Steamboat Springs The city’s Tax Policy Advisory Board spent a little more than an hour Wednesday discussing the pros and cons of a proposal to recommend that the Steamboat Springs City Council seek voter approval to swap the 4 percent city sales tax on food and utilities for a citywide property tax that would generate a corresponding amount of tax revenue.
Board member and former City Manager Paul Hughes said his plan would exchange a regressive sales tax for a more progressive property tax with the goal of being as revenue-neutral as possible — that is, the city’s overall tax revenues would not increase.
Hughes expects a gain for most full-time residents by spreading the overall tax burden to bring in vacation-home owners. He cites a 2008 study to show that over time, an increasing share of the city’s sales tax revenue comes from full-time residents, with second-home owners accounting for only 6 percent of local spending.
Hughes proposes to afford an additional measure of protection to small businesses and homes of moderate value by including a temporary tax credit on the first $100,000 of actual value on all non-exempt real property.
Above all, Hughes said, the measure would shift a portion of the local tax burden onto second-home owners, whom he says currently do not pay the bill for city services.
“It’s an issue of fairness, not of going after where the money is,” Hughes said.
“The fact is that current full-time residents of whatever income level have been subsidizing second homes and businesses in paying for city services and programs. Second homes account for about 48 percent of all residential units and about 62 percent of all residential assessed value,” according to the city survey cited in Hughes’ proposal.
“Second-home owners pay a pittance towards their city services, and they should be asked to pay their fair share,” he wrote in his proposal.
Board member Jennifer Schubert-Akin, the owner of an accounting firm, said she disagrees with Hughes’ plan for a variety of reasons.
“First, the Gallagher Amendment (to the state constitution) means a property tax would put an undue burden on businesses” that drive employment and payroll, she said. “Second, it would increase the cost of owning a home, and I just don’t see raising the cost of housing right now. (City Finance Director) Deb Hinsvark told us that sales tax on food and utilities are the stable source of sales tax in the city, so we would have to replace our most stable source of revenue.”
James “Jake” Henry said he would not support the measure because of the impact it would have on small businesses, which he said he knows from personal experience are heavily taxed in Steamboat.
Banker Adam Beaupre said he would support the proposal because he doesn’t think the modest increase in the tax burden would tip the scale of profitability for local businesses and observed that it’s the primary Steamboat residents who are truly shouldering the burden for city services such as snow plowing.
Several plans on the table
The property tax proposal is one of a number that have been discussed over seven months by the 10-member board since the City Council asked the group to assess the city’s current tax structure and reach conclusions about whether changes are needed. The establishment of the group rose from October budget discussions, when City Council President Pro Tem Jon Quinn said the city’s current sources for funding capital projects were inadequate.
Steamboat Springs is one of just six municipalities in Colorado that does not have some form of property tax, Hughes said. Instead, it relies on a 4 percent sales tax (of a total 8.4 percent, including state tax) and grants.
Other forms of tax the board has discussed include parking fees, a tax or fee on timeshares used as vacation rentals, charging for bus service, and a tax on admission to entertainment venues, including ski lift tickets.
Of the 11 members on the board, seven gave preliminary stances on Hughes’ proposal.
Lining up behind him on the plan were Beaupre, Bud Romberg, Co-Chairman Jack Dysart and Bert Cohen (by email). Registering their disapproval were Bob Larson, Schubert-Akin and Henry. Laurie Good said she was sitting on the fence, and Co-Chairman Ken Solomon said he would wait for a formal vote to give his position. Other members were not present.
— To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com