Local-Option Tax Seen As Best Resort Kootenai Communities Ask Legislature For Authority To Tax The Tourist

Coeur d’Alene’s parks, roads and police department have to deal with hordes of tourists all through the summer season.

But the only way the city can pay for those services is with property taxes - which hits local property owners, not tourists.

“Somebody has to pay for it,” said Coeur d’Alene Mayor Al Hassell. “So it’s a cost shift to the local taxpayers.”

That’s why Coeur d’Alene, Post Falls and Kootenai County are pushing the Legislature for authority to ask local voters if they want to try a local sales tax. It would relieve property taxes and shift some of the burden onto the tourists.

The Legislature should let communities address their own problems in the way that works best for them, Hassell said.

The House Revenue and Taxation Committee killed one local-option measure Thursday that would have allowed cities over 10,000 population to impose “resort city” taxes.

Smaller cities have that option now. But local officials in North Idaho have their own bill in the works, to be introduced next week.

“It ain’t over yet, not by a long shot,” said lobbyist Mike Kane, who’s representing Coeur d’Alene, Post Falls and Kootenai County.

Rep. Hilde Kellogg, R-Post Falls, the only North Idaho member of the powerful Revenue and Taxation Committee, voted against killing the resort cities bill. But the committee overwhelmingly went along with a subcommittee recommendation to kill the bill without even giving it a hearing.

Kellogg said the bill was so broad that it could have been applied anywhere, and that made it lose support.

North Idaho’s problems, like coping with the costs of growth and tourism, aren’t shared by the vast, arid stretches of rural southern Idaho that make up the districts of Kellogg’s fellow committee members, half of whom are farmers.

“What we feel we need isn’t necessarily palatable to the rest of the state. So it seems like we have to continue to write special legislation, to try to take care of our needs and not cause anyone else any problems,” she said.

“Certainly, we need property tax relief.”

The local-option issue long has been a sore spot in relations between Idaho’s cities and counties and their state government. Despite repeated attempts, year after year, cities and counties have been unable to convince the Legislature to loosen its hold on the power to tax.

Rep. Jim Kempton, R-Albion, who headed the subcommittee, said his group didn’t want to set a precedent.

“The state wants to retain control of sales tax,” he said. “If you start allowing local-option taxes, when the state wants to raise the sales tax you’ll have people from the cities pressuring the Legislature not to, because they’re already paying locally.”

That’s already happened, he said. Ada County was allowed to impose a local vehicle registration fee. Then, when the state wanted to impose its own hike in registration fees, there was pressure to make it a smaller hike because of the impact on Ada County residents.

Kootenai County Administrator Tom Taggart observed, “The states want to have the feds out of their business, and they seem to have a hard time with the idea that we want them out of our business.”

All the local-option tax measures proposed this year, including the new one in the works, call for a vote of the people before there can be a local tax.

“It’s about trusting local voters to make intelligent decisions on their own,” Taggart said.

The bill that’s in the works is tailor-made for Coeur d’Alene, Post Falls and Kootenai County in that it would allow “resort counties” the option of local taxes, with voter approval.

Kane, the lobbyist, said that way, there wouldn’t be a tax in one town and none in the next. The tax would be uniform across the county.

The tax, which Hassell said probably would be less than 1 percent, would apply to everything now subject to state sales tax. It could be imposed only for specific projects, and for set lengths of time.

“Obviously, it wouldn’t work in every county,” Kane said. He noted that Payette County in southern Idaho sits just across the border from Ontario, Ore., which has no sales tax. Clearly, a higher sales tax wouldn’t go over there, he said.

But Kootenai County is just down the road from Spokane, where there’s an 8.1 percent sales tax.

“What’s right for one area of the state is absolutely wrong for another area,” Hassell said. “I think each area should have the ability to choose.”

If the local tax were imposed in Kootenai County, it wouldn’t all be paid by tourists. Residents would pay some of it, too. But their lower property taxes would easily make up the difference, Hassell said.

Scott McDonald, director of the Association of Idaho Cities, said he thinks this year might be the year for local option taxes. “We’re going to get this,” he said.

Taggart said in Kootenai County, a local sales tax could raise a lot of money because of the tourists who shop at the Factory Outlet Mall and elsewhere. As much as 75 percent or 80 percent of the money could be dedicated to reducing property tax, he said, if voters choose.

Said Taggart, “That should be up to them, not to some legislators from some other part of the state.”

, DataTimes MEMO: Cut in the Spokane edition.