Town council to study new sources of revenue at May 25 retreat
By Bob Berwyn
SUMMIT COUNTY — A 2.5 percent tax on lift tickets could generate $1.5 million dollars for Breckenridge, according to a financial study prepared for next week’s town council retreat, when council members will once again study how the town can develop a steady revenue stream for marketing, and to bolster other areas of the budget.
A special tax on medical marijuana is also on the table for discussion at the retreat (8:15 a.m., River Mountain Lodge, May 25). Taxable sales at the town’s six dispensaries have soared in the past few months, from about $70,000 in February to $117,000 in March. The memo prepared for the retreat show the town could collect about $36,000 from a 3 percent tax.
Town manager Tim Gagen said the town council is getting closer and closer to moving ahead with proposals for both the taxes. The preferred option is to partner with the resort on a plan that benefits both the town and the ski area, he said. A lift ticket tax could be part of a broader amusement tax in the town that would apply to theater tickets, bar and restaurant cover charges, winter sleigh rise and summer fun park revenue, Gagen said, explaining that staff took a good look at other resort towns around the West to get an idea of how such taxes are administered and spent in other communities.
Special sales taxes on medical marijuana have easily won voter approval in a couple of different localities, for example Fruita, where 62 percent of the voters approved a 5 percent tax in the April election. the town of 11,000 doesn’t have any operating dispensaries, but there is one pending application and the town manager said the tax could generate up to $100,000 in revenue to help offset costs associated with regulating future dispensaries.
In Oakland, California 80 percent of the voters approved a 1.8 percent tax on medical marijuana, with estimated revenue of about $294,000 in 2010. Berkeley and Los Angeles are both considering ballot measures for November.
Gagen said some of the research suggests that some medical marijuana sellers favor a tax because it gives the business more legitimacy. Similar discussions are occurring across the county Gagen said, explaining there might be an effort to coordinate a tax rate so that potential operators don’t pick their locations based on the lowest taxes.
However, a local caregiver, who asked not be identified by name, said there should be no tax on medical marijuana.
“There is no tax on any other medicine in Colorado, even over the counter medicine often has no tax. To tax medical marijuana more that the typical 7.9 percent or 8.9 percent just plain hurts patients in the end,” the caregiver wrote in an e-mail.
The tax doesn’t really justify medical marijuana … it is already legal. The tax justifies the tax … Durring a recession an increase of tax is a bad idea on anything,” the e-mail concluded.
The lift ticket/amusement tax has been the subject of repeated discussions between the town and the ski area. In early December, Vail Resorts CEO and chairman said his company is 100 percent against a lift ticket tax, as reported in this story in the Vail Daily.
Nevertheless, Gagen said it might be an idea whose time has come. He said that, with a variety of large projects, including the gondola lot development, on the horizon, the new source of revenue could fund not only marketing efforts, but a variety of public/private improvement projects that would benefit the town and the resort.
For example, the town could take over all local transit operations, including routes currently covered by the ski resort. According to the town, the ski area has said it costs between $750,000 and $1 million to operate its transit service, but few details are available. The town is applying for a grant to study those costs more closely.
To frame the discussion at the retreat, Breckenridge staff carefully analyzed how a similar lift ticket tax is administered in Vail, where it was originally adopted to fund transportation and parking programs. In Vail, the tax is based on a calculation of skier visits provided by the resorts, which allows the tax to be applied to skier visits including season pass holders who bought their passes outside the town.
Using a similar formula, Breckenridge officials estimated an average of $40 per-visit sales. Based on the skier visit total for the 2008-2009 season, that would result in a total of $61,288,000 in taxable lift tickets sales. A 1 percent tax rate would generate $612,000, a 2.5 percent tax rate would generate about $1.5 million and a 4 percent tax rate would generate $2.45 million in revenue, town officials estimated.
Other ski resort towns generally use lift ticket tax revenues for specific purposes. Mt Crested Butte has a 4 percent local tax with the revenue dedicated to transportation. Snowmass has a 1 percent local tax, also earmarked for transportation, while in Utah, there is a statewide 7.4 percent tax, with 1.4 percent earmarked for municipalities like Park City. The state keeps 4.65 percent, while counties garner .35 percent.
Killington, Vermont has a 7 percent lift ticket tax, of which 6 percent is a state tax, 1 percent local. Eagle Crest, Alaska collects a 5 percent tax subject to voter approval every five years, and Whistler, B.C. collects 12 percent on tickets, including a 5 percent federal share.
Also on the agenda for the retreat is a session on water, presented by Glenn Porzak, the town’s water attorney, a review of parking management and town financials. The discussion on new taxes is scheduled for 3 p.m. to 4:15 p.m.
View the memos in the retreat packet in the Scribd.com window below. The tax analyses begin on page 109. Use the menu for different viewing options, including a tiled view or a full screen view.
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