After strong run, Ketchum sales tax receipts dip slightly

Ketchum’s fiscal years run from October through September. The city’s calculations for the fiscal year include the amounts it collects in those months, not the months they are collected by businesses. Businesses submit the funds to the city the month after they are collected from sales.

With LOT collections for three months still to be tallied this fiscal year, the city could outpace the record high of the 2020-21 fiscal year, when the city brought in just over $3.3 million. The city was “conservative” in budgeting LOT revenue for the current fiscal year, city spokeswoman Lisa Enourato said, projecting $2.4 million in receipts.

The city collects a 3% LOT on room sales (including both hotel rooms and short-term rentals), a 3% LOT on by-the-drink liquor sales, and a 2% LOT on general retail sales and building materials (but excluding groceries). The city is authorized by the state to collect the taxes through a law that allows small resort cities to tax specific sales categories to offset in their budgets the financial impacts of hosting large numbers of visitors. The funds are used to support a variety of city services and projects, with the majority in Ketchum budgeted for emergency services.

Those figures include a 1% LOT in the same sales sectors collected through a voter-approved initiative to support commercial air service in the Wood River Valley. Those tax funds are set aside and transferred monthly to the Sun Valley Air Service Board, which allocates the funding to subsidize and market commercial flights into Friedman Memorial Airport in Hailey.

The city keeps separate calculations for the so-called “1% for Air” tax. It has collected approximately $2.25 million in the first nine months of the current fiscal year through the air-service tax, up about $296,000—roughly 10%—over the first nine months of the previous fiscal year.

Voters must approve and renew the local-option taxes. The current approval of the city’s general LOT lasts until the end of 2027. The “1% for Air” tax is approved until the end of 2023.

Potential tourism drop could impact LOT revenues

As the city awaits to see its LOT income from the final three months of the fiscal year, a recent report on hotel and vacation-rental occupancy indicates that tourism—which accounts for a large percentage of LOT receipts—might be slowing slightly.

The report from Vermont-based Inntopia—a tourism-services and analytics firm—and the Visit Sun Valley tourism organization indicates that while occupancy of lodging units has been up, it is predicted to dip in the coming months.

Based on bookings as of June 30, paid occupancy in the Ketchum-Sun Valley area was up 14.4% in June, the report states, and the average daily rate was up 2%, to $307. For the broader Western region in June, resort-area occupancy was down 2.9%, the report states.

Occupancy in the Sun Valley area was up 25.6% in the six months of January through June, the report states, but advance bookings were down every month from July through November. Reservations on the books on June 30 ranged from being down 12.6% in August to 33.3% in November, compared to the same time last year. However, bookings for December were up 25.2%, as of June 30.

The drop in advance bookings in the Sun Valley area mirrors a similar trend at other Western mountain resorts, the data in the report indicates.

“Bookings have certainly slowed down for the remaining of summer and fall,” Visit Sun Valley Operations Manager Jessica Maynard said in a July 14 email, when the report was released. “Overall, the Fourth of July weekend was good for lodging properties, but occupancy was down [compared] to 2021. Labor Day weekend seems to be pacing on par to last year.”

Some of the reasons bookings could drop in coming months could be high inflation, high gasoline prices and lower consumer confidence, Maynard noted.

The next occupancy report—with data through July 31—is expected to be released in about two weeks.