Paul Hughes: ’The smart tax plan’
For Steamboat Pilot & Today
Steamboat Springs, we have a problem. Our excellent city services are in jeopardy, the tax burden is now falling heaviest on those who can least afford it, we have a growing housing crisis, and our sales-tax-only revenue system depends upon constant growth of tourism and retail and is no longer sustainable. The double whammy of pandemic and economic downturn has brought all these problems into sharp focus. But we can do something to solve our problems. It will require a frank assessment of our assets, our resources and our needs. It will require a fresh look at what we want and how we can best pay for it. I call it “The Smart Tax Plan.”
Our city is facing tough times: layoffs, service cuts, deferred maintenance of our facilities and woefully insufficient spending on needed capital. Adding to all this pressure on the city budget, the Steamboat Springs Chamber plans to spend $795,000 in city funding for more tourism marketing. (Steamboat Pilot & Today, 9/3/20) The many comments to that article indicate that residents think we depend too much on tourism and that “we need a different economy.”
We can have a different economy — one that lessens our dependence on tourism while remaining Ski Town USA as well as an attractive summer destination; one that no longer penalizes those who have the hardest time making ends meet because of our regressive taxes on groceries and utilities; one that at long last asks second-home owners to pay their fair share; and one that opens the door for responsible housing development so that those who work here are able to live here.
The solution to our tourism-at-any-price problem is a tax policy that draws not only on sales taxes but on a smart combination of sales taxes and a modest property tax. We’ve known about this problem for decades. The 2008 Economic and Planning Systems report to Steamboat Springs City Council stated clearly that, “The current fiscal structure relies on constant growth in tourism and retail and is therefore not sustainable.”
We need our businesses. They sell goods and services that we need, and they employ us locals. And our businesses need us customers, especially those who will patronize them year-round. We need housing for those workers and customers, which we cannot afford now because we know that every house costs more to serve than its occupants produce in sales taxes. With a property tax, we’d know that every house, including new, affordable houses, would be paying its own way.
How do we get from here to there? First, we eliminate the unfair sales taxes on groceries and utilities. Those taxes alone total more than $6 million dollars that could be spent instead on more groceries and utilities.
Second, we separate our city’s wonderful services into needs (really essential) and wants (nice to have, but less important). Needed services would be funded principally through a reasonable property tax that, for the first time, would allow the great number of our second homes to contribute to the services that are provided for them. Wanted services — the ones that make living here so enjoyable — would be paid for by the sales taxes we have come to expect.
We can do this. We can correct the mistake of 50 years ago and create a city funding plan that’s smart, fair and sustainable for the next 50 years. Let’s get to work.
Paul Hughes was Steamboat Springs city manager from 1998 to 2006, during which time he assembled and managed annual budgets of $20 million to $30 million in the challenging environment of TABOR and Gallagher. Before coming to Steamboat, he served as town manager of several Vermont municipalities, as well as chief lobbyist for a coalition of towns fighting a legislative bill that would fund statewide education by double-taxing ski towns and other so-called “gold” towns. A long-time proponent of tax fairness, he was also a member of the Tax Policy Advisory Board in 2010-11.
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