Friday, October 5, 2012

Consider the competition from Colorado

As voters in Sun Valley, Ketchum and Hailey contemplate the ballot measure to increase local-option sales taxes in order to support air service to the area, they must consider Colorado.

The home rule utilized by mountain resort towns in Colorado has allowed them to pound the economic daylights out of the Sun Valley area, home of the nation’s first destination ski resort, for decades.

With home rule, Colorado communities have broad authority and flexibility to levy local-option sales taxes that Idaho’s resort communities lack thanks to a hide-bound state government that jealously protects its own power by limiting the power of cities and counties to shape their own economic destinies.

The residents of Colorado’s mountain towns have used their pro-business taxing authority to become the juggernauts of mountain recreation. They have reaped the benefits of businesses made far stronger than those in the Sun Valley area by investing taxes levied on goods and services, including real estate, in economic boosters like workforce housing, marketing, events and air seat subsidies.

Even during the nation’s economic downturn, Colorado’s mountain town economies have continued to benefit from the investments, though none has gone unscathed. It’s highly likely that when the national economy improves, and it will, that the investments will give Colorado’s resort communities increased horsepower to drive away quickly from the downturn and to see its effects recede in the rearview mirror.

The Sun Valley area competes for customers with Colorado mountain towns. It’s impossible to ignore the fact that minimum revenue guarantees for airlines are a critical component of the success of Colorado resort areas.

Until an opinion from the Idaho Attorney General’s Office opened the door, it had looked like the Sun Valley area would be forced to continue to compete with its limbs chained together against smart and nimble opponents in the quest for visitors.

The opinion leaves voters with the uncomfortable duty of assessing whether to place a bet for five years—the length of time the tax will be in effect—that the new tax can unchain the area’s economic verve or at least keep the economy from getting any worse.

Any new tax is a bitter pill. However, voters must acknowledge the association between mountain town livelihoods and lifestyles and the airlines’ capacity to deliver customers.

It’s important to understand that the Sun Valley area is not so isolated that the tax policies of resort towns in other states cannot or do not adversely affect our lives.

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