Winter airline tax presented to Steamboat Democrats
September 22, 2011
Steamboat Springs — Loui Antonucci told an audience of local Democrats on Wednesday night that after five years, the quarter-of-a-penny city sales tax proposed by Referendum 2B will have put Steamboat's winter air service program on sound financial footing.
"This is a five-year tax, and after that, we'll have built up our reserves enough we don't think we'll have a problem," said Antonucci, the former Steamboat Springs City Council president. "If we don't do something to fix this, we'll probably lose another 20 percent in the next few years, so it's really scary. According to Scott Ford, every 92 passengers support one job. The reality is, we're all in this together, and we always have been."
If approved by the voters, the new sales tax would mean people spending $100 in Steamboat, for example, would be charged 25 cents to fund ski season jet service. It's projected that it would raise about $1.3 million annually.
Antonucci appeared with Steamboat Ski & Resort Corp. President and chief operating officer Chris Diamond to speak to a group of about 20 Routt County Democrats about the proposed tax. It is intended to bolster an existing lodging tax that underwrites revenue guarantees necessary to attract commercial jets to serve Yampa Valley Regional Airport in Hayden during ski season. Ski Corp. also is a major funder of the airline guarantees.
Antonucci is leading a committee advocating for the tax. Diamond told the Democrats he recognized the increasing severity of an airline funding crisis early this year. He said he then stepped back to let Steamboat Springs Chamber Resort Association and business leaders address a solution.
"I was the whistleblower," Diamond said. "I recognized early last winter, as I looked at how flights were performing, that we were running off by 6 percent from the previous year (in arriving passengers). Over the last few years, we'd already lost 27 percent. Never had this happened before."
Recommended Stories For You
Diamond explained that dramatically increased jet fuel costs and reduced airline fleets had combined with dwindling revenues from a 2 percent lodging tax to reduce the number of airline seats the program could afford.
The airline fund's reserves, which are managed by a Local Marketing District overseen by City Council, had slipped from $1.5 million to less than $1 million, Antonucci added. Without new revenues, the reserve is projected to go to zero by the 2012-13 ski season.
Diamond emphasized that Ski Corp. would continue to put $1.3 million annually at risk to help secure the flight program and to make payments to airlines when that's necessary under the contracts.
"The Ski Corp.'s money will continue to be first in," Diamond said. "If we hit the caps and money is not there to pay for it, we'll pay for it. The community won't have to shoulder it."
Routt County Democrats Chairwoman Catherine Carson invited members of the audience to submit questions to Antonucci and Diamond, and an assistant drew three out of a bag without pre-screening them.
"Are you saying there are not enough airline seats, or that there are (too many) unfilled seats?" one person asked.
Diamond replied that adjusting airline capacity to passenger load factors is a balancing act.
"It's both," Diamond said. "We could have all the seats filled at a cheap price and still write a check (to the airlines at the end of the year). We want to sell seats on a competitive basis, but the reality is we need to get enough cash so revenue guarantees aren't triggered. Increasing the total number of seats available and then getting load factors up to 70 percent is about the best we can do."
Another questioner asked: "How do you know additional passengers will fill those (additional) seats in this poor economy?"
"That's an inherent risk in any business," Antonucci said. "Since (the ski season flight program) started in 1987, load factors have ranged from a low of 62 percent up to a high around 72 percent, so we think it's going to be in there."
Wednesday's meeting of the Routt County Democrats also invited City Council candidates to introduce themselves and respond to questions.
Darrell Levin was the only of the three candidates present. Kevin Kaminski and John Fielding didn't attend. Levin said that in terms of generating new revenues for the community, "I favor looking in other directions in winter — some different events to bring more people here. Advertising worldwide is probably the biggest thing."
Dave Moloney: "I'm running because I want to do my part to make sure Steamboat remains a community that offers great economic opportunity for its residents while we maintain our quality of life. I want to fund and protect the assets we already have in Ski Town USA and our Western heritage. I'm a big fan of Bike Town USA."
Sonja Macys: "I only want your vote if you believe in the same things I do. I don't want to be a different leader than what you asked for. People want to see our City Council looking far forward economically and ecologically. Elected officials should represent you. I'll come and ask you first before it gets to the 11th hour."
Bart Kounovsky (running unopposed): "We need to stick to our knitting and make the city a nice, beautiful place that people, including location-neutral workers and visitors, want to come to. What we're going through with city finances and the budget is important and I feel I have the skill set to help our community."
Rich Levy: "I was appointed to Planning Commission for a second term and I really like that work. The community development code and the (Steamboat Springs Area Community Plan) define the vision we have for community goals. I think the current council is missing on those cylinders. Steamboat 700 did not meet the vision set forth in the comp plan."
Scott Myller: "I'm real proud that this council anticipated this financial crisis. The last three years we cut expenses by 40 percent. Now it's time to improve employee morale and make room in the budget for maintaining buildings and assets we're not taking care of right."