For the week of September 4 - 10, 2002

Sun Valley approves extension of its LOT

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By GREGORY FOLEY
Express Staff Writer

Sun Valley City Council members Thursday unanimously approved a proposal to extend the city’s ability to levy local option taxes through 2010.

The panel voted 4-0 in favor of an ordinance to extend the city’s existing local option tax (LOT) provision for eight years, and subsequently voted 4-0 in favor of placing the ordinance before voters in the Nov. 5 general election.

If the conditional ordinance is endorsed by a simple majority of Sun Valley voters, it will replace the city’s existing LOT ordinance allowing the collection of a 3-percent tax on retail sales, liquor sales and hotel-room charges.

City Attorney Rand Peebles told the panel that the city was proposing to bring the eight-year extension before voters a full year before the existing ordinance expires because the law requires a 12-month intermission between votes if the ordinance is turned down by the electorate.

Voters approved a five-year LOT ordinance in 1998, which is set to expire in November 2003.

Peebles said the LOT revenue is too critical to the city budget to take a chance on losing it. Thus, the city determined it was prudent to ask voters to approve the extension a year in advance to help ensure it could be collected beyond November 2003.

In effect, the new eight-year ordinance would supersede the final year of the existing ordinance.

If it were rejected, the city would still collect the tax through November 2003 under the existing ordinance, and would likely propose another extension next year.

The LOT provision allows the city to levy a 3-percent tax on the sales price of hotel and motel room charges, by-the-drink liquor sales and most retail transactions except for building materials and ski lift tickets.

Under the Idaho State Sales Tax Act, certain resort cities such as Sun Valley that have a tourist-based economy and a population of less than 10,000 can exercise LOTs to supplement the city budget.

The new ordinance specifically notes that "as a resort city, the City of Sun valley derives a major portion of its economic well being from businesses catering to recreational needs and meeting the needs of people traveling to the City of Sun Valley as a destination city for an extended period of time."

Sun Valley in recent years has derived about 40 to 45 percent of its General Fund revenue from the collection of LOTs.

In the 2000-2001 fiscal year, the city brought in just over $1.3 million from the taxes, and has projected it will take in about 10 percent less—just over $1.1 million—during the current and upcoming fiscal years.

The ordinance passed by council members Thursday was done with a condition that the proposal receive voter approval.

Several city officials at the meeting alluded to the importance of the LOT revenue, but noted that they will be not be permitted to campaign for—or against—the proposed eight-year extension.

 

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