Money moves: Silverthorne sees tax, fee revenues outpace budget by about $1.2M
Sales, nicotine taxes bring unexpected gains to town coffers
Silverthorne has begun conversations on budgeting the next two years, and according to data from the town, how customers are spending money is drastically changing.
“(The budgeting process) has got a theme of ‘a rising tide lifts all boats,’ and certainly that’s the case here,” town manager Ryan Hyland said. “I feel like if we were a marina, we might need to move up the hill at this point because the tide is going up. For some of the charts — whether it is the use of services or sales tax revenue or whatever it is — it is an incredibly different world than five to 10 years ago.”
Because Silverthorne has a two-year budget cycle, the last time early discussions happened was during the COVID-19 pandemic. Finance director Laura Kennedy said that at that time, there was a lot of uncertainty around what revenue would come in. Currently, the year’s revenues are ahead of the budget by about $1.2 million. Expenses for wages are below budget by approximately $500,000 because the town has several openings for positions.
Over the past few years, where most of the town’s sales tax revenue is coming from has changed. Because of Wayfair vs. South Dakota, a Supreme Court case that decided that local municipalities can charge local sales tax on online purchases, a larger percentage of sales tax is now coming from online sales rather than in-person sales from physical locations in town. This does not mean that sales at the outlets in Silverthorne have gone down, but rather that their portion of all sales tax has decreased.
“In 2012, the outlets’ contribution to the town sales tax was higher at 35%, and now they’re down to about 10%,” Kennedy said. “So obviously, our overall revenues have increased, so their contribution has decreased overall.”
Mayor Ann-Marie Sandquist said that in the past, town leaders aimed to make Silverthorne more diversified when it came to where sales tax was coming from.
“I remember though, that one of the concerns back in the day was that the outlets were just a big portion of our sales tax. We did have Target, but the main question was, ‘How do you try to diversify?’” she said. “It would be great to have a grocery store, as well. Having Murdoch’s and having some of these other things in here now is helpful. We’re not a two-legged stool or a three-legged stool anymore.”
Town leaders are also expecting a rise in lodging tax, mainly due to the approval from voters to raise the lodging tax from 2% to 6%. Another growing revenue stream is the town’s nicotine sales, which includes cigarettes, vaping devices and chewing tobacco. For this year, revenue from tobacco is expected to be about $1 million and has grown over the past couple of years.
Kennedy said that’s most likely because of Silverthorne’s proximity to the interstate. Travelers stop at a gas station in Silverthorne, buy nicotine without really checking the price and then head back out to their destination.
Nicotine is a county tax, as well, and the county shares those revenues back with towns based on the amount of taxes generated by the stores and retail locations within town limits. This means that the $1 million generated in Silverthorne is just a portion of nicotine sales countywide. Hyland said that because nicotine revenue can be used for various wellbeing or wellness initiatives, it can be used for things like child care, making it a “powerful revenue source.” Nicotine tax also supports grants for local nonprofit groups.
“We had no idea how much it was going to be. We had originally budgeted $70,000 because we were like, ‘Well, I don’t know how much people smoke,’” Kennedy added. “We’ve been able to be really generous with nonprofits. The normal applicants for nonprofit grants are now being paid through the nicotine tax fund, which is freeing up some revenue in the general fund.”
Support Local Journalism
Support Local Journalism
As a Summit Daily News reader, you make our work possible.
Now more than ever, your financial support is critical to help us keep our communities informed about the evolving coronavirus pandemic and the impact it is having on our residents and businesses. Every contribution, no matter the size, will make a difference.
Your donation will be used exclusively to support quality, local journalism.