Friday, February 12, 2010

Ketchum LOT continues to lag

Revenues rise in December

Express Staff Writer

Ketchum LOT collected per month vs. 11-year monthly average

Ketchum can at last see how business fared during the holiday season.

The city has tabulated local-option taxes for business done in December—$178,000. At first glance, the number seems to shine a ray of light through the clouds that have overshadowed Ketchum for more than a year.

And this news relates mostly to the tourist industry's performance, since LOT—commonly called the "tourist tax"—comes from a 2 percent sales tax on lodging and by-the-glass liquor sales, and a 1 percent tax on retail sales and building materials.

December's LOT was behind December 2008 by only 3 percent. That seems like good news since the average change for the months of 2009 was a drop of 21 percent compared to the same months in 2008. December was by far the most successful month of 2009, with second place being January, lagging behind January 2008 by 16 percent.

But looking back at the same months of 2008 isn't an illuminating comparison. The slump started in 2008. To get the bigger picture, an average was computed for LOT using data dating back to the 1998-99 fiscal year.

Looking at that long-term average, December doesn't seem so bright.

December's $178,000 is 24 percent behind the long-term average of $235,000 for December—the highest LOT-grossing month of the year. For 17 months in a row LOT has lagged behind monthly averages, usually by about 20 percent. The last time LOT surpassed the average was almost a year and a half ago in August 2008 when Ketchum earned $224,000, a 6 percent increase over the August average of $210,800.

But the recession isn't the only reason LOT has taken a dive.

To date, 64 businesses have failed to hand over LOT payments they owe, thereby skewing the statistics. And since the city doesn't know how much business these companies are doing, it doesn't know how much LOT dollars it's missing out on—until it checks their books. Ketchum just knows that they're not paying.


Businesses charge LOT on top of the price of their goods and are supposed to pass the tax dollars on to the city every month. Some of these 64 businesses have just missed one month's payment sometime in the past, while others have been skipping out for a straight year. However, the public isn't able to ascertain the names of these businesses or the length of their delinquencies. City ordinance protects businesses from having their LOT information revealed to the public.

"No city clerk ... shall divulge or make known to any persons, in any manner, any information whatsoever submitted or obtained, directly or indirectly, pursuant to this chapter [of non-property taxes]," the ordinance reads.

LOT money is used for the upkeep of city services and infrastructure, such as streets, that see more use because of visitors.

Ketchum office assistant Kathleen Schwartzenberger said the city has sent letters to these 64 businesses notifying them of their delinquencies. If they don't reply within 10 days, the businesses will be put on a list—to go before the City Council on March 1—to have their tax permits revoked. When that permit is revoked, the business isn't allowed to continue operations. If it ignores that, it could be fined $300 for every month that its doors remain open.

City Clerk Sandra Cady said the city has been lenient in light of a troublesome series of events—the 2007 Castle Rock Fire, floods and the recession—putting businesses at risk. But, she said, some businesses took a mile with the inch they were given.

The city is now stepping up. And if a business doesn't pay the back taxes it owes, the city can place a lien on the property for the amount owed.

Schwartzenberger said 18 of the 64 delinquent businesses are outside Ketchum. LOT is charged on goods such as building materials that are shipped to the city.

Trevon Milliard:

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