By Cristina Kumka
KILLINGTON — The proposed repeal of the sales and use portion of the 1 percent option tax was the agenda item that inspired about 40 citizens to show up at the Selectmen’s meeting last Tuesday, Nov. 18. Killington Resort, once again, presented a short Power Point presentation on the benefits such a repeal could have on future summer developments (when polled, most of those in attendance had seen the full presentation at a community meeting earlier in the summer or fall.)
The resort is asking town voters, with the unanimous support of the municipal Economic Development and Tourism Commission and Killington Chamber of Commerce, to repeal the sales and use portion of the local option tax. The resort, in turn, plans to reinvest the money it currently pays toward that tax back into summer tourism infrastructure at the ski resort.
If repealed the town would initially face a $450,000 shortfall in the budget, but plans to parcel out marketing and events budget to a third semi-private party would reduce the shortfall to about $200,000. That would add about 2.5 cents per thousand dollars of property value to the municipal tax rate, Town Manager Seth Webb explained, or $62 for a $250,000 home, the median average in Killington. Currently, the average resident pays approximately $50 in sales and use tax per year, according to a town poll, so the net increase for the average citizen would be $12.
Those whose home values are higher than average would face a tax increase proportional to the assessed value of their properties.
Some taxpayers voiced their concern about future town projects that may require tax increases, such as the golf course balloon payment and the fire department renovation. They suggested keeping the tax in place to curb the need for future tax hikes.
Those in favor of the repeal cited the resort’s ability to move the needle on economic development in far greater ways than the town ever could and cited the benefit this would have on everyone, as it would reinvigorate the real estate market.
Residents were deeply divided on whether the benefits outweighed the risks and who would truly benefit from such a repeal.
But the issue at hand Tuesday was only whether or not the town Select Board should put the question on the Town Meeting ballot in March for voters to decide.
Mike Solimano, president of Killington and Pico resorts, asked the selectboard to put the question to a vote. Jim Haff, former selectmen and business, and others agreed that that was indeed the democratic way. Chris Bianchi supported the vote.
Selectmen Ken Lee, however, motioned for the board to table the issue until next year, saying the timing was just not right this year.
Select Board Chairwoman Patty McGrath said, “We need to keep pushing in the same direction… people want an attractive place both summer and winter.”
Resident Vito Rasenas said, “We are facing serious budgetary issues in the town. I like Ken’s idea that we table it this year and give Mike some time to prove himself and the resort’s capabilities.”
Resident Charlie Demarest said there is no reason why the resort can’t just approach the town’s economic development commission and ask for money for zip lines, from the local option tax. “We’d still have control of the money and we can say yea or nay,” Demarest said.
Haff reminded voters that “if more rooms are going to be sold, if more alcohol is going to be sold [due to summer growth] we are going to receive more 1 percent local option tax on all of that,” he said.
But former selectman Bernie Rome disagreed with the correlation as it is not guaranteed. Rome said the town is asking to invest $450,000 in the resort and that “we are being given very soft terms on the other side,” without clarity on the town’s return on such investment.
“A town can’t fund or finance a corporation the magnitude of Killington…. The town can’t afford it,” Rome said, asking the selectboard not to put it up to vote.
The board did not decide whether to put it on the ballot or not at the meeting Tuesday. They will take up the issue again at a future meeting.
Killington Resorts plan for reinvestment
According to Solimano, the resort has paid a total of $3.9 million toward the tax since 2008 — $1.3 million for the rooms and meals portion of the tax and $2.6 million in the sales and use portion. The state keeps 30 percent of that money with 70 percent returned to the town.
“Would the town and resort have been better if that $4 million were invested back into the resort for summer tourism?” Solimano asked.
He also said that “over time, more and more has gone into the town’s general fund and less toward tourism,” as was the initial intention of the Killington voters when it was enacted.
(Other towns in Vermont enacted an option tax to offset municipal or state education taxes after Acts 60 and 68 were passed.)
Solimano says the repeal of the sales and use portion of the tax would put the resort, and therefore the town, in a better position.
Mountain biking is up 64 percent at the resort, the most gondola rides were taken this summer and the resort held 15 events. The “Soaring Eagle” zipline contract has been signed and is slated for installation in the spring of next year, he said.
Stowe, for example, is far outpacing Killington in summer business, Solimano noted.
According to state figures of the most current rooms and meals receipts, Stowe earns $46 million in winter, compared to Killington’s $35 million. In the summer that gap widens significantly. Stowe still earns about $47 million in the summer according to rooms and meals taxes, while Killington only brings in about $8 million. In other words, Stowe earns roughly six times as much as Killington in the summer.
Vermont as a whole earns $613 million in winter tourism and about $692 million in the summer, based on rooms and meals receipts. The potential is huge for summer growth, Solimano concludes.
Town’s plan to off-set losses with KPAA
While the town does not necessarily support the repeal, it has made a plan to protect itself from a crippling loss of $450,000 to its general fund. If the repeal is passed, the town plans to parcel out its marketing and events budget to a third semi-private party, which would reduce the shortfall to about $200,000.
The third semi-private party would be called the Killington Pico Area Association; it would encompass the current Chamber of Commerce, but would have a larger operating budget so as to produce events currently run by the town such as the Killington Classic, Killington Stage Race, Cooler in the Mountains Concert Series, etc. The resort would help to fund this organization with a six-figure donation in addition to the expanded regional pass program, which is also expected to generate more membership revenues.
Cristina Kumka is a freelance reporter, firstname.lastname@example.org.