Our View: Tax board falls short
The Tax Policy Advisory Board has determined that the city’s tax structure ain’t broke.
The board’s 12 members put in more then a year’s worth of work, including more than 40 public meetings, to reach that decision. It is explained in a thorough, 110-page report that the board developed. We have read the report and agree with many of the findings. The board’s volunteer efforts should be applauded.
But overall, the Tax Policy Advisory Board’s recommendations fall short. In essence, the board found reasons not to challenge the status quo and then criticized others for doing so. And although the board recommended that the city maintain its sales-tax dependent structure, it offered no ideas for marketing and promotion of tourism to enhance and stabilize that structure. That’s a missed opportunity — you can’t ignore marketing and still expect visitors to pick up more than half the costs of city services.
The tax board did effectively call the city’s bluff on its property tax efforts in 2002 and 2003. Both years, the city asked voters for a property tax to fund fire and ambulance services that would allow the city to achieve its larger goal of building a reserve fund to pay for future capital needs. The problem, the board said, was that the city was sitting on more than $9 million in reserves when it sought the taxes.
Ironically, it was the voters’ rejection of those taxes that led to the volunteer board’s creation. The City Council wanted to create a community board that would review its tax structure and recommend new tax policies. Although not stated in the board’s mission, it was implied that the board would offer a tax proposal for voters to consider.
Board members said they entered the process with preconceived notions. Many assumed some combination of a new property tax and sales tax relief would be the end result. But they encountered problems:
n The Taxpayers Bill of Rights and the Gallagher Amendment make implementing a property tax without burdening businesses difficult.
n Eliminating the city’s regressive sales tax on groceries would not provide local residents with the tax break board members had hoped.
n A tax on lift tickets likely would prompt the Steamboat Ski and Resort Corp. to cut back on the community contributions it already makes.
Instead, board members became increasingly attracted to the existing structure. Sales taxes, they said, provided steady revenue growth, even in down economic years. The only area where the board saw opportunity was in an accommodations tax, but that idea was dropped when the lodging community successfully won approval of a Local Marketing District that assesses a 2-percent accommodations tax to pay for airline flight guarantees.
The board disagreed with the LMD and later the Urban Renewal Authority that will use a portion of future tax revenues to improve infrastructure around the base of the ski area. The board went so far as to recommend that the city implement restrictions to make the creation of such entities more difficult.
That’s where we are most disappointed with the board’s work. Assuming the board is correct in its premise that the city’s current sales-tax heavy structure is adequate, then the board should support the creation of entities such as the LMD and URA, which are designed to drive additional sales tax revenues. And the board’s report should have placed emphasis on policies that promote and attract tourists and thus also drive sales taxes.
The board was given the opportunity to offer a visionary plan for the city. But the board’s vision is at best shortsighted, not because it advocates maintaining a tax structure that relies heavily on sales taxes, but because it offers no ideas for strengthening that structure.
Ultimately, the Tax Policy Advisory Board did a good job of showing the city where it stands. Too bad the board couldn’t show the city where to go.
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