Friday, October 18, 2013

Air-service LOT gets second chance

1 percent sales tax increase is on Ketchum and Hailey ballots

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By GREG MOORE
Express Staff Writer

    Hailey and Ketchum voters are being asked for the second year in a row whether they want to increase their local-option-tax rates by 1 percent to subsidize commercial air service to Friedman Memorial Airport.
    Receipts from the tax would be used to fund minimum-revenue guarantees to airlines and to promote commercial air service. An unspecified amount of such subsidies are currently being paid by Sun Valley Co. and the nonprofit Fly Sun Valley Alliance through its fundraising efforts to Alaska Airlines for its seasonal flights between Friedman and airports in Los Angeles and Seattle.
    State law requires 60 percent voter approval for imposition of any new local option tax. Last year, the measure passed in Sun Valley but lost by narrow margins in Hailey (58.7 percent in favor) and in Ketchum (57.9 percent). Collection of the tax in Sun Valley was contingent upon its passage in Ketchum.
    Proponents of the additional tax have stated that it would raise about $2 million annually.
    Proponents argue that subsidized air service is needed for the Sun Valley area to compete with other resort towns, where air service is also supported by revenue guarantees. They also point out that a local source of revenue will be required to extend a one-year $500,000 federal grant to jump-start connecting service to the East Coast by United Airlines.
    Among elected officials, opposition to the proposed tax increase has been virtually nonexistent, and little has been publicly stated by citizens. However, its failure last year indicates substantial opposition to a sales tax increase.
    Hailey already levies a 3 percent local option tax on lodging and rental cars, a 2 percent tax on alcoholic beverages and a 1 percent tax on restaurant food. The additional 1 percent air-service LOT would apply only to hotel and rental car receipts.
    Ketchum charges a 2 percent sales tax on lodging and by-the-glass liquor sales, and a 1 percent tax on retail sales except groceries.
    Sun Valley imposes a 3 percent sales tax on lodging, by-the-glass liquor sales and event tickets. It also collects a 2 percent tax on most retail sales, and a 1 percent tax on lift tickets and season passes.
    Bellevue does not a have a local option tax and the proposed air-service LOT is not on the ballot there.
    Added to an existing 6 percent state sales tax and a 2 percent state lodging tax, passage of the additional LOT would result in sales taxes of between 6 and 12 percent in the Wood River Valley.
    According to an agreement drawn up among the participating cities, funds from the tax would be administered by a newly formed Sun Valley Air Service Board. The board would be made up of representatives from Ketchum, Sun Valley, Hailey and Blaine County, and the amount of voting power each city has would be proportionate to the amount of tax funding that city is contributing. The county would not have a voting seat, but a representative would sit in an advisory capacity due to the county’s status as an airport owner.
Greg Moore: gmoore@mtexpress.com

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