Saturday, October 18, 2003
Referendum 2A, the city of Steamboat Springs' proposed 3.55-mill property tax, is not much different in concept from the 5-mill tax that failed in November 2002.
What is different is that the city has been more forthcoming about how the tax will be used. In 2002, the city tried to disguise a tax for capital improvements as a tax to support fire and ambulance services. This time, the city has again dedicated the tax to fire and ambulance services, but it also has provided a list of capital projects that will be accomplished if the tax succeeds.
We hesitate to impose a greater tax burden on residents, especially in a time of economic hardship. However, the projects the city has said it will accomplish -- including funds for improvements at Yampa Valley Regional Airport and Ski Time Square -- are important and necessary. For that reason, we endorse Referendum 2A.
The city needs a property tax to help stabilize its revenues. Currently, the city relies almost solely on sales and building use taxes. That's risky, as the past two years demonstrate. Sales taxes, projected to bring in about $13.8 million this year, are down 2 percent compared to last year and have been flat since 2001. Building use fees also are down.
Sales taxes are subject to the whims of the economy, so it makes financial sense that the city would try to hedge some of that risk by seeking a property tax. It is akin to an investor diversifying a portfolio by investing in a mixture of stocks, bonds and real estate.
The 3.55-mill tax is a relatively modest increase for homeowners, who will pay about $28 per $100,000 of valuation per year. Because of Gallagher, commercial businesses will pay more -- about $103 per $100,000 of valuation.
One of the benefits of the property tax is that it shifts a greater burden to second-home owners, who receive city services for their homes but who contribute little in sales taxes compared to full-time residents.
The tax is not about funding fire and ambulance services -- the city just as easily could have dedicated the tax to another part of its operating budget and shifted those funds to capital improvements. However, approval of the tax will allow the city to live up to its intergovernmental agreement with the Steamboat Springs Rural Fire Protection District to provide additional equipment and personnel for firefighting.
But the best reasons to support the tax are the commitments city officials made should it be approved. Those commitments include:
n That the tax can be used as leverage to establish an autonomous fire protection district;
n That the city will contribute $250,000 toward Yampa Valley Regional Airport improvements in 2005;
n That the city will take a lead role in improvements to the Ski Time Square area with $850,000 during the next five years; and
n That the city will build and improve trails, acquire open space, make median and road improvements and complete the two dozen or so other capital projects it says will be funded if the tax is approved.
Long term, the city needs a tax strategy that identifies the proper balance of property taxes, sales taxes and other revenue sources, such as a lodging tax. Referendum 2A is not that strategy, but it can and should serve as a first step in the development of such a plan.
In the short term, this tax gives the city a more stable revenue source that will allow it to improve emergency services and complete capital projects the community needs. Referendum 2A should be approved.