Sales tax question for air program inches closer to November ballot
July 19, 2011
Steamboat Springs — Without additional funding, Local Marketing District chairman Steve Dawes said the winter airline service that brings commercial jets from airports across the country to Steamboat Springs would continue its 27 percent decline since the 2007-08 ski season.
That effort got a slight boost Tuesday when the Steamboat Springs City Council unanimously approved the first reading of an ordinance that would result in a ballot question asking voters this fall to consider a 0.25 percent sales tax to supplement the winter air service.
If approved, the five-year tax would increase the sales tax rate in the city to 8.65 percent from 8.4 percent. It would raise 25 cents on every $100 spent, bringing an estimated $1.3 million in its first year to help pay the revenue guarantees demanded by airlines that fly into Yampa Valley Regional Airport during ski season.
The Local Marketing District currently provides 48 percent of the funding for the air service program, a total that is matched by Steamboat Ski and Resort Corp. The Fly Steamboat program, a voluntary program in which businesses can contribute to the winter airline service, covers the other 4 percent.
Historically, Ski Corp. took the full brunt of the revenue guarantees needed to secure ski season airline service while the Steamboat Springs Chamber Resort Association solicited donations from member businesses that peaked at about $250,000.
Intent on finding a more secure and productive funding source, the resort community successfully proposed in 2005 the creation of a Local Marketing District to add a 2 percent lodging tax devoted to the airline program.
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Ski Corp. Airline Program Director Janet Fischer said last week that the Local Marketing District generated close to $1.5 million in its best year, but receipts have dropped 30 percent in the past two years.
City Council members will consider a second reading of the ordinance Aug. 2.
Dawes said the cost to supplement the winter airline service is increasing significantly while revenues decrease. He said the 2011-12 estimated budget of $3.35 million would require the Local Marketing District to deplete its reserves over the next two years.
"What we have is not a problem today," Dawes said. "What we have is a problem a couple of years down the road."
Local Marketing District treasurer Chuck Porter, who served on a winter airline service task force, said the group considered several funding alternatives, including increasing the LMD's lodging tax and adding another accommodations tax, before choosing a sales tax.
"Increasing the Local Marketing District (tax) would put further load on total taxes for accommodations," he said. "We wanted it more broad-based."
Porter said visitors who stay in Steamboat lodging accommodations currently pay 11.4 percent in taxes — 4.5 percent in city sales tax, 2 percent in a Local Marketing District tax, 1 percent in accommodations tax, 2.9 percent in county taxes and 1 percent in state taxes. He said Steamboat's total accommodations taxes are among the highest in Colorado.
Ski Corp. President Chris Diamond said a sales tax would help the winter airline service recover some of the more than 44,000 seats lost since the 2007-08 season. The goal is to get that number back into the range of 150,000 seats; there were 118,360 available seats for winter travelers to YVRA last season.
"Now is the time for a broad community discussion and education effort to get this issue on the table," he said.
The City Council's approval of the first reading was contingent on making the ballot language more specific to supporting commercial airline service to YVRA and creating an intergovernmental agreement with the Local Marketing District that would include a 1 percent administrative fee for collecting and distributing the tax.