Breckenridge considers lodging tax increase
Summit County correspondent
Aspen, CO Colorado
BRECKENRIDGE, Colo. – Breckenridge faces both short- and long-term revenue needs, but council members are cautious about asking the voters for tax increases.
“We’re pretty sensitive with the economy right now. It’s not a good time to ask for more money,” Councilman Jeffrey Bergeron said.
The town transferred about $600,000 extra to its marketing fund last year to be competitive with other tourism destinations – an approach town officials say is unsustainable.
Council members are considering an increase of about 1 percent to the accommodations tax to help support marketing, provided local lodging businesses show support.
The existing tax is 2.4 percent, and it generated about $1.8 million for the town in 2009. The increase could add an extra $700,000.
A similar tax increase was considered for the April ballot, but council members felt there wasn’t enough public awareness of the need. The marketing fund has been supplemented the past several years, in part because its business licensing tax was not created to adjust for inflation.
Councilman Mark Burke, former president of Johnson and Wales University in Denver, said any ballot question for a tax increase could affect Summit School District’s chances of passing one of its own.
“I don’t feel this is the year for us to go with any tax increase,” he said. “Our town is only as good as our school district.”
Amid reduced state tax revenues and a slow economy, the school district has been making cuts and is expected to ask voters for a tax increase in November.
The Summit Board of Education is considering a possible mill levy to increase annual property taxes on a $400,000 home by $40.
Burke said he’s also concerned because the town lodging tax increase would “address the immediate issue but not the long-term marketing or transit or others.”
Town staff project overall expenses to increase and outpace revenues by a gap that will continue to grow each year – with the town’s fund balance going negative by 2014.
Town Manager Tim Gagen said it takes an increase of about $600,000 to $650,000 per year to maintain town government, with most of that money going toward employee wages and benefits.
Town financial manager Brian Waldes said about 50 to 55 percent of the town’s budget is for employees. The town employs about 170 full-time employees and 250 to 300 part-time employees.
Even with cuts across all town departments in the past couple years, the revenue problem is expected to get worse.
Suggestions for increasing revenue streams include an increase to sales tax, an amusement tax (on lift tickets, bar cover charges, theaters and more), a medical marijuana tax and others.
“We have to come up with the right strategy that the voters will buy into,” Councilman Eric Mamula said Wednesday. “I’m still pushing that we build a reservoir.”
He said that with water becoming more scarce in Colorado, storing and selling it “could be a great revenue stream for this community.”
Town officials have discussed using the McCain property at the north end of town for a reservoir.
An amusement tax would require voter approval, and town leaders have emphasized they want to bring Vail Resorts to the table on any proposal.
The town of Vail raked in an estimated $3.1 million off its 4 percent ski lift ticket tax in 2009.
Burke said the lift ticket tax is likely to be the solution, especially considering how much money it brings to Vail.
“I feel like we really need to address the problem once and for all,” he said.
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