ballot language has not been written.

Steamboat Ski and Resort Corp. Senior Vice President of Marketing Rob Perlman said more funds for the airline program are needed because airlines are demanding more money for fewer inbound seats to Yampa Valley Regional Airport, and proceeds from the 2 percent accommodation tax that contributes more than $1 million to the program annually is off by 33 percent in recent years. That translates into fewer arriving seats and fewer passengers to generate new sales tax revenues, he said.

Council President Pro-tem Jon Quinn said he sat in on several meetings of resort and business leaders where a variety of options were considered to increase the money available for revenue guarantees needed to secure airline service. He predicted it would be a challenge to persuade the voters of the necessity of the tax.

“The reason they’ve come to the sales tax is really, the whole community does benefit from the airline program,” Quinn said. “Each of those people (who arrive on the flights) spends $1,100 on average at restaurants, retail and (for) services.”

Steamboat’s airline program is 25 years old and relies on the Steamboat Ski & Resort Corp. to sign contracts with each airline based on a promise to provide minimum guarantees to offset the uncertain profits of flying to a resort market. Since 2004, the cost of the revenue guarantees has been split evenly between Ski Corp. and the proceeds of the 2 percent accommodation tax dedicated to the air program. That tax is collected by the city through a local marketing district that comprises most of the resort bed base.

The actual cost of the program depends on the fiscal performance of each flight. After the winter of 2010-11, the flight program sent $1.9 million to the airlines against guarantees of $2.69 million. However, rising fuel costs, airline mergers and reduced aircraft fleets have conspired to bump the revenue guarantee budget for the coming ski season 50 percent to $3.35 million, Perlman told City Council.

Councilman Scott Myller told Perlman he was uncomfortable with the proposal to raise sales taxes.

“This comes off all of us, including groceries and everything we buy,” Myller said. “In that way, it’s a little regressive. I wish it was coming from a different source.”

Perlman responded that over the weekend, he took the time to pull out all of his bills for his family of four and calculated that the 0.25 percent tax would cost him $3.66 a month and just less than $40 a year.

Perlman acknowledged that a campaign emphasizing the overall benefits to the community of the airline program will be necessary. Part of it will be to overcome any perception that the purpose of the tax is to reduce the amount of money Ski Corp. plans to pay into the program. Perlman said Ski Corp. currently bears half the cost of the ski season jet program although it captures only 25 percent of winter visitors’ expenditures.

“The Steamboat Ski and Resort Corp.’s contribution will not be changing as a result,” Perlman said. “The ski area is committed at minimum to the average of what we’ve paid for the last three years — $1.1 million. Our money will be first in, and as signatory on the contracts, we will be ultimately responsible.”

To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com

Comments

Scott Wedel 2 years, 8 months ago

Right, so adding more taxes is good as long as each one is another $20 or $30.

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Scott Ford 2 years, 8 months ago

Council member Scott Myller did touch on one of the key questions associated with this issue. The .25% increase in sales tax will have an impact on every family living in Steamboat Springs and Routt County. How big is this impact? In the article, it appears that Rob Perlman attempted to answer the question as it relates to groceries - but there is more to this impact than simply groceries and Perlman's family as a representative of all household units in Routt County.

There is data available and assembled by Yampa Valley Partners to answer the impact question with reasonable accuracy. I would encourage the staff of the Pilot/Today to follow through on this key local family/household impact question. Otherwise, we will just keep guessing and using terms such as HUGE and minimal. It is what it is but, knowing an estimate of the impact number itself is a lot better than guessing. Agreed?

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beentheredonethat 2 years, 8 months ago

Citizens are going to vote no to this tax increase and then vote all those council members out of office for having the nerve to put this up for a vote in the first place. Pull your heads out of the sand and find out how much financial suffering workers are under without having elected,officials increasing taxes.

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Scott Wedel 2 years, 8 months ago

The worst part of this tax is not the impact upon locals, but the whole idea of a sales tax that affects the entire population of the county that is being used to subsidize travel for wealthy people that spend most of their vacation money at a multi-billion dollar corporations, Ski Corps, Wyndham and Sheraton. And the public funds have minimal public accountability as they are being used to fund the airline subsidy program not accountable to the public.

City might as well take the public tax money and simply write checks to Ski Corps, Wyndham and so on with a note saying "Thank you for bringing tourists to SB". As if we should be completely beholden to them as if nothing in SB brings tourists to them.

Vail Resorts pays 100% of their winter flights program. That certainly forces greater discipline into how many flights they offer and the ski/lodging packages they offer because if they screw it up then they pay for it. So Vail Resorts manages it so that it costs them between $250K and $1M a year. Private sector investing private capital - what a concept. I know, it'll never work in socialist SB.

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pitpoodle 2 years, 8 months ago

Another one of those votes by City Council that is not well thought out. You cannot continue to raise taxes from people who are scraping by -- no matter how you justify your wonderful programs. I am not opposed to encouraging tourism but when you have a private company asking a small number of the general population (SBS city residents only) to subsidize their income, I say no.
This is reminds us of the fleecing council tried with SB700, promising how it would be great for SBS, if only SBS residents (city residents & city businesses only) would pay for water and sewer needs for another private enterprise that would allow out-of-town developers to make a tidy profit. If ski corps wants to raise its bottom line, they can pay for airline seats. As a company owner doing business in SBS, I already pay monthly (via sales tax collection) to subsidize the airline program. No more tax increases, thank you city council.

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Scott Wedel 2 years, 8 months ago

You want to see a clear example of the complete lack of accountability of this proposed tax? I asked the City of SS via an open records request for historical information regarding the airline flight program's number of subsidized seats and number of occupied seats and cost of the program for that year. The most basic sort of information that anyone would want to know before committing money, particularly tax money, to a program. Well, according to the City of SS, that information has not been provided by the Chamber or Ski Corp (It was suggested I should ask them questions regarding the program) and all the City has is the proposed ballot language.

So, according to the City of SS, we should tax ourselves $1M a year and give the money to subsidize a program run by Ski Corp and the Chamber because that is what they told us to do. We certainly have not been provided any sort of data for us to judge the merits of the program. No, we are completely dependent upon the pronouncements of Ski Corp's marketing on both the value and necessity of the program.

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ralph cantafio 2 years, 8 months ago

I posted this comment originally on February 3rd. Irrespective and despite any information available through Yampa Valley Partners, I would repeat my comments initially directed as to the Fly Steamboat Program and ask the same general questions as to this proposed new tax. I repeat:

"This information may be available, but my questions would be: 1) is there any reliable 3rd party economics available to determine empirically whether this is a good investment of the dollars of our community; 2) on the same lines - is there any cost/benefit analysis demonstrating that there really is any net benefit derived from this program; and 3) to the extent there is a benefit, who precisely does benefit? I think these are all fair questions whether or not one is engaged in analysis of the existing program or the creation of a rural transit authority. I would hate to learn that all of this is done based on a mere presumption of a greater public benefit to only learn that either there is no benefit or that the benefit is not adequately distributed to make this truly a community (as opposed to a special interest) issue.

My point is that typically good decisions are a product of good information."

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bill schurman 2 years, 8 months ago

Welfare for the ski corp/chamber?? Nah, welfare is for the poor white folk and people of color. The is a "subsidy" for the well-healed. Too bad I'll be gone so I could vote "NO". Let the ski corp/chamber pay. You know, spend $$ to make $$$.

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rhys jones 2 years, 8 months ago

I was the programmer who maintained and enhanced Central Reservations' software before Ski Corp bought it. That is a cash cow. As is their whole business.Asking the public to subsidize private business is ludicrous. Let those who benefit kick in. Don't palm it off on everybody.

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rhys jones 2 years, 8 months ago

Where ya goin', Bill? I was sorta hoping you'd stick around and help me with my appeal, pro bono, since you're retired :-)

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sledneck 2 years, 8 months ago

I wonder if everybody who opposes this tax also opposes "affordable housing"? I wonder what creative rationale one might use in ones mind to oppose the one and support the other.

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rhys jones 2 years, 8 months ago

Apples and oranges. A major difference is who benefits,

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Scott Ford 2 years, 8 months ago

Hi Ralph - I agree with the three questions you outline. I think it is very reasonable to ask these questions. As far as I know there has been no third party analysis. A lot of bits and pieces have been done but not all the parts combined to allow for a full analysis. Although a wee-bit scattered I think all the data to do this type of analysis is available. It is essentially an economic impact study with well-defined and prescribed boundaries and agreed upon assumptions.

I am optimistic as the election date approaches the Steamboat Pilot/Today will pick up this important and informative task. How about this for a headline / Who Pays and Who Benefits?

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Scott Wedel 2 years, 8 months ago

Scott Ford, I have no doubts that the SB Today will print such an article. I just have no expectations that the analysis will be done by a third party. I fully expect such an article to be written based upon the same source as was sufficient for the City Council which was Ski Corp VP Senior Vice President of Marketing Rob Perlman.

The great Leo McKern for years did a TV series Rumpole of the Bailey starring as a British barrister. He always referred to his wife as "She who must be obeyed". Well, in SB, they who must be obeyed is Ski Corp and the Chamber. If Ski Corp and Chamber want a sales tax hike on the ballot then whom are our elected representatives on the City Council to ask any questions?

I note that June sales tax receipts already make a liar of Ski Corp Sr Marketing VP whom said that summer tourism had nowhere else to grow (and so we should commit ourselves to winter tourism which has barely grown in a decade).

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Scott Ford 2 years, 8 months ago

Hi Scott W - I really do not have a problem with City Council placing this question on the November ballot. I think if they Yampa Valley Housing Authority had pursued its desire for a tax question on the ballot City Council would have approved that as well.

I am wee-bit more optimistic that the Steamboat Pilot/Today staff will be objective in the analysis. I recognize that I may be letting my Pollyanna side show through.

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callguinness 2 years, 8 months ago

$3.66 per month... that means his family of 4 is only spending $1,464 a month on taxable items.

At $40 a year... that means they are only spending $16,000 a year on taxable items.

Doesn't seem like those numbers add up to what a typical family of 4 would spend.

Thoughts?

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Clay Ogden 2 years, 8 months ago

Mr. Ford ... "Polyanna" ... perhaps ... she learned to turn great adversity into great strength ... not naive ... just hopeful ...

So council asks for tax payers to formally weigh in at the ballot box ... I just don't see the problem with that.

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Scott Wedel 2 years, 8 months ago

callguiness, Numbers don't seem that crazy because that is represents spending in Routt County. So while a family may spend more overall, we know from leakage studies that much is outside of Routt County.

My concern is not the impact upon people which won't be that severe, but that it is being committed to the airline subsidy without any evidence that is an effective use of that money. A local parallel situation could be the Education Fund Board. It is financed with a half cent sales tax, but the ballot measure did not fund a specific education need, but set up a board to grant money based upon needs.

It might be reasonable to set up a Tourism Fund Board funded with a quarter cent sales tax. But if such a board was set up then no tourism board would ever consider giving money to the winter airline subsidy program if the application was as bereft of data as the justification given to the City Council. A million dollars a year could fund so many things and it is far from obvious that we should be expanding an airline subsidy program that currently has 30% of it's seats unoccupied.

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exduffer 2 years, 8 months ago

Grapes for lunch, corn for dinner and raspberries for dessert. A little over $10 spent and was charged $.50 in tax. I guess the raspberries are considered a luxury item.

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exduffer 2 years, 8 months ago

Here is the big question. Why not add a $10 departure fee administered by the YVRA? This gets the locals who can afford to fly out during winter and spring breaks with their high paying location neutral businesses, but gives the rest of us a break. $10 less spent in SS for 120,000 seats would cost the city $54000 in tax revenues. Seems like the right way to go.

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dave mcirvin 2 years, 8 months ago

Like the Stbt-700 debate, I am glad to see that this decision will be placed into the hands of the voters. I am not a 'triangle hat' adorning, anti-tax 'patriot' (seems mutually exclusive at times) though this proposal and impact may seem largely symbolic to many.

In the midst of the lagging economic recovery, continued stagnant employment, age of the boisterous Tea Party, medically induced bankrupcies/foreclosures, cutting benefits for many including soldiers/veterans/single parent families/teacher-education & outrage over budgets/cuts without revenue increases it does seem bizarre that we are being asked to supplement the bottom line of Fortress. Last I read, Fortress/Intrawest owns ski corp and is a private equity firm (i.e. hedge fund) in the business of making money.

No matter your view of 'too big to fail', I'm not sure that we need to supplement the bonus structure of the top line Fortress/Intrawest executives.

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sledneck 2 years, 8 months ago

Highway, I disagree. It is not apples/oranges. We are supposed to be a "nation of laws, not a nation of men". Meaning: it should not matter WHO pays or WHO benefits, wrong is wrong and subsidies are wrong.

It really frets me that people see things as ok or not depending on who is getting screwed and who is getting the "benefit".

Stormpeak, Nothing is "too big to fail". Just look at Uncle Scam; the biggest thing going and a collossal failure.

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cindy constantine 2 years, 8 months ago

Right on, strompeakco!! Is it me or do others find it discouraging that we are now a spoke in a BIG wheel of a hedge fund. I am not knocking the great local employees of our mountain who are probably the hardest working, most experienced ski area employees of any area out there, but hedge funds have a different MO than folks who are focused on the ski biz. I am sure the employees who have taken pay/benefit cuts or been fired might privately agree. Hedge funds are totally driven by the bottom line and returns to their investors instead of re-investing in the mountain to better compete in a shrinking market. My solution after being a Steamboat pass holder for years---skiing Copper Mountain, Winter Park and Vail this coming season. : (

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Scott Wedel 2 years, 8 months ago

Sledneck, There is a massive difference between supporting the concept of affordable housing or the concept of supporting tourism as compared to supporting specific programs under those banners.

One can support tourism and be against this sales tax hike for the airline subsidies. One can support affordable housing while being critical of the stupid local plans passed by the City or the County.

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rhys jones 2 years, 8 months ago

Nice -- I got a harrumph outta that guy!! What he said.

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