Friday, May 22, 2009

Ketchum coming up short on tax collections

21 businesses behind on payments


By JON DUVAL
Express Staff Writer

Ketchum leaders are considering what to do about a number of businesses that are behind on their sales tax payments to the city.

Mayor Randy Hall told the City Council Monday that he is concerned about the number of delinquent sales tax collections. While the city is focused on helping the businesses as much as possible, he said, it has financial responsibilities to consider.

"We want to be as lenient and compassionate as possible, but the city has to pay its bills, too," Hall said.

Hall said that while some of the names have previously been on a list of businesses late in their payments, others are new, apparently victims of the poor economy. According to the city, the names of these businesses are confidential.

City Administrative Assistant Kathleen Schwartzenberger said Wednesday that there are 21 names on a "short list" of businesses up to four months behind in their payments.

These payments come under the city's sales tax ordinance, which imposes a 2 percent sales tax on lodging and by-the-glass liquor sales, and a 1 percent tax on retail sales and building materials. The goal of the so-called local option taxes (LOT) is to offset the impacts of tourism on city services and infrastructure.

Schwartzenberger said payments are made on either a monthly, quarterly or annual basis. Those on a quarterly schedule would have to remit the tax receipts for January through March by mid-April. If the revenue is not received by then, a letter is sent from the city in May, giving until June for a response. If the payment is still not received by the city, the council has to make a decision on whether to revoke the sales tax permit, effectively closing the businesses.

Hall said Thursday that Ketchum LOT receipts are down approximately 23 percent this year, but the number could fall even further if the city cannot collect the owed taxes.

"The LOT makes up about 20 to 25 percent of total tax collection, so the city can still survive," Hall said. "But we still need to be mindful that the city has its own expenses, while being sensitive to the economic times."

At Monday's meeting, Hall asked the council and city staff to research potential solutions that would help bring cash into the city without taking the drastic final measure of taking away business permits.

"That would shut down a business and is something we hope we never have to do," Hall said. "These businesses in distress are our neighbors, friends and family, making us all concerned from both a community and business standpoint."

Hall said he plans to look into how other resort cities are handling this situation and at possibilities, such as allowing for payment plans, that could help businesses make it to the busy Fourth of July holiday period.

Hall said he hopes to have a preliminary plan in place by the next City Council meeting on June 1, which should also help the city begin its budgeting process for the next fiscal year.

Jon Duval: jduval@mtexpress.com




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