Voters in Steamboat Springs will be asked on November 1st to consider adding a 0.25 percent sales tax to their shopping bills in order to bolster the ski season airline flight program that transports some of Steamboat Springs’ highest-spending tourists and second-home owners to the resort.
The Steamboat Springs City Council voted unanimously last 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. 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. supports the tax and has stated that 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.
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 forced airlines to increase the guarantee budget for the coming ski season 50 percent to $3.35 million. The challenge for proponents of the tax is 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. Spokesman for the Ski Corp. argues that the resort currently bears half the cost of the ski season jet program although it captures only 25 percent of winter visitors’ expenditures.