From Sandpoint to Driggs, over a dozen resort cities across Idaho currently enjoy the benefits of local-option taxes imposed on car rentals, lodging, alcoholic beverages and restaurant meals.
Hailey, like its north-valley neighbors, is on that list, and today levies 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.
Since Hailey’s inception of the tax in 2006, the city has collected about $6 million in additional revenue. Last year alone, it brought in around $575,000.
Under Idaho code, resort cities that vote to impose or adjust local-option taxes on tourist-based revenue streams can do so only if their population remains under 10,000. Based on a recent population estimate of 8,500, Hailey meets that criterion—but with the upcoming U.S. Census on track to release new data by early next year, city officials can’t be sure it will stay that way.
“We need to extend the life of our local-option tax payout before the census [data] is out,” Hailey Mayor Martha Burke said during a City Council meeting Monday. “In the case that we hit above 10,000 people we want to ensure that we continue to benefit from the tax.”
As a protective measure, the city adopted an ordinance amendment Monday evening to extend Hailey’s local-option tax collection from 2030 to June 2050.
The amendment also stipulates what would happen if Hailey were to withdraw as a voting member of the Sun Valley Air Service Board, and if the board’s 1 Percent for Air program—which receives one-quarter of the revenue from Hailey’s 4 percent “car rentals and lodging” category—were to dissolve. Under the ordinance, the 4 percent tax would be fully directed toward city-improvement efforts in the case of dissolution.
“The [ordinance] is very simple in its approach,” City Administrator Heather Dawson said.
To become law, Hailey’s freshly drafted tax amendment will need to advance through three City Council readings and gain approval from at least 60 percent of the voting public. Thus, after adopting the ordinance on Monday, the council passed a resolution scheduling a special election for May 19.
“Assuming the election is successful, the ordinance would go into effect on July 1. That’s the goal,” Burke said.
The main idea behind local-option or “tourist” taxes is to reimburse jurisdictions for costs caused by nonresidents, such as emergency services and road repairs. All four council members agreed on Monday that Hailey’s local-option tax has served the city well in its 13-plus years of operation.
Hailey resident Peter Lobb, however, contended during a public-comment session that the tax is unfair.
“We’re trying to recruit revenue on the damages that we believe tourists cause to us. But there’s no evidence or data for those costs,” Lobb said. “We want these people here—we desperately want them to help our businesses—but when they have to pay local-option taxes, it's a burden. It’s really unfair.”
Councilwoman Kaz Thea pointed out that locals also shoulder the tax.
“Whenever I go out to eat and drink, I’m happy to pay it,” she said. “Anything that goes back into our fine city—it’s worth it.”
In the meantime, city staff will edit ballot language for clarity, as suggested by Councilman Sam Linnet on Monday.