Friday, May 12, 2006

Hailey seeks local option tax

Voters asked to decide whether city taxes some tourism items

Express Staff Writer

Hailey voters go to the polls May 23 to consider whether to implement a city-driven local option tax ballot initiative. If approved, the LOT would place a tax on rental vehicles, hotel and motel rooms, liquor by the drink and restaurant sales in places like Viva Taqueria, where Jim and Andrea Rule were served by Karen Rossi late Wednesday. Photo by David N. Seelig

Hailey officials wishing to cash in on the city's increased visibility as a tourist destination hope city residents will vote to support a city-driven local option tax ballot initiative.

Funds raised by the proposed tax would be used to help pay for a variety of city projects and services and for the promotion of Hailey as a tourist destination.

Hailey voters will go to the polls to vote on the matter Tuesday, May 23. Approval of the LOT ordinance requires a 60 percent majority of city voters.

Ever since Hailey officials began discussing the possibility of putting a LOT to a vote, one of the primary questions has been whether the city can legally implement such a tax.

After reviewing the issue, an ad-hoc committee established by Hailey Mayor Susan McBryant in early 2005 determined the city can put the LOT to a vote because the city derives a major portion of its economic well-being from tourist-related activities, as required by Idaho law.

"They spend time in our community and eat in our restaurants," McBryant said during a public meeting in April.

Under the draft LOT ordinance voters are set to consider, Hailey would collect taxes of varying percentages on rental vehicles, hotel and motel rooms, liquor by the drink and restaurant sales.

If approved by voters, the LOT would yield approximately $326,250 in its first year, the ad-hoc committee estimated.

Under the proposed ordinance, the duration of the LOT would be four years. Based on its success, Hailey would likely ask voters to reauthorize the LOT before it would expire in 2010.

Both the Hailey Chamber of Commerce and the group's executive director, Jim Spinelli, have been vocal supporters of the LOT proposal and have worked closely with the city to promote it.

For Hailey taxpayers, the LOT would be the least invasive type of tax the city could implement to raise additional tax revenue, Spinelli said. Tourists would pay for at least 90 percent of the LOT, he said. By comparison, if the city were to implement "bonds and levys, you and I are going to pay for that," Spinelli said.

Hailey businesses won't suffer from the tax, either, he said. "It's not a tax on the restaurants, it's a tax on the persons who use the tax," Spinelli said.

Members of the recently formed South Valley Merchant's Alliance have also come out in favor of the tax, he said. Spinelli said business owners realize that promoting Hailey to tourists will in the long run benefit them and the rest of the Hailey community. "All of us from Hailey are going to benefit," he said.

The tax could also allow the city to do things that have been impossible under the current budget, Spinelli said. Idaho law doesn't allow cities to increase their budgets by more than 3 percent in any given year.

"We haven't added a policeman in 10 years," he said. "We've stretched as far as we can. We need more help."


How will money be spent?

Revenues from the proposed LOTs (as specified by the city) would be used for:

· Various emergency services.

· Maintenance, improvement and acquisition of parks.

· Road repair, transportation enhancements and snow removal.

· City promotion, visitor information, special events and economic development.

· Town improvements: library modernization, sidewalks, town square, etc.

· Public transit and related improvements.

· Direct cost to administer and enforce the LOT ordinance.


Proposed LOTs

If approved by voters, Hailey will collect the following local option taxes:

· A rental-vehicle tax of 3 percent.

· A hotel- and motel-room tax of 3 percent.

· A liquor-by-the-drink tax of 2 percent.

· A restaurant tax of 1 percent.

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