`Bed tax’ may help fund transit
Aspen may join a number of other mountain resorts that use a “bed tax” to collect revenues from visitors who stay at hotels and lodges.
A 1 percent “visitor benefit tax” – also commonly referred to as a bed tax, pillow tax or lodging tax – may be the city’s answer to raising its share of funding for a proposed Rural Transportation Authority.
If the City Council agrees, the bed tax will go on the November ballot for voter approval. Also on the ballot will be formation of the RTA.
Governments up and down the Roaring Fork Valley are preparing to take formation of the RTA to their voters, along with a mechanism for funding it. All but Aspen are looking at a sales tax to support the RTA, which would improve mass transit in the valley.
Aspen City Attorney John Worcester is drafting the ballot language to establish a bed tax for the City Council’s review. The council may discuss the matter tonight, but formal action on the tax will likely occur at its Aug. 28 meeting, he said.
City staffers met with several representatives of the Aspen Lodging Association Friday to discuss the tax.
Molly Campbell, general manager of The Gant and chairwoman of the association’s RTA committee, said members of the lodging group recognize the need for improved transit, but would prefer a broader-based sales tax if they had their druthers.
“The Lodging Association as a whole supports the establishment of a Rural Transportation Authority,” she said. “We strongly believe sound and good public transportation throughout the valley is really critical to our long-term success.”
Recognizing that an additional sales tax in the city might not win voter approval, however, Campbell said the association was pushing for a combination bed tax and sales tax or, at the very least, a “shareback” on the bed tax.
The city is apparently prepared to share proceeds from the bed tax with the lodging community. Worcester said he is drafting a ballot question that provides for a 50/50 split.
In all, the city expects the bed tax to produce about $1 million a year. The plan is to spend half of the proceeds on transit and half on marketing efforts on behalf of the local lodging industry.
Half of the money would go into a tourism promotion fund, according to Worcester. The city would then contract with the Aspen Chamber Resort Association or some other agency to promote tourism/lodging, he said.
“I, frankly, think that would be good for the community,” Campbell said.
The city is looking to raise an additional $565,000 for transit annually with the bed tax, according to Tabatha Miller, the city’s finance director. The proceeds would actually go toward the city’s in-town bus service, freeing up other transit dollars to fund the RTA, she said.
Aspen already has a half-cent sales tax dedicated to transit and Pitkin County levies a one-cent tax for transit, as well.
Unlike a sales tax, which hits both visitors and locals alike, a bed tax is paid primarily by tourists.
“You’re taxing people who are using your services,” Worcester said. “The whole city’s infrastructure is based on a population that it normally wouldn’t be if it wasn’t for the tourism industry.”
Aspen, for example, has a far larger police department and water utility than it would were it not for the swell in population that results from tourism, he said.
The proposed 1 percent bed tax, or one penny for every dollar spent on lodging, would mean an extra $5 tacked onto a $500 hotel bill.
The bed-tax idea has been kicked around in Aspen before and has been enacted in a number of other resort communities, Worcester noted.
“There has been discussion of a pillow tax for years. I think this is the first time it’s on the ballot, though,” he said.
Even with the additional tax, should it be enacted, Aspen’s taxes would remain lower than a number of other Colorado resort communities, Miller said. In fact, Aspen’s existing taxes are the lowest among 15 different Western Slope communities, according to a comparison prepared by Miller.
Aspen’s current sales tax rate is 8.20 percent, including a city tax, county tax and state tax.
Avon’s total tax rate is 12.50 percent and Breckenridge’s is 10.40 percent. Both levy sales taxes and a city lodging tax. Mount Crested Butte has a total tax rate of 10.40 percent, Crested Butte’s is 9.90 percent and Telluride’s is 10.50 percent. In those resorts, various sales taxes and a county lodging tax are levied.
Vail’s tax rate is 9.90 percent, including sales taxes and a city lodging tax. Glenwood Springs’ total tax rate is 8.75 percent, including sales taxes and a 1.5 percent lodging tax.
A number of communities that levy a lodging tax use the proceeds for tourism promotion or related expenditures.
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