Wednesday, October 10, 2012

‘Where would the money go?’

Fly Sun Valley Alliance releases proposed LOT budget

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By KATHERINE WUTZ
Express Staff Writer

The pie chart above shows how much of the new local-option tax revenue, plus $900,000 contributed by Sun Valley Co., would be spent in 2013 if the tax passes. Sixty percent of the total revenue would go toward minimum-revenue guarantees for new and existing flights. Courtesy graphic

Air service nonprofit Fly Sun Valley Alliance has released a glimpse into how it would like to spend the $2.1 million anticipated from a new local-option tax.

In anticipation of a potential new LOT for airfare and a possible contract with a newly created Sun Valley Air Service Board to develop new air service to the valley, the organization has posted a proposed budget on a website of Yes to Air, an organization campaigning for passage of the new tax.

According to www.yestoair.com, the Fly Sun Valley Alliance is proposing to spending 60 percent of its 2013 revenue on minimum revenue guarantees for new and existing flights; 25 percent on promoting new and existing flights; and 10 percent on administrative costs, research, consulting fees and other operating expenses.

Fly Sun Valley Alliance Executive Director Carol Waller said the “administrative costs” would include her contract. However, she said those costs are already coming out of current local-option tax funding.

According to documents provided by Waller, Fly Sun Valley Alliance received $45,000 from the cities of Ketchum and Sun Valley’s local-option taxes in fiscal 2012.

“That’s helped us carry out the mission of the entire program,” she said. “It allows us to do what we do.”

However, she said, public funding from the cities has always remained separate from private funding, which comes from local businesses, Access Sun Valley discount card sales and last year’s Ski for Air Service fundraiser—a total of $197,246 in fiscal 2012.

“To this point, we have not used any public funding for MRGs,” she said.

Instead, public funding goes to diversion bussing for passengers whose flights must land in or depart from Twin Falls, usually due to weather. It also goes to consulting fees, research and administrative fees—including Waller’s contract.

According to the budget, public funds are not enough to cover all those expenses. Of the private funds collected, only $98,915 went toward paying minimum revenue guarantees for airlines that would not otherwise fly into a risky resort market such as Sun Valley.

Waller said that if the new local-option tax passes, Fly Sun Valley Alliance plans to put $900,000 of the $2.1 million collected into minimum revenue guarantees—$1 million into a new direct flight from San Francisco, and $800,000 into the existing flights from Los Angeles and Seattle. Sun Valley Resort will contribute an additional $900,000, for a total of $1.8 million in guarantees to airlines.

As for marketing, Waller said the organization would spend $350,000 to promote existing flights from Los Angeles and Seattle, and an additional $400,000 to promote the new flight. Roughly $300,000 would go toward a contingency fund for future guarantees, and $150,000 would go toward research, consulting and management.

Waller pointed out that the joint powers agreement creating the Sun Valley Air Service Board gives the cities the power to decide how they want the revenue to be spent. She said the organization would present a budget plan, but the cities have final say.

“The way it’s written, they have the power to direct their money according to the allowed uses,” she said. 

Ketchum Mayor Randy Hall said that if the local-option tax passes, Ketchum would decide how to allocate its $1.4 million in revenue through a public process that would involve research into the amount of marketing funding needed.

“We’re going to have to have a better understanding how much marketing we’ll need,” he said.

He added that he felt marketing was important because the more seats that are filled on new direct flights into the valley, the less money the Sun Valley Air Board will end up paying in minimum revenue guarantees.

Hailey Mayor Fritz Haemmerle was out of town and Sun Valley Mayor Dewayne Briscoe did not return a call from the Idaho Mountain Express by press deadline Tuesday to say how those cities would decide how to allocate new local-option tax revenue.

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Kate Wutz: kwutz@mtexpress.com

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