The city of Hailey is scheduled to lose an important source of revenue next summer when a four-year term for collecting the city's local option tax expires. If the city's population exceeds 10,000 before residents vote to extend the tax, it could be lost for good.
The population of Hailey is currently about 8,500.
Since July 2006, the city has collected some $1,680,000 in local option taxes on by-the-drink liquor sales, restaurant food, car rentals and hotel rooms in the city.
Mayor Rick Davis said the taxes have offset the monetary impacts from tourism on city services and infrastructure, as it is designed to do. Idaho code allows resort communities with populations of less than 10,000 to collect local option taxes to help pay for the costs of hosting numerous visitors.
"The tax targets tourists rather than locals," Davis said.
Money collected by the city has funded lighted pedestrian crosswalks, a city snowblower, a police patrolman position, and marketing funds for the Hailey Chamber of Commerce.
City Administrator Heather Dawson said the city expects to spend $360,000 in LOT funds this year, down from $377,000 in fiscal year 2008-09. The city originally predicted that annual LOT returns would total some $325,000.
But some city leaders fear the income will be lost. When the population exceeds 10,000, the city will lose the option to assess the taxes, unless an extended term of approval is already in place. So, some city officials are now contemplating a long-term extension of the taxes.
When voters approved the taxes in 2006, 877 Hailey residents out of the city's 3,385 registered voters went to the polls. Voters authorized the taxes by a significant 597-to-268 margin, or 67 percent to 33 percent.
"We will need 60 percent of voters to pass this again," Dawson said. "We can put it out for a vote in the November elections. If more research is needed, we can wait until May [2010]."
Hailey Chamber of Commerce Executive Director Jim Spinelli will head up discussions with business leaders over the next four weeks in an effort to gauge opinion on the LOT and educate people on its significance.
One issue raised at a City Council meeting Monday night is the negative attitude of the Idaho Legislature toward LOTs.
"They don't like them," said Councilman Don Keirn. "One guy tried to implement them in Boise and they handed him his head."
The council on Monday considered extending the LOT term for 20 years, but decided to gather more information before a public hearing on the matter on Aug. 24.
Spinelli may have the most to lose if the LOT expires next year. The LOT doubled his budget for marketing the city as a tourist and shopping destination (to $75,000) in the last three years, adding a full-time position and relocating the chamber office to Main Street.
Spinelli said the chamber's budget, expanded by the LOT, allowed him to advertise and support 17 public city events, rather than the three events he previously supported.
"It is very dramatic what the LOT has done for the city," he said.
The council will discuss the matter again on Aug. 24 at City Hall.
Tony Evans: tevans@mtexpress.com
Hailey LOT
Hailey collects the following local option taxes:
· A rental vehicle tax of 3 percent.
· A hotel and motel room tax of 3 percent.
· A by-the-drink liquor tax of 2 percent.
· A restaurant food tax of 1 percent.
