MONTPELIER — A state senator has sent a
letter to the seven ski resorts using state land asking them to
renegotiate leases, but the closing paragraph has some lawmakers
concerned he has issued a thinly veiled threat to raise their taxes if
they don’t comply.
Sen. Tim Ashe, D-Chittenden, chairman of the powerful Senate Finance Committee, sent the letters on Senate letterhead last week to Bromley, Okemo, Killington, Stowe, Smugglers’ Notch, Burke and Jay Peak resorts. He signed each letter as chairman of the Senate Finance Committee.
Ashe’s letters follow the release of a report by State Auditor Doug Hoffer last month that found the resorts’ lease payments to the state have not kept pace with their economic growth.
The leases range from 50 to 100 years. Bromley was the first resort to strike a deal with the state in 1942.
Over the past 50 years, resorts that once had just a handful of lifts and few facilities have become year-round, multimillion-dollar enterprises.
Many are now owned by large out-of-state corporations, according to Hoffer’s report. The resorts feature new lodges, hotels, condominiums, retail stores, golf courses, water parks and other amenities that generate significantly more revenue than during the fledgling days of Vermont’s ski industry.
Between 2003 and 2013, development at the seven resorts led to increases in sales of goods and services, property values and revenues from excise taxes, all of which contributed to more state revenue.
But lease payments for the 8,500 acres of public land used by the ski areas have not kept the same pace of growth in that decade as other tax revenues generated by the resorts.
The leases were designed to capture a percentage of lift ticket sales, typically 5 percent. But lift ticket sales became a secondary source of revenue as the resorts evolved, according to the report, and the leases generate only about $3 million annually for the state.
Ashe’s letters ask the resorts to open negotiations, even though most leases do not expire for several more decades. Bromley’s lease, for example, is scheduled to end in 2032. Ashe said in his letter, as Hoffer’s report did, that renegotiating makes sense because the ski world of the leases’ origins “would be unrecognizable today.”
“It is for that reason I ask you to renegotiate voluntarily your lease terms or agree to amend your lease to have it expire on December 31, 2016. Either of these options would allow for thoughtful, unhurried negotiations between the State and you to arrive at modern lease terms reflecting the great changes in the ski industry and in the revenue streams it features,” Ashe wrote.
It is the closing paragraph that has drawn the ire of some fellow lawmakers, however.
“From time to time, the Legislature considers various proposals that would have an impact on various classes of taxpayers. In terms of the ski industry, I have heard Legislators propose eliminating the property tax exemption on snowmaking equipment and other assets, and suggest creating a special non-homestead tax rate for ski areas. It seems to me that voluntary renegotiation of your lease with the State is a far superior method of striking the right balance of proceeds for the right to use public land,” Ashe wrote.
Rep. Patti Komline, R-Dorset, whose district includes Bromley Mountain, said Ashe’s letter is a clear threat to try to eliminate tax exemptions currently enjoyed by ski resorts if they refuse to scrap their current leases.
“It is very concerning when those in power look to interfere in contractual agreements using overt threats. This is an overreach, and I hope it doesn’t create a precedent that will affect the credibility of our state’s reputation,” she said.
Komline said she learned about the letters Wednesday and planned to reach out to officials at Bromley and work with the Vermont Ski Areas Association to help ease any concerns the resorts have.
Rep. Heidi Scheuermann, R-Stowe, said she, too, found out about the letters Wednesday after officials at Stowe Mountain Resort sent her a copy. Stowe’s lease is good until 2057, she said.
“I think it’s inappropriate. That said, he can do it. I’m sure Stowe will have a response for him. They have a legal lease that is extremely beneficial to the state of Vermont, and I expect they are going to maintain that lease,” she said.
Ashe said Wednesday his letters are not a threat and should not be seen as one.
“It’s reading the auditor’s report and saying that even though they are under no obligation to open their leases … it seems to be maybe appropriate that they do so,” he said. “It’s not about a threat. It’s hoping they’ll just do it.”
Making a threat to strip away tax exemptions should the resorts decline to renegotiate leases would be bad policy, Ashe said.
“I would never threaten a taxpayer, because I don’t think that’s a very good tax policy,” he said. “But rather, saying, in thinking about the use of public lands, it’s better to voluntarily step up because the proposals that are from time to time directed at them or any other industry are usually sort of inartful.”
Still, lawmakers question the tax exemptions every year, and Ashe said he wanted to point out that some lawmakers could look to use them as leverage to ensure the leases are fair.
“People gravitate to that … and say, ‘Why do we do that?’ It raises this whole issue about why that equipment and stuff is exempt,” Ashe said. “And then, there’s always the discussion about, ‘Well, they do get a pretty sweet deal.’ People articulate it in different ways.”
Senate President Pro Tem John Campbell, D-Windsor, said he was not aware that Ashe was planning to send the letters.
“I have not had an opportunity to discuss this with Sen. Ashe, nor have I seen the letter,” he said Wednesday. “It’s certainly an issue that I will discuss with him.”
Sens. Richard Sears and Brian Campion of Bennington County, whose districts include Bromley, both said they had concerns with Ashe’s approach.
“There has to be a balance here,” Campion said. “I don’t want to do anything to jeopardize Bromley’s ability to attract people to Bennington County.”
Sears said, “Right now people are in a desperation mode. They’re looking (for revenue) in every corner. I don’t think I want to force ski areas. I don’t want to do anything that impacts the tremendous relationship with our ski areas.”
Parker Riehle, president of the Vermont Ski Areas Association, said Wednesday the ski resorts were still crafting a response to Ashe.
“We certainly still stand by the leases and their terms as still a very good deal for both parties and a very favorable deal for the state of Vermont,” he said. “Overall it’s a really strong partnership.”
The federal government gets only 2.5 percent of lift ticket sales, on average, Riehle said, and neighboring states get about 3 percent of lift ticket revenue on similar leases.
“Vermont’s actually way ahead of the game, and there’s been a couple of reports issued in that regard that back that up,” he said.
Additionally, the ski industry generates an estimated $100 million in various tax payments to the state and provides about 12,000 jobs during the winter when some other industries are typically laying workers off.
“You can’t just focus on the lease payments and think that they look too small,” he said.
Given what the ski industry provides to the state, Riehle said, the resorts should not be facing the threat of higher taxes.
“In light of the numerous revenue benefits to the state, we certainly don’t see a need to look for any additional tax burden on the ski areas. We certainly don’t want to see anything like that hanging over our heads,” he said.
neal.goswami @rutlandherald.com
Sen. Tim Ashe, D-Chittenden, chairman of the powerful Senate Finance Committee, sent the letters on Senate letterhead last week to Bromley, Okemo, Killington, Stowe, Smugglers’ Notch, Burke and Jay Peak resorts. He signed each letter as chairman of the Senate Finance Committee.
Ashe’s letters follow the release of a report by State Auditor Doug Hoffer last month that found the resorts’ lease payments to the state have not kept pace with their economic growth.
The leases range from 50 to 100 years. Bromley was the first resort to strike a deal with the state in 1942.
Over the past 50 years, resorts that once had just a handful of lifts and few facilities have become year-round, multimillion-dollar enterprises.
Many are now owned by large out-of-state corporations, according to Hoffer’s report. The resorts feature new lodges, hotels, condominiums, retail stores, golf courses, water parks and other amenities that generate significantly more revenue than during the fledgling days of Vermont’s ski industry.
Between 2003 and 2013, development at the seven resorts led to increases in sales of goods and services, property values and revenues from excise taxes, all of which contributed to more state revenue.
But lease payments for the 8,500 acres of public land used by the ski areas have not kept the same pace of growth in that decade as other tax revenues generated by the resorts.
The leases were designed to capture a percentage of lift ticket sales, typically 5 percent. But lift ticket sales became a secondary source of revenue as the resorts evolved, according to the report, and the leases generate only about $3 million annually for the state.
Ashe’s letters ask the resorts to open negotiations, even though most leases do not expire for several more decades. Bromley’s lease, for example, is scheduled to end in 2032. Ashe said in his letter, as Hoffer’s report did, that renegotiating makes sense because the ski world of the leases’ origins “would be unrecognizable today.”
“It is for that reason I ask you to renegotiate voluntarily your lease terms or agree to amend your lease to have it expire on December 31, 2016. Either of these options would allow for thoughtful, unhurried negotiations between the State and you to arrive at modern lease terms reflecting the great changes in the ski industry and in the revenue streams it features,” Ashe wrote.
It is the closing paragraph that has drawn the ire of some fellow lawmakers, however.
“From time to time, the Legislature considers various proposals that would have an impact on various classes of taxpayers. In terms of the ski industry, I have heard Legislators propose eliminating the property tax exemption on snowmaking equipment and other assets, and suggest creating a special non-homestead tax rate for ski areas. It seems to me that voluntary renegotiation of your lease with the State is a far superior method of striking the right balance of proceeds for the right to use public land,” Ashe wrote.
Rep. Patti Komline, R-Dorset, whose district includes Bromley Mountain, said Ashe’s letter is a clear threat to try to eliminate tax exemptions currently enjoyed by ski resorts if they refuse to scrap their current leases.
“It is very concerning when those in power look to interfere in contractual agreements using overt threats. This is an overreach, and I hope it doesn’t create a precedent that will affect the credibility of our state’s reputation,” she said.
Komline said she learned about the letters Wednesday and planned to reach out to officials at Bromley and work with the Vermont Ski Areas Association to help ease any concerns the resorts have.
Rep. Heidi Scheuermann, R-Stowe, said she, too, found out about the letters Wednesday after officials at Stowe Mountain Resort sent her a copy. Stowe’s lease is good until 2057, she said.
“I think it’s inappropriate. That said, he can do it. I’m sure Stowe will have a response for him. They have a legal lease that is extremely beneficial to the state of Vermont, and I expect they are going to maintain that lease,” she said.
Ashe said Wednesday his letters are not a threat and should not be seen as one.
“It’s reading the auditor’s report and saying that even though they are under no obligation to open their leases … it seems to be maybe appropriate that they do so,” he said. “It’s not about a threat. It’s hoping they’ll just do it.”
Making a threat to strip away tax exemptions should the resorts decline to renegotiate leases would be bad policy, Ashe said.
“I would never threaten a taxpayer, because I don’t think that’s a very good tax policy,” he said. “But rather, saying, in thinking about the use of public lands, it’s better to voluntarily step up because the proposals that are from time to time directed at them or any other industry are usually sort of inartful.”
Still, lawmakers question the tax exemptions every year, and Ashe said he wanted to point out that some lawmakers could look to use them as leverage to ensure the leases are fair.
“People gravitate to that … and say, ‘Why do we do that?’ It raises this whole issue about why that equipment and stuff is exempt,” Ashe said. “And then, there’s always the discussion about, ‘Well, they do get a pretty sweet deal.’ People articulate it in different ways.”
Senate President Pro Tem John Campbell, D-Windsor, said he was not aware that Ashe was planning to send the letters.
“I have not had an opportunity to discuss this with Sen. Ashe, nor have I seen the letter,” he said Wednesday. “It’s certainly an issue that I will discuss with him.”
Sens. Richard Sears and Brian Campion of Bennington County, whose districts include Bromley, both said they had concerns with Ashe’s approach.
“There has to be a balance here,” Campion said. “I don’t want to do anything to jeopardize Bromley’s ability to attract people to Bennington County.”
Sears said, “Right now people are in a desperation mode. They’re looking (for revenue) in every corner. I don’t think I want to force ski areas. I don’t want to do anything that impacts the tremendous relationship with our ski areas.”
Parker Riehle, president of the Vermont Ski Areas Association, said Wednesday the ski resorts were still crafting a response to Ashe.
“We certainly still stand by the leases and their terms as still a very good deal for both parties and a very favorable deal for the state of Vermont,” he said. “Overall it’s a really strong partnership.”
The federal government gets only 2.5 percent of lift ticket sales, on average, Riehle said, and neighboring states get about 3 percent of lift ticket revenue on similar leases.
“Vermont’s actually way ahead of the game, and there’s been a couple of reports issued in that regard that back that up,” he said.
Additionally, the ski industry generates an estimated $100 million in various tax payments to the state and provides about 12,000 jobs during the winter when some other industries are typically laying workers off.
“You can’t just focus on the lease payments and think that they look too small,” he said.
Given what the ski industry provides to the state, Riehle said, the resorts should not be facing the threat of higher taxes.
“In light of the numerous revenue benefits to the state, we certainly don’t see a need to look for any additional tax burden on the ski areas. We certainly don’t want to see anything like that hanging over our heads,” he said.
neal.goswami @rutlandherald.com
Comment: How do these people get elected?How can Tim Ashe say the ski resorts don't provide enough revenue to the state. For him to say that the resorts need to renegotiate because they have revenue streams other than lift ticket sales which pay for the leases boggles the mind. How can the chairman of the Senate Finance Committee not be conscious of the amount of sales tax revenue the state garners from these other revenue streams. Killington resort pays a premium sales tax above and beyond what everyone else pays. Killington town's 1% options tax generates around a half million from the resort alone. If you consider that the resort pays anywhere from 6 - 10% plus in various sales taxes that's 3 to 5 million dollars just on that category of taxes alone, never mind property, income, and god knows what other taxes the state squeezes out. And of course since the resorts are what make gold towns gold, the resorts and the towns they're in pay a disproportionate share of the education tax.
Maybe the senate should forgo buying themselves pricey laptops with taxpayer money and buy the computers out their salary like everyone else does. And maybe Mr. Ashe should start using his.
And further more, does Mr. Ashe think we're all morons? Trying to backpedal on his veiled threats to revise other tax policies if the resorts don't "voluntarily" renegotiate does not refute his threat. It's there in black and white.
Vito
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