“Breckenridge lodging tax increase likely headed for Nov. election ballot”

Breckenridge lodging tax increase likely headed for Nov. election ballot

Posted: 13 Aug 2010 08:18 PM PDT

BRECKENRIDGE — Town residents will likely vote this Election Day on a 1 percent lodging tax increase — from 2.4 percent to 3.4 percent — strictly to support marketing.

Each year Breckenridge Town Council pulls an increasing amount of money from other sources to make its marketing fund competitive, and the anticipated tax increase would help efforts toward creating a sustainable revenue stream.

Council on Tuesday unanimously approved a three-ordinance package intended to achieve that goal. It includes compromises to maintain support of local lodging businesses.

"It makes a lot of sense the way we have it structured," said Bruce Horii, sales and marketing director with Beaver Run Resort and Conference Center.

Final vote on the ordinances — a ballot item, a five-year commitment from town coffers to marketing and creation of a special marketing committee — is slated for the council's Aug. 24 meeting. Public hearings are to occur at that time as well.

The increased tax on hotels, motels and other accommodations is not to increase any direct costs to residents.

"I support it," Councilman Mark Burke said of the package Wednesday. "A critical point for me was to make sure the lodging community supported it; they did, and because of that I support it."

The existing lodging tax allocates 2 percent to the excise fund (a major town revenue stream fund) and 0.4 percent to marketing (totaling 2.4 percent).

If voters approve the lodging tax increase, then 1.5 percent would go to the excise fund and 1.9 percent would go to marketing (totaling 3.4 percent).

The town ordinance to supplement marketing with 0.5 percent from town coffers would be effective if November's ballot item passes, and it would exist for five years.

Burke said he aims for council to "find either cost reductions in the budget or additional revenue sources" to fund marketing without taking money from the excise fund.

Crunching the numbers

For 2010, the town marketing budget is $1.8 million. This includes finances from three set streams (parts of lodging tax and sales tax, and all of business license tax) and a $773,000 boost from the excise fund, said town financial manager Brian Waldes.

Town council has transferred similar boosts to marketing for several years, and current council members want to get away from doing so. In a time of significant budget cuts and salary freezes, the council is especially focused on finding a way to fund marketing without taking potential finances away from town services.

About $1.68 million of the marketing budget goes to the Breckenridge Resort Chamber. The remaining finances are for grants to local nonprofits including the Breckenridge Outdoor Education Center, which "bring people to town," Waldes said.

The current projection for lodging tax revenue this year is $1.7 million. If those revenues remain flat in 2011, the new tax would potentially bring in about $2.5 million.

From that revenue, the town's marketing fund ordinance would result in an additional $367,647 going to marketing — for a total of roughly $1.4 million — rather than the excise fund. The amount taken from the excise fund, which helps finance town services, would be less than half what it is today.

Councilman Mike Dudick said Wednesday that increased marketing will help preserve quality of life in Breckenridge.

"We can have things like recreations centers and golf courses and ice rinks," he said. "We need the tourist tax dollars to pay for those things. We're trying to create a win-win for the citizens of Breckenridge."

Luring the right visitors

With the new tax increase and today's' projections, the town could be looking at a $2.25 million marketing budget in 2011.

Horii said that even if the proposal is approved, Breckenridge will remain short of the $3 million marketing budget he envisions (Aspen, South Lake Tahoe and Park City all budget more than $4 million; Steamboat Springs budgets $3 million).

"I still don't think it's enough to be competitive with some of the other ski resorts," he said. "The closer we can get to that $3 million mark, the better."

He also said the tax increase could lead to lodging businesses booking fewer groups and conventions.

"They really scrutinize more than the average customer," he said.

Dudick said he wants the town's new marketing approach — which will include a seven-member committee, three members of which would be from the lodging industry — to focus more on groups and "well-heeled" visitors from outside of Colorado.

"This is about destination travelers who set their sights on Breckenridge," he said.

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