Paul Hughes: Men behind the tree
September 18, 2012
"Don't tax me and don't tax thee; tax that man behind the tree."
— Sen. Russell Long
One reading of this much-repeated saying is, "You and I are paying enough taxes already. Let's see if we can find someone who isn't paying as much, and let's tax him." In most cases, there is no such person, but here in Steamboat, we have two. Those well-hidden "men" are second homes and businesses. If they were to share the tax burden with the rest of us, we all would be better off.
The Steamboat Today's Sept. 12 editorial ("Steamboat's fiscal health may require service cuts") misses the point. The city of Steamboat Springs might well need to make service cuts if it had exhausted its available revenue sources, but it hasn't. In fact, much of the city's well-publicized financial woes during the past four years stem from this City Council's refusal to ask the men behind the tree to pay their fair share of the costs of running the city.
Way back when city voters decided to eliminate the progressive property tax in favor of a high, regressive sales tax, the conventional wisdom was that tourists would pay the lion's share of city costs so that residents would pay relatively little. That hopeful scenario died years ago. Most locals probably will be shocked to learn that they, not tourists, pay the biggest share of city sales taxes. A 2008 study conducted for City Council by Economic & Planning Systems, Inc. revealed the ugly facts: residents pay 41 percent of all sales taxes, tourists pay 35 percent, county residents pay 18 percent and second-home owners pay just 6 percent. And businesses? Because businesses spend little on retail goods, they pay little or nothing for the services the city provides for them. As the 2012 Tax Policy Advisory Report summarized, "full-time residents … have been subsidizing the basic City services that are provided to second homes and businesses, and they have been doing so for decades."
The startling imbalance in tax burden between full-time residents and second-home owners is highlighted by the fact that second-home owners, who pay just 6 percent of sales taxes, sit on 62 percent of the city's total residential assessed valuation. A small property tax would bring to the table more than 4,000 second homes and 3,500 businesses to share the tax burden for the first time. The city would have at its disposal a much larger taxable base from which to draw needed revenue, only as approved by voters. Doing so also would allow the voters to eliminate onerous regressive sales taxes such as those on food and groceries.
The goal is not to sock it to second-home owners or businesses. The goal is to create a fairer, more flexible tax structure that reflects today's reality, not that of 40 years ago, and in doing so, to ensure the city's financial health for decades to come. It is not council's job to march to the beat of Grover Norquist's no-taxes-ever drum. Nor is it council's job to starve deliberately the very organization it has been elected to oversee. City Council's only job is to take the very best possible care of this city and its residents. Cutting services every time unreliable sales tax revenues drop is no way to take care of this special place.
City of Steamboat Springs voters have not had an opportunity to revisit our tax system since the 1970s. It's time to allow them to do so, and it is incumbent upon City Council to ask them for their opinion no later than November 2013.