Breckenridge passes lift ticket tax requiring Vail Resorts to pay $3.5M annually
Breckenridge Town Council passed the second reading of an ordinance Tuesday evening to create a lift-ticket tax and establish a parking and transportation fund. As established by a ballot measure passed in November, the excise tax would levy 4.5 percent of the price of Breckenridge Ski Resort single- and multi-day lift tickets, with Vail Resorts remitting a minimum of $3.5 million to the town for each winter season.
The ordinance would go into effect July 1, 2016, and Breckenridge would collect the tax from Nov. 1 to April 30 yearly. It would not apply to season passes or multi-resort tickets.
“This is important. We want it to work for our sake, and we want it to work for the resort’s sake as well,” Breckenridge Mayor John Warner said.
During a work session earlier that evening, councilmembers raised questions related to a piece of the ordinance detailing that town staff may enter into agreements with the ski area operator related to the collection of the tax. Town of Breckenridge financial services manager Brian Waldes explained the administrative agreement would not modify the ballot language or the amount of tax collected, but would allow town staff and the ski resort to discuss how the tax would be administrated and remitted to the town.
“The lift tax is not a normal sales tax. It’s only on one particular product, a Breckenridge-only lift ticket, and only during a certain time of the year,” Waldes explained. “You have to sit down and think ahead and anticipate all of the different products and different scenarios that could arise. That is why we have an agreement with Vail, so we both understand how it’s going to be administered before we start the first annual use period.”
He added that the town had entered into administrative agreements with other entities in the past, so this treatment will not be unique to Breckenridge Ski Resort.
“We’re here to help people to remit the tax. That’s what that effort was about,” he said.
PICKING A PRODUCT
Councilman Ben Brewer also raised some concerns about the ordinance in terms of future sales tax collections. He noted in the future, the $3.5 million minimum might not be sufficient to cover growing transportation needs if consumers favored a product aside from daily or multi-day lift tickets.
“You have the ability to create or remove products regardless of whether they are taxable or not,” he said. “In other words, the ski area has the ability to manipulate ski area ticket sales, to the point where once the minimum generate revenue is reached, they can stop selling that product, and that’s all the town gets. The problem with that is that all of those more people who come to Breckenridge are essentially creating stress on our infrastructure, and we don’t have revenue coming in that reflects it.”
Patricia Campbell, president of Vail Resorts’ Mountain Division, stood to address Brewer’s concerns.
“When you think about the magnitude of our business, the size and the success, we would be foolish to spend a lot of time designing products to manipulate tax collection,” she said. “No matter what shifts in our business — whether it’s a different product customers migrate to that wouldn’t be taxable, maybe there’s an issue with the economy, maybe we have a bad snow year — the town has a guarantee.”
Councilwoman Wendy Wolfe added that as a publicly traded business, Vail Resorts has a right to design their product according to marketing needs.
“I don’t want to meddle in that. I believe we need to create an ordinance, give the (town) finance department their usual amount of scrutiny and rely on them to report what they can to council and run any issues up the flagpole as they always do,” she added.
While the town is guaranteed $3.5 million regardless of lift-ticket sales, there was some conjecture as to how much additional revenue it would bring into the town.
When asked her estimate, Campbell quipped, “Can you tell me how much it’s going to snow next year? I don’t know.”
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