WHAT WAS AND WASN’T TAXED
WHAT WAS TAXED
The proposed ordinance will impose the following:
A 3% room occupancy charge for short-term rental (30 days or less) charges for hotel-motel rooms, condominium units, tourist homes, vacation rentals or other sleeping accommodations.
A 2% liquor by-the-drink sales tax on all sales at retail of liquor by-the-drink including liquor, beer, wine, and all other alcoholic beverages for consumption on the premises, or at any event or activity in the City of Crouch.
A 2% tax on all sales of prepared foods, meals, and drinks subject to taxation under Idaho Code.
What businesses are affected:
3% Occupancy Tax
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- Wander Inn Motel & Cabins
- Tom’s Creation Airbnb
- Uncle Billy Bob’s (Two Units)
- Tim Fritzley’s VRBO above the Hinge
- Starlight RV Park
- Middlefork Camp by the Merc
- Miller’s RV Park
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2% Liquor-By-The-Drink
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- Two Rivers Restaurant
- The Dirty Shame
- Fusion
- The Hinge
- Wild Bill’s
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2% Prepared Foods
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- Two Rivers Restaurant
- The Dirty Shame
- Fusion
- Wild Bill’s
- Deli in the Market
- The Mud Room
- The Hinge
- Starlight Theater
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The Local Option Tax Committee projected the $70,000.00 would be collected under this ordinance in the first year.
The numbers do not add up and have been overstated. Using a very generous computation on the lodging occupancy that included full bookings for all lodging locations for the 100 days the committee claims they are trying to capture.
Full lodging for the 100 days only generated $5315.70 in option tax revenue. This left a balance of $64,684.30 for the food and drink portion of the tax to fulfil.
In order to reach that number, the restaurants needed to generate $3.2 million in gross revenue between the 8 of them. Using the average to guage the feasibility of that, every restaurant had to generate $404, 276.88 in gross sales each. This is unrealistic.
The occupancy factor was doubled to full occupancy for 200 days. The amount of option tax generated by the lodging facilities was then $10,631.40. This left a balance of $59,368.60 for the food and drink businesses to make up. A total gross sales of $2,968,420.00 is required. Again using the average, this requires each food and drink location to generate $371,053.75 in gross sales. This is also unrealistic.
The numbers just are not there when only lodging, food and drink are considered.
The list of wants with the proposed solution falls short while leaving to much potential revenue on the table; just to get something passed.
This is the wrong formula to achieve the goal.
Why was the committee fixed on a tax that is generated from only a few businesses and is one that overlooks those businesses that have higher gross sales?
Below is the spreadsheet.
Here is the estimated revenue as projected by the committee. Notice that the threat of implementing a property tax is once again used to promote a YES vote.
$25,000.00 to $30,000.00 is a more realistic estimate for 2022
WHAT WASN’T TAXED
Rental of off-road vehicles – High tourist use
The City of Mackay and the City of Sun Valley included a 3% local option tax for the use of recreational equipment.
If there are any businesses frequented by visitors and having an impact on the city, this is clearly one of them. The desire to capture monies from those who are visiting and visibly impacting the city did not seem to apply here, as evident with the omission from the local option tax of the recreational equipment used by visitors traveling up and down Middlefork Rd.
Construction Material – The attorney recommended that this be part of the Local Option Tax as the growth should pay for itself. Large-scale developments like Pine Grove Subdivision and the Edge Resort will have an impact on the city.
General Sales Tax – The reason given why this was not included was because the committee did not want to have a negative impact on the low-income families shopping at the grocery store. With a 1% sales tax, a $100.00 purchase would have cost $1.00.
Out of the current 17 cities with a Local Option Tax, 11 cities (64.71%) voted to approve a General Sales Tax.
What the committee did not discuss with the city council is that it was possible to exclude groceries from the ordinance and capture the sales of alcohol at the store as well as other sales occurring in town.
A research for Poverty Data was conducted for the cities with a Local Option Tax that included the General Sales Tax provision and compared them to the City of Crouch
Based on 2021 data provided by the World Population Review, the poverty levels ranged from 2.19% to 42%. The City of Crouch has a poverty level of 24.30%, Garden Valley had a poverty level of 12.01% and the State of Idaho has a poverty level of 13.12%.
The following table is limited to cities that have implemented a General Sales Tax.
The City of Crouch is the hub for the Garden Valley residents and the market is the business most impacted by visitors passing through town headed up to the forest. The stated intent of the committee was to capture the influx of the busiest 100 days, but left the business that potentially would have been the greatest source of option tax revenue out of the equation. By focusing on the Crouch today and not the Crouch tomorrow, this loss is even greater when you consider the completed projects of Pine Grove Subdivision and the Edge Resort.
The following table illustrates the type of Local Option Tax implemented by each city
At the city council meeting, members of the committee expressed a desire to get a Local Option Tax passed and not risk it failing. It was stated that the ordinance could be amended later to add additional taxes.
The limited number of businesses providing the revenue to meet the cities expectations seemed out of balance and unrealistic.
One city council member recognized the issue..
There is no guarantee that any of the existing businesses impacted by this ordinance will continue to exist. One is currently up for sale and it is possible that the usage may change to something other than a restaurant.
The public presentations made the proposed Local Option Tax out to be about crosswalks, sidewalks, water, sewer and saving the city from financial ruin. The funnel capturing the funds is too small to achieve the stated goals and the desire to get something passed with minimal opposition seemed exceedingly high.
The Local Option Tax is not going to fund the projects as a stand-alone funding source, but place the city on a path of long term financial commitment that will eventually force the implementation of a property tax.
Something isn’t right.
See: IS A LIQUOR LICENSE THE REASON BEHIND THE LOCAL OPTION TAX
Additional Pages:
WHAT WAS AND WASN’T TAXED
IS A LIQUOR LICENSE THE REASON BEHIND THE OPTION TAX
THE TRUTH ABOUT THE LIQUOR SALES REVENUE SHARING
RESEARCH ON THE LOCAL OPTION TAX COMMITTEE REASONS THIS TAX IS NEEDED
YOUR VOTE COUNTS ONLY IF YOU CAST IT
DON’T LET APATHY GIVE THE ADVANTAGE
Regardless of your position on the Local Option Tax,
it is imperative that you cast your ballot.
Failure to cast a ballot will only make it easier for the other side to prevail.