Mountain Times
KILLINGTON - The town of Killington is in the process of
considering Killington Resort's proposal for the town to repeal
part of the options tax to support its summer investments. At a
special public meeting held at the Killington Grand Hotel, June 9,
the resort outlined its plans to increase summer traffic to the
area, asking the town to consider repealing the sales and use
option tax, which would give it the initial seed money to get
projects going.
Currently, the town of Killington levies a sales and use option tax and a rooms and meals option tax.
The resort is proposing to repeal only the sales and use portion.
Some of the summer improvements the resort outlined include investing in world-class mountain biking improvements and increasing access for all levels, creating a watersports activity center at Snowshed Pond, as well as installing ziplines and a mountain coaster in the next few years.
At the June 9 meeting, Town Manager Seth Webb preempted the discussion saying the "town's position has been that any proposal it could consider would have to meet three criteria." These criteria would ensure that any change has a positive net effect on the town, its residents and businesses, he said.
The first criterion states: "The Resort has an effective year round tourism development plan and 1-2 years of summer operations/expansion under its belt."
The second states: "The proposal supports the creation of a strong semi-independent third party (like the Vail Valley Foundation or the Stowe Area Association or stronger chamber of commerce) to manage the events and marketing the town has started (allowing the town to transfer these expenses and responsibilities to an outside entity and ensure they continue)."
The third states: "The town has a solid transition plan to ensure any increase in property taxes is minimized or avoided."
Next steps
"Now that the Resort has outlined its request, the EDTC will begin reviewing the proposal at its next meeting on July 14 and make a recommendation on how to proceed to the Selectboard," Webb explained. "If the Board decides there is a proposal they want to take to the voters they would finalize the plan in September and decide if they call for a special meeting."
A large part of what the EDTC, Selectboard and voters will consider when analyzing any proposed change will be the effect it could have on town services and property taxes, said Webb.
Events and marketing
The town seeks to ensure that the events and marketing that the town currently manages continues in a sustainable manner. To this effect, the resort is working with the chamber of commerce on a plan to strengthen the chamber so that it has sufficient funding to manage the town's events and marketing program in the future.
If this is successful, the town could cut those expenses from its budget and transfer the obligations to the chamber. Doing this would decrease the town's deficit created from option tax reform.
Webb explains: "Repealing the sales and use portion of the option tax would eliminate approximately $450,000 in revenue from the town. If the Chamber can take over the town's events and marketing, the town will be able to cut $250,000 in expense from its budget, and transfer those responsibilities to the Chamber," he said.
"Then the town would need to need to figure out how to find an additional $200,000 in revenue, which would likely come from an increase in property tax," Webb added.
But that increase would be off-set by savings residents currently pay in sales and use taxes.
Effect on taxpayers
Based on information residents have provided to the town, the average person spends approximately $50 a year in sales and use tax, which is levied on many everyday expenses such as cable, phone, and retail (including supplies, hardware, equipment, ski tickets, entertainment, recreation, etc.).
Other expenses are exempt according to state law: "There are 46 exemptions from the tax (sales and use) which include medical items, food, manufacturing machinery, equipment and fuel, residential fuel and electricity, clothing and shoes."
In order to make up the remaining town deficit of $200,000 (assuming the events and marketing were successfully transferred to an entity apart from the town and assuming no cuts are made to current spending levels) property taxes would need to increase by $0.02 - $0.03 cents per hundred.
Based on the 2013 grand list, that would mean an increased cost of about $40-$60 annually to a person with a $200,000 house (the median home value in Killington) or $50 - $75 annually to a person with a $250,000 house (the approximate average home value).
That correlates to a very minimal change to the average taxpayer per year - slight net decrease if the property taxes increased $0.02 and a slight net increase if $0.03. Those property owners with median home value ($200,000) would see a savings of $10.20/year if the rate were $0.02, or an increase of $9.80/year if the rate were $0.03. For a property owner with average home value ($250,000) the savings would be $0.20/year if the rate were $0.02, or an increase of $24.80/year if $0.03.
Data on the effect the option tax reform would have on businesses is currently being compiled. Look for that analysis in next week's edition.
Comment: While the effect may be minimal there certainly is an effect. I have a hard time believing the median home value is $200,000. It must include condo's most of which are vacation homes.
The biggest problem with this proposal is there is no guaranty the resort will actually do what they proposed. At the joint EDTC/Chamber/Resort meeting I specifically asked Mike Solimano that question and was told there are no guarantees.
Later in correspondence with him requesting a copy of the resort's plans, he stated he could not provide them because the resort did not want to, " over promise and under deliver."
So while we as voters can guarantee the resort a half million in profits and savings by voting to eliminate the sales and use tax portion of the 1% tax, the resort cannot in turn guarantee these monies will be spent on improvements that will result in increased business.
What was also stated was the resort was going to proceed with their plans whether or not the 1% was eliminated or not.
Additionally the town is facing large expenditures down the road. We will have tax increases to repay the loans on the reconstruction of Killington and West Hill Roads, the golf course irrigation system will need to be replaced soon (estimated around a million dollars, don't kid yourself that the golf course revenues will cover it), the town swimming pool will have to be rebuilt soon (hundreds of thousands), the impact of the single payer health insurance has yet to be felt.
So the impact of the repeal of the sales and use tax, while supposedly "minimal", will be felt. It cannot be just defined in the narrow context of how much it will cost the taxpayer to replace the lost 1% sales and use tax revenue, but rather what budgetary concerns will also put upward pressure on property taxes in addition to the elimination of the 1% sales and use tax.
Vito
Currently, the town of Killington levies a sales and use option tax and a rooms and meals option tax.
The resort is proposing to repeal only the sales and use portion.
Some of the summer improvements the resort outlined include investing in world-class mountain biking improvements and increasing access for all levels, creating a watersports activity center at Snowshed Pond, as well as installing ziplines and a mountain coaster in the next few years.
At the June 9 meeting, Town Manager Seth Webb preempted the discussion saying the "town's position has been that any proposal it could consider would have to meet three criteria." These criteria would ensure that any change has a positive net effect on the town, its residents and businesses, he said.
The first criterion states: "The Resort has an effective year round tourism development plan and 1-2 years of summer operations/expansion under its belt."
The second states: "The proposal supports the creation of a strong semi-independent third party (like the Vail Valley Foundation or the Stowe Area Association or stronger chamber of commerce) to manage the events and marketing the town has started (allowing the town to transfer these expenses and responsibilities to an outside entity and ensure they continue)."
The third states: "The town has a solid transition plan to ensure any increase in property taxes is minimized or avoided."
Next steps
"Now that the Resort has outlined its request, the EDTC will begin reviewing the proposal at its next meeting on July 14 and make a recommendation on how to proceed to the Selectboard," Webb explained. "If the Board decides there is a proposal they want to take to the voters they would finalize the plan in September and decide if they call for a special meeting."
A large part of what the EDTC, Selectboard and voters will consider when analyzing any proposed change will be the effect it could have on town services and property taxes, said Webb.
Events and marketing
The town seeks to ensure that the events and marketing that the town currently manages continues in a sustainable manner. To this effect, the resort is working with the chamber of commerce on a plan to strengthen the chamber so that it has sufficient funding to manage the town's events and marketing program in the future.
If this is successful, the town could cut those expenses from its budget and transfer the obligations to the chamber. Doing this would decrease the town's deficit created from option tax reform.
Webb explains: "Repealing the sales and use portion of the option tax would eliminate approximately $450,000 in revenue from the town. If the Chamber can take over the town's events and marketing, the town will be able to cut $250,000 in expense from its budget, and transfer those responsibilities to the Chamber," he said.
"Then the town would need to need to figure out how to find an additional $200,000 in revenue, which would likely come from an increase in property tax," Webb added.
But that increase would be off-set by savings residents currently pay in sales and use taxes.
Effect on taxpayers
Based on information residents have provided to the town, the average person spends approximately $50 a year in sales and use tax, which is levied on many everyday expenses such as cable, phone, and retail (including supplies, hardware, equipment, ski tickets, entertainment, recreation, etc.).
Other expenses are exempt according to state law: "There are 46 exemptions from the tax (sales and use) which include medical items, food, manufacturing machinery, equipment and fuel, residential fuel and electricity, clothing and shoes."
In order to make up the remaining town deficit of $200,000 (assuming the events and marketing were successfully transferred to an entity apart from the town and assuming no cuts are made to current spending levels) property taxes would need to increase by $0.02 - $0.03 cents per hundred.
Based on the 2013 grand list, that would mean an increased cost of about $40-$60 annually to a person with a $200,000 house (the median home value in Killington) or $50 - $75 annually to a person with a $250,000 house (the approximate average home value).
That correlates to a very minimal change to the average taxpayer per year - slight net decrease if the property taxes increased $0.02 and a slight net increase if $0.03. Those property owners with median home value ($200,000) would see a savings of $10.20/year if the rate were $0.02, or an increase of $9.80/year if the rate were $0.03. For a property owner with average home value ($250,000) the savings would be $0.20/year if the rate were $0.02, or an increase of $24.80/year if $0.03.
Data on the effect the option tax reform would have on businesses is currently being compiled. Look for that analysis in next week's edition.
Comment: While the effect may be minimal there certainly is an effect. I have a hard time believing the median home value is $200,000. It must include condo's most of which are vacation homes.
The biggest problem with this proposal is there is no guaranty the resort will actually do what they proposed. At the joint EDTC/Chamber/Resort meeting I specifically asked Mike Solimano that question and was told there are no guarantees.
Later in correspondence with him requesting a copy of the resort's plans, he stated he could not provide them because the resort did not want to, " over promise and under deliver."
So while we as voters can guarantee the resort a half million in profits and savings by voting to eliminate the sales and use tax portion of the 1% tax, the resort cannot in turn guarantee these monies will be spent on improvements that will result in increased business.
What was also stated was the resort was going to proceed with their plans whether or not the 1% was eliminated or not.
Additionally the town is facing large expenditures down the road. We will have tax increases to repay the loans on the reconstruction of Killington and West Hill Roads, the golf course irrigation system will need to be replaced soon (estimated around a million dollars, don't kid yourself that the golf course revenues will cover it), the town swimming pool will have to be rebuilt soon (hundreds of thousands), the impact of the single payer health insurance has yet to be felt.
So the impact of the repeal of the sales and use tax, while supposedly "minimal", will be felt. It cannot be just defined in the narrow context of how much it will cost the taxpayer to replace the lost 1% sales and use tax revenue, but rather what budgetary concerns will also put upward pressure on property taxes in addition to the elimination of the 1% sales and use tax.
Vito
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