Wednesday, September 5, 2012

Hailey to put air-service LOT on fall ballot

Council limits proposed tax increase to lodging and rental cars

Express Staff Writer

Voters in Hailey this November will join those in Ketchum and Sun Valley in being asked whether to increase their city’s local-option tax by 1 percent to fund minimum-revenue guarantees for airlines serving Friedman Memorial Airport. However, the increase in Hailey’s LOT would be applied only to sales for lodging and rental cars.

The City Council voted unanimously Aug. 28 to place the initiative on the ballot.

Hailey currently collects a tax of 3 percent on rental car and hotel bed revenues, 2 percent on alcohol sales and 1 percent on restaurant food sales.

If passed by at least 60 percent of voters, the proposed five-year tax increase would allow for an estimated funding contribution of about $60,600 per year from Hailey to nonprofit Fly Sun Valley Alliance’s efforts to support commercial air service.

“This is the single most important step this community can take to protect its future,” Councilwoman Martha Burke said.

The council voted to limit the LOT increase to proceeds from lodging and rental cars, and exclude an increase in the tax on alcohol and restaurant meals, due to a concern that voters might reject the proposal if it increased their dining-out expenses.

However, collections from alcohol and restaurant sales account for about two-thirds of the estimated $190,000 that an across-the-board 1 percent increase would bring in annually from Hailey.

Ketchum and Sun Valley have authorized similar ballot initiatives that do include taxes on restaurant food and alcohol.

Da Vinci’s restaurant owner Larry Schwartz said at the meeting that only 10 percent of his business is from tourists.

“You would be asking Hailey residents to shoulder a large part of the burden,” Schwartz said.

Before the Hailey City Council decided to include only lodging and rental car business in its proposed 1 percent increase, Fly Sun Valley Alliance estimated that the total funding from a LOT increase in all three cities would amount to about $2 million per year. Some of that would be used for marketing. 

Hailey resident Wendy Bullock took issue with the practice of subsidizing airlines for “empty seats” while locals pay top dollar to fly from their hometown airport. She said she and her family have to drive to Boise to find affordable flights to Seattle.

“Why are airlines asking for MRGs and giving nothing back?” Bullock asked. 

Despite the payment of minimum-revenue guarantees for many years, funded primarily by Sun Valley Co., flights to Friedman Memorial Airport have decreased.

“There are fewer enplanements today than there were 10 years ago,” airport Manager Rick Baird said at the meeting. “The national trend is to take seats out of the market.”

Tony Evans:

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