Flight tax to go to Steamboat voters | SteamboatToday.com

Flight tax to go to Steamboat voters

— 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.

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"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

Other business

■ 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.

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