Election Guide: Sales tax increase to support winter air service program | SteamboatToday.com

Election Guide: Sales tax increase to support winter air service program

— Resort industry leaders are asking Steamboat Springs voters to make what they call an investment in the local economy by approving a 0.25 percent city sales tax that would be used to stem the decline of airline seats arriving during ski season.

Specifically, Referendum 2B proposes to generate $1.3 million a year to help pay revenue guarantees to the airlines that fly into Yampa Valley Regional Airport each ski season. Airlines agree to fly here in the winter only if revenue guarantees are attached to the routes, meaning that if enough passengers don't buy seats and generate a specific revenue number for the air carriers, Steamboat's winter air service program must make up the difference.

Half of the program traditionally has been funded by Steamboat Ski and Resort Corp. and half by revenues from a Local Marketing District lodging tax. A much smaller annual contribution is made by local businesses through the Fly Steamboat program.

In recent years, the winter air service program's reserve fund has dwindled as fewer visitors have flown into YVRA, thereby increasing the amount of money the air program must spend to hit the airlines' annual revenue guarantees.

Simultaneously, the number of available airline seats for passengers coming to and leaving YVRA each winter has decreased steadily, the result of airlines driving a harder bargain in an economic climate where the cost of aviation fuel has gone up, airlines have reduced their fleets and airlines flying to YVRA have merged.

Records kept by Ski Corp. show that the number of available ski season airline seats had dropped from a peak of 162,700 seats in winter 2007-08 to 118,360 in 2010-11. For the 2010-11 air program, Steamboat put up $2.69 million in guarantees, of which it had to pay $1.9 million.

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Although the number of seats have bounced back 6 percent for the coming winter to 125,719, the long-term trend won't sustain that figure without more revenue, Ski Corp. President and Chief Operating Officer Chris Diamond said.

Proponents of the five-year tax emphasize the importance of the winter air service program to Steamboat's overall economy and the direct impact the tax dollars have on the lives of residents.

"We're a tourism-based economy," said Rob Perlman, Ski Corp.'s senior vice president of marketing. "Frankly, our visitors help subsidize our quality of life. We've got to stop this downward slide of losing seats if we're going to rejuvenate our economy. We've got to find another source of funding."

Many opponents question why a sales tax is being sought rather than an increased lodging tax that would impact only visitors staying in local accommodations.

Resort leaders say they considered an increased lodging tax as well as creating a rural transportation authority that could generate revenues for the air program. However, they say an increased lodging tax would have made Steamboat uncompetitive with other resort communities.

The language of Referendum 2B specifies that the tax would sunset after five years. Supporters hope additional revenues will enable the air program to get back up to 160,000 inbound airline seats by 2016. Advocates of the tax say they are optimistic but not certain that after five years of collecting an estimated $1.3 million annually to bolster the reserves in the airline fund, the program will be back on solid footing. If that proves true, they say, they would not have to go back to the voters to ask to renew the tax.

Ski Corp. would continue to provide its same annual funding for the program, and the existing lodging tax revenues also would continue to be allocated to the air program.

Referendum 2B

Shall city of Steamboat Springs sales and use taxes be increased $1,300,000.00 annually in the first full calendar year, and by whatever additional amounts are raised annually thereafter by increasing the sales tax rate by 0.25% from 4.5% to 4.75%, to be levied on and after January 1, 2012, and to expire on December 31, 2016, and shall revenues generated from that increased tax rate be dedicated for use by the local marketing district to support guarantees to commercial air carriers to provide non-stop service to the Yampa Valley regional airport in Hayden, and shall the proceeds of such tax and investment income thereon constitute voter approved revenue changes pursuant to Article X, Section 20 of the Colorado Constitution?”

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