At a joint Economic Development Commission/Chamber/Resort symposium, the resort announced its capital expansion plans for summer activities for this year and near future. It attracted a crowd of about 100-150.
Mike Solimano announced the expansion of the novice/intermediate trail bike system and a zip line of sorts for this year with a budget of just under $500k. In future years major expansion of zip lines will occur at Snowshed and Killington Peak to Snowden to Snowshed. Some of these ziplines are proposed as year round amenities which will operate during the ski season. The out year budgets are in the millions. I don't remember the exact numbers so I'll forgo trying to give them. I have requested a copy of the specifics from the resort as well as the town. Hopefully they'll be forthcoming soon as they are a public record given this meeting was warned by the town as an EDT Commission meeting.
People, I included, were excited about the proposals. It's what this town has needed, still needs and will need in the future. Given the town has turned itself inside out to increase economic activity in the summer to bolster overall annual sales in the face of declining to flat skier/rider visits, these expanded summer amenities are a welcome development. It is my contention that as the resort goes so goes the town.
Mike Solimano and Tracey Taylor outlined industry statistics indicating that while other ski resorts do 11-14% of their business during the off season, Killington only does 7% and thus there is plenty of room to expand. They also cited the growth of mountain biking in general - there are way more mountain bike visits than skier visits - and vastly more mountain bikers than skiers, and specifcally at Whistler where their mountain biking business has grown something like 500% in roughly 10 years. Again I don't remember the exact numbers. Tracy mentioned that consultants were brought in to assess the resort's and region's potential for mountain biking and were told this region's potential is on a par with Whistler's.
That was the exciting part, now we come to the not so exciting part. As a sort of quid pro quo, Mike Solimano proposed repeal of the 1% sales and use tax. In part this would help fund these summer capital improvements, at least that's what the inference was. A major selling point of this proposal is that for every dollar collected the state takes 30 cents. If the tax was repealed the resort would collect the full 1% and keep that money to apply to these capital projects - again that is what was inferred.
This, of course would affect the town's budget. I spoke with Seth Webb and Chris Bianchi about that effect who related that after removing the marketing and events expenditures from the town budget it would result in a short fall of about 200k. Some of this could be made up from the increased business generated by the resort's proposed investments, but more than likely there would be an increase in the property tax.
While a property tax increase may seem an anathema a closer look is warranted. First if there is a property tax increase the resort as the largest property owner in the town would bear the brunt of that increase. Secondly, there might actually be a net tax benefit for residents and businesses. I hope I can clearly explain.
Let's say a property is valued at $300,000. Let's calculate the tax effect of the budget shortfall on the dollar impact of this property's municipal real estate tax. First divide $300,000 by 100 which gives you $3,000. Next let's calculate the effect on the tax rate of the $200,000 - currently for every $90,000 a 1 cent increase. So $200,000 divided by $90,000 is roughly 2.2 cents or 2.2 percent. $3,000 times 2.2% is $66.
Now let's see how much 1% tax an ordinary homeowner might pay on utilities, purchases and so on.
My cable bill is roughly $100 per month or $1,200 per year, 1% equals $12.
My electric is roughly $150 per month or $1,800 per year, 1% equals $18.
My propane bill is roughly $2,000 per year, 1% equals $20.
My land line phone is $60 per month or $720 per year, 1% equals $7.20
My cellular bill is roughly $100 per month, $1,200 per year, 1% equals $12
I use about 8 cords of firewood for heat or my propane would be higher, at $200 per $1,600, 1% equals $16.
So already we're up to $85.20 in 1% tax expenditures. This does not include all the purchases made at Goodro's for instance or any other retail establishment in town. If you get anything delivered from Rutland to Killington you also pay the 1%.
So according to the example above, there would actually be a savings of, $85.20 - $66, or $19.20 if the 1% options sales and use tax was repealed.
Now mind you this is only the sales and use portion of the tax. The options tax is made up of three components, sales and use, rooms and meals, and alcohol.
So there's some food for thought here.
More on this will be forthcoming as I get more info.
Thanks Jim Haff for the the real estate tax vs. 1% sales and use tax analysis.
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