Friday, December 15, 2006

Sun Valley endorses transportation tax

City Council also looking to lower city LOT


By TREVOR SCHUBERT
Express Staff Writer

Local municipalities' ability to tax themselves was the theme of an hour-long discussion at Sun Valley City Hall on Wednesday.

The Sun Valley City Council discussed, and ultimately approved, a resolution in support of statewide legislation that would allow creation of countywide local option taxing up to .5 percent for the purpose of funding regional public transportation.

Idaho, the third fastest growing state in the nation, is one of four states that does not provide either state funds or countywide local option taxing authority for local public transportation funding, according to the resolution.

The motion in support of the resolution passed by a 3-to-1 margin, with Blair Boand, Ann Agnew and Nils Ribi voting in favor and Lud Renick voting against.

"At this point, I just can't get behind this," said Renick, who voiced discomfort over approving a tax that did not have a clearly defined plan for allocation.

But the resolution led to the larger question of the city's overall local option tax collections.

The City Council was concerned with how this additional countywide tax, should it pass both the Legislature and be approved by Blaine County voters, might affect the 3 percent city local option tax that is currently allowed in the state's "resort cities."

Ribi voiced concern over the mounting tax burden on Sun Valley residents. With the state's current 6 percent sales tax, coupled with Sun Valley's 3 percent local option tax and the impending 0.5 percent increase, "we're at a 9.5 percent rate, it starts to get kind of ridiculous," Ribi said.

In order to remain in line with surrounding municipalities, Ribi suggested lowering Sun Valley's local option tax on retail, lodging and liquor sales to 2 percent, but then subject lift ticket sales and building materials to the tax—two items that are now exempt from collection.

Sun Valley City Attorney Rand Peebles pointed out that, while adding building materials is possible, the problem arises when it comes to collection.

"There is no point-of-origin sales (for building materials) inside Sun Valley," Peebles said.

This means Sun Valley has to rely on contractors and developers to report their own use, and the city would then collect the tax retroactively—not a clear-cut process.

Renick raised another concern: that Sun Valley Co., by far the largest business in Sun Valley and the largest employer in Blaine County, would face an undue burden because of the tax change.

"The major contributor to LOT is Sun Valley Co., contributing up to 90 percent of all LOT collected."

But Renick's perception of the situation exposed a fundamental rift in understanding between council members.

"It is an absolute falsehood to say Sun Valley Co. pays LOT," Ribi said. "The Sun Valley Co. only collects it and remits it to the city. In reality, I pay that LOT when I dine at the LDR (Lodge Dining Room). Sun Valley Co. benefits from it. They don't pay it."

The logic is that the local option tax collected by Sun Valley goes to, among other things, advertising to attract tourists who in turn stay at Sun Valley Co, increasing their revenue.

The council considered whether to ask voters in August if the city should adjust its existing local option tax. Mayor Jon Thorson said the intention of seeking voter feedback in August would be to make sure the overall local option tax does not go up, should the Legislature allow Blaine County to consider taxing itself for public transportation.

"Then we will make sure that the sales tax that includes this .5 percent won't be above the current one," Thorson said.

However, he also said it would be an opportunity for the city to re-examine its local option tax to ensure it is on par with other local municipalities collecting resort-town local option taxes.

However, Thorson urged the council to separate the two issues of the current Sun Valley local option tax and the possibility that the Legislature—and subsequently Blaine County voters—could pass a .5 percent transportation tax. He urged the council to focus, for now, on the latter.




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