Air service board recommends that city council not ask voters to renew .25 percent airline tax | SteamboatToday.com

Air service board recommends that city council not ask voters to renew .25 percent airline tax

Group recommends council not put airline levy on ballot







— The board that oversees expenditures of public funds to help secure commercial airline service in the Yampa Valley voted May 20 to recommend that Steamboat Springs City Council not place renewal of a .25 percent general sales tax on the fall ballot.

The decision came after a second straight season of strong fiscal performance and with the blessing of Steamboat Ski and Resort Corp. executives. The ski area's airline director, Janet Fischer, and Vice President of Sales and Marketing Katie Brown took part in Friday's meeting and confirmed their company's approval of the recommendation.

Ski season 2015/2016 airline program at a glance

• Available arriving seats (that actually flew): 117,200, up 8 percent over 109,000 in 2014/2015.

• Arrivals: 82,000, up 8 percent from 75,500

• Overall load factor: 70 percent compared to 69 percent the previous winter

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"The success of the airline program is due to the entire community, including all of those who live here and those who visit our town," Brown said. "On behalf of the ski area, I really feel the tax was designed with a five-year sunset, and we've had successful execution. We're OK with (the) recommendation, and we support it."

The tax, due to lapse at the end of December, was passed during a time airlines were demanding higher revenue guarantees to fly here in ski season, and the program's reserves were being depleted. Since then, the cost of aviation fuel has plummeted, airlines have merged, fleets have been reduced and the airlines are as profitable as they've ever been.

The recommendation to let the tax lapse originated with an independent exploratory committee comprising business leaders from different segments of the local economy, who were tasked with studying the future of the tax. Mark Walker, president of the Resort Group and chairman of the committee, told the LMD Board that the program's healthy reserve fund played a significant role in the group's recommendation, but members also saw a chance to reward the faith of the voters who passed the tax by a large margin in 2011.

"Some people would say ‘You have momentum, you should just continue it,’" Walker said, but, "Trust is earned, and our group felt, ‘Let's gain some trust out there with the voters and let it sunset.’ Down the road, when we identify a need and go back to the voters, trust is built. We felt there would be value through that."

Other members of the exploratory committee included GSki Butlers owner Glen Traylor, Alpine Bank President Adonna Allen, President of the Steamboat Springs Board of Realtors Ulrich Salzgeber, Cafe Diva owner Paul Underwood, Steamboat Ski and Resort Corp. President and Chief Operating Officer Rob Perlman and attorney Bob Weiss.

The members of the board of the Local Marketing District were unanimous in making the recommendation, however veteran LMD board member Chuck Porter and current board president Bob Milne expressed some hesitancy.

Milne said, in his mind, Friday's vote does not preclude the group from seeking to restore some form of additional public funding for commercial air service in the future, if the situation warrants.

"The group isn't saying we're never going to come and look for some kind of funding," Milne said. "Sometimes, what gets lost is that everybody benefits from this. Transportation generally has some subsidy. The tax was designed to sunset for a reason. Maybe it's prudent to continue to work with Ski Corp. and the lodging community to find out if there's some other way to fund this so we can be assured the reserves don't go away."

Air program finances

The airline program is funded first by $1.1 million from the Ski Corp. and by more modest amounts from local businesses in the Fly Steamboat program. Next in line is the .25 percent sales tax, followed by the proceeds of a 2 percent lodging tax applied within the boundaries of the LMD.

Based upon the fiscal performance of the airline program in the ski seasons of 2014/2015 and 2015/2016, its $7 million reserve fund is likely more than enough to fund the 2016/2017, as well as the 2017/2018 airline programs.

Fischer told the LMD Board that the maximum amount (or caps) the airline program could have been required to pay the airlines at the end of the 2015/2016 ski season was $4.76 million, representing the combined exposure of the airlines' to risk. But revenues from the flights were strong enough that the approximate cost is $2.1 million (April revenues are estimated at this time).

To reach Tom Ross, call 970-871-4205, email tross@SteamboatToday.com or follow him on Twitter @ThomasSRoss1

Ski season 2015/2016 airline program at a glance

• Available arriving seats (that actually flew): 117,200, up 8 percent over 109,000 in 2014/2015.

• Arrivals: 82,000, up 8 percent from 75,500

• Overall load factor: 70 percent compared to 69 percent the previous winter