The city of Sun Valley is asking voters for permission to lower a portion of its local option tax in a special election Tuesday, May 22, a move the City Council believes will help local retailers compete with businesses in Ketchum.
The special municipal election seeks to lower the LOT collected on retail sales for so-called "defined hard goods" from 3 percent to 2 percent, a rate closer to Ketchum's 1 percent retail tax.
Sun Valley's LOT on lodging and liquor by the drink will remain at 3 percent, as will the city's tax on restaurant meals and intangible goods like green fees for golfers.
In the next year, the state Legislature could place a lid on LOT collections at 2 percent. This change could be accompanied by an increase in the required voting percentage for any amendment to LOT from the current 60 percent, to a required two-thirds voter approval, or 66 percent. At that point, any changes Sun Valley would like to make to LOT would be harder to come by.
The local option tax is an extra tax the state of Idaho allows resort towns with populations of fewer than 10,000 to collect. The intent is to use the additional revenue stream to help mitigate the impacts of tourism on a community. LOT comprises roughly 32 percent of Sun Valley's total general fund revenues.
However, for years, merchants in Sun Valley have voiced agitation over the increased tax shoppers face when they leave Ketchum and head one miles up the road.
There was no question that the LOT "provides a lot of good things to the community," said business owner Bill Mason, of Bill Mason Outfitters of Sun Valley during a work session meeting in February. "All we are looking for is an equal playing field and we don't have one right now."
Tom Keenan, owner of Towne and Parke Fine Jewelry in Sun Valley, voiced his appreciation for the council's efforts to level the discrepancy between the two cities' taxes.
"I'd like to thank you all for working so hard on the LOT," Keenan said. "If it was given the consideration (by past city councils) that you all have given it, there would not have been the disparity there was."
The 1 percent drop in LOT on retail sales would represent an estimated $89,000 loss for the city. To fill a small portion of the revenue gap the city proposes to subject lift ticket sales in the city to LOT collections. This is expected to bring in around $7,400 for the city.
Mayor Jon Thorson said he expects the growth of the community also would increase LOT revenue naturally over time.
In order for the council's proposed change to the LOT to go forward, a 60 percent voter approval in the May 22 election is necessary. If passed, the new tax cut would go into effect Oct. 1 and remain in place for 10 years.
LOT election
The local option tax election is open to all residents of the city of Sun Valley. Voters can cast their ballot Tuesday, May 22, at Sun Valley City Hall between 8 a.m. and 8 p.m.
Sun Valley business owners Tom Keenan, left, and Bill Mason have lobbied Sun Valley and local state legislators to reduce local option tax rates on retail sales. The special election on May 22 is intended to help level the playing field for retailers in the resort town. Photo by Willy Cook
