In a response to public criticism of how the city's money is spent, the Sun Valley City Council held a special meeting Thursday, May 29, to discuss establishing a budget for the city's local option tax revenues for the fiscal year of 2008-2009.
The city has benefited from LOT revenues since 1978, when the state passed legislation to address the special needs of resort towns.
By state law, resort cities with fewer than 10,000 residents can levy their own sales tax on non-property items such as hotel rooms, food and beverages. The intent is to raise additional revenue to help mitigate the impacts of tourism on property-tax payers in the community.
For 2008-2009, Sun Valley City Council expects LOT revenue to be $1,350,000.
By state law, Sun Valley is required to spend the revenue only on projects and organizations that provide services for visitors to the city. This includes police and fire departments, the Sun Valley/Ketchum Chamber & Visitors Bureau and the Wood River Community YMCA.
In previous years, only a portion of the LOT revenue was accounted for in the City Council's general budget. While all of the revenue was eventually spent, the money was never divvied up in advance.
"We never specifically allocated for it," Councilman Nils Ribi said.
This would be the first year the council has made such a stringent, itemized budget specific for LOT revenue.
The intention is to create a more transparent and exact process, and to determine just how much money the city is spending on LOT-related services.
Ribi said he expects to discover that the city is spending more money on LOT-related services than the actual revenue it collects. Despite a potential discrepancy in revenues versus expenditures, the council does not plan to try to raise LOTs.
"There is no way," Ribi said. "We fought so hard to lower LOT, and in my opinion we need to lower it more."
A hesitancy to raise the tax comes in the wake of years of protest by Sun Valley business owners who were forced to charge a collective 9 percent sales tax—including state and local taxes. With last year's lowering of LOT tax on hard items from 3 percent to 2 percent, Sun Valley businesses now charge an 8 percent tax.
The push for transparency by the council comes in response to a number of citizens' concerns about where the city has been spending the its money. Sun Valley residents Chris and Mary Thiessen spoke at Thursday's meeting to question the council's allotment of money to a number of organizations, in particular the $75,000 the council gave to the YMCA in Ketchum.
Councilman Nils Ribi said the new budget for LOT revenue is meant to answer these types of concerns.
"This is accountability, rather than a slush fund," Ribi said.
