As we head into spring (let’s be like the rest of the world and get past calling it “off-season” or even worse, “mud season” and just call it spring), most indicators are tracking solidly and some are tracking at record levels.
First quarter lodging occupancy, record sales tax collections, new flight service this winter from Toronto, increased load factors on other flights, consistent snow conditions and a continually improving economy all worked in our favor. Our most recent economic indicators report (found at VailValleyPartnership.com) shows increased employment numbers and a slow increase in weekly wages.
Most businesses that I’ve talked to are reporting a strong first quarter and business operators are optimistic moving forward into the summer. We’re teed up to have a solid winter next year with the return of the Alpine World Ski Championships.
The question remains: how to we continue this upward trajectory? The simple answer is to increase the number of customers. More customers – both local and destination visitors – is the key to overall business vitality and our future sustained success as a community. Basic economic theory states that more customers creates opportunities for businesses to grow their market share; the same number of customers (or less customers) causes businesses to have to steal market share from others.
Everyone should agree that driving more customers is the easiest way to ensure continued growth across all business segments, including demand for real estate (and increased home values), increased sales tax collections in our municipalities and increased opportunities for business success.
It’s a pretty simple formula: more customers/visitors equals more money spent locally. This results in a healthier business community, which in turn creates more jobs and increased competition for existing jobs and thus higher wages. A healthier business community results in more sales tax dollars for our municipalities to provide their services (including capital expenses, local infrastructure needs, health and human services support and other government services).
Business vitality is clearly in everyone’s best interest. A second consideration to improve business vitality after increased number of visitors (customers) is to ensure our current customers have more discretionary income to spend locally.
Eligible electors should have their local ballots in hand for the May elections. Specifically, the Eagle River Water and Sanitation District is posing a choice to voters related to an increased property tax or a rate increase. This is a unique choice as we are going to pay more regardless of whether you vote yes or no – it’s simply a matter of how our community will pay for it.
We are all inherently motivated by self-interest; this isn’t a political statement or position, but rather an encouragement to voters to do what is in your best interest. Our best interest should include what’s good for the business community.
Both businesses and individuals are motivated by having more money in our pockets as this results in more money being spent locally, thus helping create a more vibrant business community. The ballot issue being posed by the Eagle River Water and Sanitation District is at its core a basic math equation for voters: will I have more money in my pockets if I vote yes for the property tax increase or will I have more money in my pocket if I vote no and choose a rate increase instead? Or put another way: what impact will my vote have on business vitality?
One size doesn’t fit all. Many voters will spend less by voting yes on ballot issue A; homes with a market value of $500,000 will pay $29.22 in annual property tax for this new mill levy or will pay $59.88 annually by voting no and instead choosing the new rate. Again using the $500,000 home value as a baseline, this is an effective annual increase of $2.11 as the district has a bond expiring in 2016, the year before the new debt service (or rate increase) would begin.
It’s not an apples-to-apples comparison (it’s more like an apples to Volkswagen comparison), as the annual amount increases with property value or square footage to a point somewhere around a home with a market value of $3-5 million where voters may pay less with a rate increase. So clearly it is in some homeowners interest to vote for the rate increase rather than the property tax option. Here it gets tricky, for business owners have somewhat different math to do, given the difference between residential and commercial property tax rates.
There are other considerations for voters, including the ability of the district to apply for state grants or other alternative funding sources, but the basic question being posed is “how do we choose to pay for these required capital improvements?”
When voting in any local election, consider the question “will my vote help business vitality by increasing visitors and/or putting more money in customers pockets?” Don’t vote yes or no without understanding this basic question, a question that has a different answer for everyone.
Increasing visitors and putting more money in customers pockets are sometimes contrary to each other and might not apply equally to all consumers. When voting in any election, consider how the issue will put more money in pockets of customers, increase customers (tourists) here and always ask how your vote might contribute to business vitality.
Chris Romer is president & CEO of Vail Valley Partnership.