For the week of Oct 30 - Nov 5, 2002

Sun Valley voters 
asked to extend 
Local Option Tax

---

By GREGORY FOLEY
Express Staff Writer

Sun Valley voters on their election ballot Nov. 5 will be asked whether they want the city to adopt Ordinance No. 337, a measure that would extend the city’s ability to levy a 3-percent Local Option Tax through 2010.

In essence, voter support of the ordinance would allow the city to collect a 3-percent tax on the sales price of hotel and motel room charges, short-term vacation rental charges, by-the-drink liquor sales and most retail sales transactions except for those involving building materials and ski lift tickets.

Sun Valley City Council members in August unanimously endorsed the ordinance, but the measure must receive approval from a majority of local voters to be enacted.

If the ordinance is endorsed by voters, it will replace the city’s existing LOT ordinance. The existing ordinance was approved by voters in 1998 for a five-year term that is set to expire at the end of 2003.

City officials decided to bring the eight-year extension before voters a full year before the existing ordinance expires because state law requires a 12-month intermission between votes if the electorate turns down the ordinance.

Supporters of conducting the early vote have maintained that LOT revenues are too critical to the city budget to risk losing them for any period of time. Thus, the city determined it was prudent to ask voters to approve the extension a year in advance to help ensure LOTs could be collected beyond the expiration of the current term.

In effect, the new eight-year LOT term would supersede the final year of the five-year term allowed under the existing ordinance.

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

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.

Ordinance No. 337 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 approximately 40 percent of its General Fund budget revenue from the collection of LOTs.

In the 2000-2001 fiscal year, the city brought in just over $1.3 million from the taxes. LOT revenues were down approximately 10 percent in the 2001-2002 fiscal year, and are expected to be down the same amount in the 2002-2003 fiscal year.

The city’s entire budget for the 2002-2003 fiscal year is approximately $5.2 million, a significant part of which will go to providing services for the many tourists who visit the city.

A vote in favor of Ordinance No. 337 will in effect extend the city’s existing LOT taxes through 2010, with revenues slated to go toward a specific set of city expenses.

A vote against the ordinance would be a vote against the extension of the LOTs, likely prompting the city to bring the matter back before voters in the November 2003 election. Any eventual interruption or stoppage in the collection of LOTS would result in a significant loss of city revenue.

 

The Idaho Mountain Express is distributed free to residents and guests throughout the Sun Valley, Idaho resort area community. Subscribers to the Idaho Mountain Express will read these stories and others in this week's issue.