Over the past 13 years, Hailey has enjoyed roughly $6 million in revenue from local-option taxes imposed on car rentals, lodging, alcoholic drinks and restaurant meals. But a potential roadblock to the system lies ahead: Under Idaho code, only resort cities with a population under 10,000 can impose or adjust local-option taxes, with voter approval.
The city’s current tax will expire in 2030.
In 2018, Hailey’s population was estimated at 8,500. The approaching 2020 census, however, may reveal a figure over 10,000—thus restricting the city’s ability to impose the local-option tax.
Right now, Hailey imposes a 4 percent local-option tax on car rentals and lodging, a 2 percent tax on alcohol by the drink and a 1 percent tax on restaurant food, with 1 percent of the “car rentals and lodging” category allocated to Friedman Memorial Airport operations.
The main priority for the Hailey City Council on Monday was to review an updated ordinance crafted by city staff that would extend LOT collection to June 2050.
“What this ordinance does is it extends the duration [of LOT collection] to 2050 and states what would happen if the 1 Percent for Air program were to dissolve,” City Administrator Heather Dawson said. “It’s very simple in its approach.”
Per the draft ordinance, in the event that Hailey would withdraw as a voting member of the Sun Valley Air Service Board under the joint powers agreement—which also involves Ketchum, Sun Valley and Blaine County—the 4 percent local-option tax imposed on car rentals and lodging would be fully directed toward city-improvement efforts like road repairs, Dawson said.
Councilwoman Kaz Thea advocated for both the extension of LOT collection to 2050 and raising local-option tax percentages. (Increasing each LOT category by just 1 percent could bring the city an additional $313,500, a recent city staff report noted.)
“I’m personally all for this. I think 30 years is a reasonable time, and the [LOT] has served us well—we should maintain it,” Thea said. “It’s provided such great money for our city. I’m always looking for how we can spread the wealth, and this is not burdensome on any population.”
Councilman Juan Martinez agreed.
“Local-option tax is a reasonable way to tax tourists,” he said. “I think what we have in place now is very fair, and extending it only gives us a better chance to plan for the future.”
In the meantime, city staff will revise ordinance language for clarity, as directed by the council on Monday.
If the ordinance is passed, Hailey residents will vote in May on whether LOT collection is beneficial and should be extended to 2050.