City Council shares mixed, lukewarm thoughts on property tax
STEAMBOAT SPRINGS — Steamboat Springs City Council will move forward on discussions about putting a property tax on the 2021 ballot, but council members were less enthusiastic about its potential during a Tuesday night work session than they have been in the past, with one member dropping support for the move altogether.
“We are not looking at the full picture of what this is going to do to our community members and if something like this would pass,” said council member Heather Sloop, who said she could no longer support a property tax.
Scott Ford, a local economist and former City Council member, presented current council members with data showing 60% of lower-income people in Steamboat own their homes, though they may have bought them decades ago when the house was worth a fraction of what it is today. If city voters were to approve a 5-mill property tax, the amount council has been discussing for months, many in the community would not be able to pay it, Ford said.
“You put a property tax on this group, and it’s going to be super regressive,” Ford said Thursday. “The higher-income households won’t even notice, and the lower-income households won’t be able to afford groceries.”
Council members voted in 2020 to move forward with a property tax because they felt the city was too reliant on sales tax, which they believed was heavily dependent on uncontrollable factors such as weather conditions or a pandemic.
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The city ended up gathering more sales tax than it anticipated, which Ford said is proof that sales tax works.
“Our sales tax that we have right now is based on consumption,” Ford said Thursday, arguing sales tax is actually more equitable than property tax would be. “Sales tax is a consumption tax, so more affluent people spend more.”
During Tuesday night’s property tax discussion, several council members said they believe second-home owners, who tend to be more affluent, should still be responsible to help fund city amenities they use while in town.
“When someone is only here for a few days or weeks out of the year, they’re not paying their fair share for the amenities they use in our community,” said council member Robin Crossan. “Those folks just let those big houses sit, and then they sell them at 10, 20, 30 percent more than they bought it for because we have taken care of the amenities that they’ve used to own that house.”
Crossan said she’d like council and the community to explore, “How do we get the upper half to pay their share?”
If Steamboat were to pass a 5-mill property tax, the city would have some of the highest property and sales tax rates in Colorado, which many council members believed would be difficult to explain to voters.
“Every year, the list of items and needs has grown exponentially,” said Council President Jason Lacy. “We need to show a detailed list to the community of where this money will go.”
Because of Steamboat’s already high sales tax rate of 4.5%, Lacy proposed a 3-mill property tax rather than 5-mill.
“Even with a really good list of projects, I still think five is going to be a hard sell,” Lacy said.
Some council members said they felt revenue from a sales tax is too unreliable, and Steamboat needed a more stable stream of revenue.
“This (a property tax) would’ve given us some peace of mind in times like last year, when we didn’t know how tourism was going to be impacted,” said council member Lisel Petis. “Property tax can help even things out.”
Council member Kathi Meyer proposed a sunset on a potential property tax, meaning the tax would need to be renewed after a certain number of years.
“The sunset would be hugely important for voters to see whether or not this is working,” added council member Sonja Macys.
Council has discussed offsets in the past, meaning if a property tax were implemented, residents could potentially pay less in other areas such as sales tax or utilities.
Council members shared different views on what that offset would be at Tuesday’s meeting.
“Even in a 10-year time window with $3.6 million per year, we have obligations and real needs, not wants, that we are not even going to be able to fully accomplish,” Macys said.
Other council members felt an offset could help convince reluctant voters to support a property tax, as they would pay less in other areas.
“An offset could help address why we have some of the highest taxes in other areas,” Petis said.
Council will discuss a property tax again in March, and council members floated the idea of considering other forms of tax, such as a lift tax on Steamboat Resort or a sin tax on alcohol, marijuana and tobacco.
“I think we need to lay all our cards on the table in front of us,” Crossan said.
City staff asked council to decide on a more clear direction in March.
To reach Alison Berg, call 970-871-4229 or email aberg@SteamboatPilot.com.
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