Steamboat City Council to continue discussion on a property tax
Editor’s note: This story has been clarified to reflect a more accurate statement from City Council President Jason Lacy and member Lisel Petis.
STEAMBOAT SPRINGS — After considering two options to help offset the city’s reliance on sales tax, Steamboat Springs City Council voted to continue discussions on a potential property tax but voted against reallocating funds from a lodging tax.
The proposed property tax would come as an addition to the 2-mill property tax city voters passed in 2019, Steamboat’s first property tax in over 40 years.
City staff presented the idea earlier this year, so the idea is still in preliminary stages, but council members voiced support for a 5-mill property tax on properties within city limits.
Steamboat voters in 1979 opted to eliminate the city’s property tax and instead rely solely on a 4% sales tax, which the city sustains due to its high tourism.
However, city officials said, while sales tax is competent, it is not sustainable enough, particularly with growing concerns about how COVID-19 will impact Steamboat’s traditionally busy winter season.
Currently, 68% of the city’s revenue comes from sales tax, but Gary Suiter, Steamboat Springs city manager, said sales tax revenue can be difficult to predict. There also are many external factors, such as wildfires, low levels of snow or an economic recession, that can negatively impact sales tax revenue.
“Sales tax is not stable enough, it’s too volatile,” Suiter said. “It’s enough to provide basic services, but in a low snow year or in a recession or pandemic, the sales tax drops off.”
Council members felt 2021 would be the ideal time to put a potential property tax on the ballot because the community has felt the impacts of a drop in sales tax due to COVID-19.
“I think this year has shown more than ever why it’s so needed for diversification of funds,” said council member Lisel Petis. “This might be a good year to pass it because people will really understand why it matters.”
If approved by city voters, a new property tax would apply to land and buildings and would be calculated by multiplying the assessed value of property by a mill levy.
Council members were asked last month to decide from a set of five taxable options: property; lodging; “sin,” meaning alcohol, tobacco and marijuana; timeshares or a lift ticket tax. Of the five, council ultimately decided on property and lodging because they felt the property tax was more stable than other tax forms and would ensure part-time resident homeowners are still paying for the services they receive.
As for a lodging tax, council members voiced support last month due to its shifting of the tax burden to visitors and its appeal to locals, but after further discussion Tuesday, only two council members kept their support for putting a lodging tax on the 2021 ballot.
Steamboat currently has a 1% lodging tax which generates about $1,100,000 per year and is used to fund multiuse trails. This restriction of the lodging tax is in effect until 2023, and Suiter asked council to consider redirecting that funding to the Steamboat Springs Chamber for their destination marketing, which they complete every summer with about $880,000 of city money. Adding the expense is an investment for the city, as the money spent on marketing evens out with money the city earns from tourist visits, Suiter added.
However, only two council members — President Jason Lacy and Petis — voiced support for talking now about reallocating trail funds in 2023.
“We have made a ton of good trails with this money, but I don’t think we need to dedicate $600,000 a year for more trails,” Petis said.
Suiter said most other resort destinations in Colorado use lodging tax money to fund the city chamber, which is why he felt the idea would be beneficial to Steamboat.
“It’s an investment for the city,” he said. “People come here, and then they spend money here.”
While the other five council members voted against having the lodging tax discussion in 2020 or 2021, most said they did not want to take it off the table altogether, rather just table it until closer to 2023, when the measure would take effect.
“I think we need to help the chamber in some way, but I’m not there yet on this one,” said council member Robin Crossan.
Council will continue to discuss a potential property over the coming months and asked city staff to research how much a property tax could offset a sales tax, particularly on groceries and utilities. City Council meets next Dec. 15.
To reach Alison Berg, call 970-871-4229 or email aberg@SteamboatPilot.com.
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