On July 16, 2014

Killington town and resort discuss plan to repeal local option tax

Killington town and resort discuss plan to repeal local option tax
By Cristina Kumka
KILLINGTON — Town Manager Seth Webb recently outlined scenarios that might convince voters to repeal the town’s local option sales and use tax that flows $450,000 into town coffers annually.
The Economic Development and Tourism Commission (EDTC) meeting, held Monday July 14, at the town offices, was attended by town, resort and chamber representatives as well as Killington business owners and residents. The meeting followed up on a special community meeting held June 9 at the Killington Grand Ballroom, where town, chamber and resort officials presented the idea of option tax reform, among other plans for summer development.
Webb outlined three criteria that, if met, could represent a way for the town to adopt tax reform and support the best interest of the town and its voters. They are: (1) the resort would have to present a written plan for ten years worth of summer development; (2) a separate, independent association like the Vail Valley Foundation or Stowe Area Association would be created to maintain events the town currently has; and (3) the town has a solid transition plan to ensure any increase in taxes is minimized or avoided.
Killington Resort officials have asked town leaders to consider presenting a revote on the sales and use tax to the public. If passed, the resort would use the tax savings as “seed money” to build more summer infrastructure at the resort and expand activities like mountain biking and zip-lining so it can compete with other ski resorts in the East.
According to the Resort, they pay the majority of the sales and use tax collected due to lift ticket and retail sales. The state of Vermont keeps 30 percent of all local option taxes collected, so keeping the money raised at Killington in Killington, would be a benefit to all, resort officials say.
The options tax was created by a 2008 public vote to establish the tax as a funding mechanism for economic development. The town currently spends about $250,000 on marketing and special events like the Stage Race, Spartan Race and summer concert series.
According to Webb, the repeal of the sales and use portion of the local option tax would mean the entire $450,000 in revenue would need to be made up (or expenses cut, accordingly); however, if the town events and marketing could be run by another organization, it would decrease the deficit created by $250,000, and put less of a burden on taxpayers.
If the Resort makes due on its promise of increased summer development, it would be “the shot in the arm we need,” Webb added.

Town criteria detail
Webb outlined the variety of steps needed to satisfy the each criteria outlined to make option tax reform a win-win for the Resort and voters. The detail is as follows:
First, the resort would need to present to the town an effective year-round tourism plan and provide 1-2 years of successful operations in writing on how it plans to invest in summer attractions over the next 5-10 years, including goals and variables.
Second, “a strong, semi-independent third party would need to be created to manage the events and marketing the town has started.”
Webb suggested setting up an association similar to the Vail Valley Association and Stowe Area Association that would be an agreement between the resort and the Killington Area Chamber of Commerce.
The new Killington Pico Area Association (KPAA) would be governed by an executive board appointed by the Resort (two appointments), the Chamber (two appointments) and the Town (one appointment), he suggested. He added that KPAA could fulfill all the roles of the town’s EDT, Chamber Board and Mountain Partnership Committee currently seek to do independently, thereby streamlining some of the duplicative functions that currently exist. The Resort and the Chamber are working together on a plan to ensure the KPAA would have enough revenue to run the visitor’s center at Bill’s County Store and manage the town events and marketing.
“Right now if we got rid of the sales and use option tax, we would lose $450,000 revenue annually,” Webb said. “That could represent a 6 cents increase in the property tax. If KPAA were to take over the town events and marketing, then the tax increase would be reduced to 2.5 cents. Additionally, I think that we can create a new organization like Vail and Stowe, which have been very successful, that could drive our marketing and events on a more sustainable level moving forward.”
The KPAA would raise funds through regional business development fees grown by merchant passes being offered to businesses and people outside of town, annual resort membership contributions, event, sponsors and private donations.
Third, the town would need a solid transition plan to ensure any increase in taxes is minimized or avoided, according to Webb.
Assuming the second criteria is met, the town would have to make up $200,000 of that $450,000 loss through property taxes, Webb said. That would equal approximately a 2.5 cent property tax increase. For an average person paying $50 in sales and use option tax a year with a $200,000 home (the median home value in Killington), that would mean a decrease of 20 cents a year. For a home valued at $250,000 (the average home value in Killington) that would mean a $12.30 increase a year total.
Webb noted that the property tax increase could be further offset if the annual payment from Killington Resort to the town were reinstated.
“The average taxpayers would see little to no net increase in taxes as a result of the tax reform,” Webb said. “I mean the bottom line is, we don’t have an ability to do this stuff, they do and we need it but we don’t want to kill taxpayers so we are trying to figure out how to have everything.”

Photo of option tax meeting
Photo by Cristina Kumka — Killington President Mike Solimano sits next to a resident and Selectman Chris Bianchi at Monday’s EDT meeting where a plan for repealing the sales and use option tax was presented by the town.

Resort reaction
Solimano said the resort just wants to reap the benefits of some additional money saved and it wants to help the town grow.
“As the tax rate goes up, Killington (resort) is the biggest taxpayer. We are trying to do the right thing. We are moving forward. This would help. I don’t see it as the carrot or the stick or any of that stuff. For the last two years, we told you what we are going to do, and we’ve implemented pretty much exactly what we said we were going to do with a lot of input from everybody,” Solimano said.
“We’re trying now to figure out how to move forward and get some things going and, at the end of the day all, we are really asking is to get some of the money that we are paying,” he continued. “This is money Killington didn’t pay seven years ago and now we’re paying and we are saying, we think the community would be better and the resort would be better if we took some of this money and put physical summer assets at the resort because at the end of the day, that will generate more economic activity than what we have been doing for the past 10 to 20 years in the summer.”

Community feedback
Some residents, however, expressed concerns on some aspects of the plan.
Resident Vito Rasenas asked for more town representation on any KPAA or association board to protect taxpayers.
Another resident said for a “yes” vote on the repeal, he would need to see a solid transition plan on how town activities would be picked up by an association that needed to raise its own funds.
The next EDTC meeting is Aug. 11 at 3 p.m. at the Killington Town Office.


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