Local-option taxes lead to fiscal fortune in the valley; Ketchum construction

LOT taxes on building materials and condo rentals drove receipts to record levels during fiscal 2021.

Fiscal 2021 was a banner one for Ketchum, Hailey and Sun Valley in terms of local-option tax revenue, a special type of collection made available to resort cities to offset costs of maintenance associated with large numbers of visitors.

LOT revenue reached an all-time high in all three local cities that collect the tax, surpassing $3 million in Ketchum, $800,000 in Hailey and $2 million in Sun Valley.

“You know, the one thing it feels like is, ‘Wow, we’re back,’” Hailey Treasurer Becky Stokes said. “In fiscal year 2021, we made $385,179 just for the lodging and rental cars, not short-term rentals, whereas in 2020 we made $228,502 and in 2019 we made $294,646. So things have surged.”

Part of that growth is due to the Marriott hotel that opened in Hailey midway through the year, but there is no doubt that tourism to the area is up from last year. Scott Fortner, executive director of Visit Sun Valley, said that despite the fact that night rates have increased up to 30% from last year, occupancy is higher than it has been the past two years.

Total LOT collection increased 31% from fiscal 2020 to 2021 in Ketchum and 54% in Hailey. The total for fiscal 2021 is not yet available for Sun Valley, but receipts increased 30% from October 2020 to October 2021, a sign that things are trending up.

Ketchum collects a 3% LOT on room sales and liquor-by-the-drink sales and a 2% LOT on retail sales, excluding groceries and motor vehicles. Hailey takes 3% of total lodging, rental-car and short-term rental sales; 2% of total alcoholic beverage sales; and 1% of total restaurant food and air travel sales. Sun Valley collects a 4% LOT on rentals under 30 days, recreation fees, food sales, beverage sales, by-the-drink liquor sales, event admission and leases of personal property; 3% on general retail sales; and 2% on building materials and lift ticket sales.

In addition, all three cities send a percentage of LOT allotment to the Sun Valley Air Service Board, which was created in 2012 in conjunction with the passage of a 1% increase in LOTs. Ketchum and Sun Valley send 1% of total LOT receipts to the board, while Hailey sends 1% of short-term rentals and car rentals. The Air Service Board, which promotes air travel to Friedman Memorial Airport, netted $847,745 in fiscal 2021.

LOT revenue trended slightly downward from fall and winter 2019 to fall and winter 2020 in Sun Valley, while it trended slightly upward over the same period in Ketchum and Hailey. However, Sun Valley and Ketchum have seen a massive uptick in collection from last fall and winter to this one, largely due to increased tourist traffic as people have grown more comfortable with travel in the later stages of the pandemic. Growth in Hailey was more moderate, though still present.

Building materials and condo rentals saw a larger percentage increase of revenue generated than any other category of sale during the pandemic, reflecting the trend of vacation-home construction in the Wood River Valley over the past year and a half.

“The things that we have going on pertain to Ketchum specifically, but they’re ringing true across many of the mountain communities in the West,” Fortner said. “People have flexible work hours, their kids have flexible school, so they are typically staying longer. And that rings true for winter and summer.”

If tourism continues to boom into the spring and summer, Ketchum, Sun Valley and Hailey will only see more economic fortune. None of the three cities knows exactly what the extra funds will be put toward, but Sun Valley Assistant Treasurer Kelly Rockwood has some ideas.

“We have not made any decisions at this time,” she said, “[but] we will be looking at continued funding of our strategic plan with emphasis on housing, Festival Meadows improvements and Sun Valley Road intersection improvements.” 

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