Breckenridge mulls tax increase to sustain marketing fund
November 1, 2009
BRECKENRIDGE, Colo. – Breckenridge officials are eyeing tax increases to support marketing as ski communities such as Vail and Telluride look to up the ante.
While tax increases can be a tough sell, the town’s existing revenue sources aren’t sustainable for the community to maintain its share of a highly competitive travel market.
“Marketing drives people to the community,” Town Councilman Eric Mamula said at a recent work session. “You aren’t living here if people aren’t here at Christmas.”
Today’s sustainability issue dates back to the early 1990s, when the town began collecting its business and occupational licensing tax earmarked for marketing via the Breckenridge Resort Chamber.
This BOLT tax did not include a mechanism to adjust for inflation.
“My dental office (has paid) the same $290 every year since 1993,” Mayor John Warner said in a phone interview. “The effective buying power has decreased dramatically.”
Recommended Stories For You
For 2009, the town budgeted about $1.6 million for its marketing arm, the BRC. Town marketing is funded through BOLT and portions of accommodations and sales tax revenues.
Since 2002, finances from the general fund have been added to bolster the marketing fund; in 2002, $93,650 was transferred, and that number rose to $435,000 for the 2009 budget.
The town’s contribution comprises roughly half of BRC revenue, with the remainder coming from membership dues, reservations and other sources, according to BRC financial statements for 2008.
As the town prepares its 2010 budget, council anticipates a 5.2 percent increase in its marketing contribution.
Meanwhile services are taking a hit.
“Money should be going to (snow)plowing, for example, which we’ve cut back,” Councilman Dave Rossi said.
Rossi said he feels Breckenridge Ski Resort should increase its marketing efforts. He said that historically the BRC focused on attracting summer visitors and left most winter marketing and advertising to the resort.
“Is the ski area going to share in this burden or do we need to ask voters to force that burden on them by taxing lift tickets or something?” Rossi said.
While hard numbers on Vail Resorts’ marketing efforts aren’t publicly available, Vail Resorts spokeswoman Kelly Ladyga confirmed that marketing dollars for Breckenridge are flat relative to 2008.
“This is counter to what much of our competition in the ski industry, as well as the travel industry as a whole, is doing in this environment,” Ladyga said in an e-mail.
As previously reported in the Summit Daily, Vail Resorts’ revenue was down about 52 percent for fiscal year 2009.
Breckenridge Ski Resort spokeswoman Kristen Petitt said in an e-mail that Vail Resorts has reallocated funding to increase money spent in destination markets, “which is our core business, and maintain a flexibility to react to business levels, economic factors, ect.”
Council members at the Oct. 27 work session brainstormed ideas for a sufficient tax increase – to bring marketing to a more competitive level of about $2.4 million – that could accrue the necessary voter approval.
“Compared to other destinations, according to BRC research, Breckenridge is under funded by up to 50 percent, and a few competitors may be increasing their marketing funds through increased tax measures,” according to a staff memo to council.
The recently formed Sustainable Marketing committee offered options of increases to the lodging tax (0.5 percent to 1 percent), sales tax (0.3 percent) and BOLT (10 percent increase for five years, then automatically adjust to consumer price index).
The current town lodging tax is 2.4 percent, which is higher than Aspen (1 percent) and Vail, which has none. The current sales tax is 2.5 percent, which is higher than Aspen (2.2 percent) and lower than Vail (4 percent).
An amusement tax to affect lift tickets, concert tickets, snowmobile tours and more was also considered at the recent meeting.
All options are on the table.
Meanwhile Telluride residents this Tuesday will vote whether to increase sales tax by 0.6 percent to support special events and arts. In April, Vail residents are to decide whether to create a 2 percent to 4 percent lodging tax expected to raise up to $4 million for marketing.
Aspen had a 1 percent lodging tax increase planned for Tuesday’s ballot, but a ballot snafu postponed the ballot item indefinitely.
In Breckenridge, surveys are expected to be administered before anything is approved for the April 2010 ballot.
Voters in 2006 turned down a proposal to double BOLT revenue.
Council members said the business community will certainly have to support any proposal for it to succeed.
“If (BRC) membership won’t get behind it, I won’t get behind it,” Mamula said. “If your base doesn’t support it, don’t even bother.”