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Resort Local Option Tax for Grangeville?

Council discusses funding option

GRANGEVILLE – Could a resort local option tax be a revenue generating option for the City of Grangeville? Councilor Shelley Dumas introduced this topic to the council at its meeting last week with the intent to start discussion on whether to pursue a potential new funding stream to address both lean and strained city budgets for public projects and infrastructure.

“I think this is something that could work for us,” Dumas said.

New sales tax revenue would be drawn from all those traveling through Grangeville, which according to count information provided by Dumas draws upon daily traffic counts of 5,843 along State Highway 13/Main Street, and 2,848 along U.S. Highway 95 from Main Street to milepost 239 (both figures based on 2012 weighted averages). Tax funds then generated would be controlled and distributed by the city to benefit the projects or services it chooses.

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The local option tax (LOT) is available to cities designated as resorts: not exceeding 10,000 in population and deriving a major portion of its economic well-being from businesses catering to recreational needs and meeting the needs of people traveling to that city for an extended period of time. Resort cities have a choice in what’s taxed with many choosing to limit the local sales tax to lodging, alcohol by the drink, and restaurant food. Tax adoption requires a 60 percent voter approval.

Dumas’ initial research found 13 cities in Idaho have a LOT and she contacted six that were close to Grangeville in size and circumstances. Two for example:

• For Salmon, the city generated — on a 4 percent hotel/motel occupancy tax — revenues of $64,145 (FY2010-11), $82,917 (FY2011-12) and $88,019 (FY2012-13). These funds are being designated for pool maintenance and modernization, and promotion of visitor information, special events, marketing and economic growth.

• Riggins set a 2 percent tax on lodging, liquor-by-the-drink and prepared meals; in 2013, more than $59,000 was generated, with funds going toward city infrastructure/capital projects and equipment, and the excess transferred to a property tax relief fund.

“Certainly, Grangeville qualifies as much as Salmon as a resort community,” Dumas said, and, as a point of discussion, a half-percent LOT would be equitable.

“I am on a fixed income,” she continued, “but I’d be happy to pay extra if it would go to improvements in the city.”

Just talking taxes, Councilor Brian Lorentz said a lodging tax – which is much more common – could be looked into and would have a better chance of public support in Grangeville, especially when talking about a 60-percent majority for LOT passage.

“But a half-percent sales tax? I think that’s a tougher sell,” he said.

“I definitely am against it. I don’t think it’s fair,” said Mayor Bruce Walker, who – while acknowledging there would be some financial benefit from an LOT — considered it a burden on Main Street commerce. Walker owns a Main Street business, Walker’s Jewelry.

“Just the collection along would be a burden,” he said, as well as a burden for those paying the tax. Both Walker and also Councilor Michael Peterson brought up examples of large ticket items, such as farm machinery, vehicles and ATVs, that under a LOT would cost more and drive business elsewhere.

“People drive to Lewiston to save $300 on a car,” Walker said. Regarding local commerce losing business as a result of a LOT, “It’s going to happen.”

For now the direction was for Dumas to gather further numbers on possible revenues a LOT could generate in Grangeville.

“Let’s keep the discussion going,” Peterson said.


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