Mackay voters in 2019 will decide whether to implement a 3 percent resort tax on certain items, following recent action by the City Council.
If approved, the money would be earmarked for spending on fire, police, streets, airport and parks needs.
Mackay Mayor Wayne Olsen said he and city council members have taken the first step in the process, declaring Mackay is a resort city. Idaho cities with fewer than 10,000 residents and economies that rely mostly on tourism can declare themselves resort cities and implement a resort tax of up to 6 percent. At least 60 percent of the registered voters must say yes to the tax in a public vote before it’s implemented. Olsen is hopeful the question can be on the May ballot for Mackay voters.
City council members determine what to tax and what percent the tax should be, Olsen said. In Mackay, they settled on 3 percent. The tax would be applied to lodging fees, including motel rooms and RV spaces; liquor by the drink; food served at restaurants; and the rental of recreation equipment including ATVs, jet skis, golf carts and golf clubs. If approved, the tax would be in place for 10 years with the option to renew it after that.
“That’s all we’re proposing,” Olsen said. “We believe it will have a minimal effect on local residents.” Groceries are not on the list, nor is a 6-pack of beer or a bottle of wine or liquor purchased to take home, he clarified. In the food category, only prepared food, ready to be eaten in a restaurant or carried out from a restaurant, would be taxed, Olsen said.
The items on the list are commonly purchased by visitors, he said, and they’d be the people paying the taxes.
“Visitors impact the city services but don’t pay anything toward city services” such as police and fire protection or maintenance of streets and parks, Olsen said. A 3 percent resort tax is pretty low, Olsen said and wouldn’t affect visitors too much.
“It’s 30 cents on a $10 burger,” he said.
Olsen cited a few funding concerns that he and the council have that a resort tax could help alleviate. For two years the city hasn’t had money for street repairs or resurfacing work. The Rose Avenue project occurred because the city obtained a matching grant from the Idaho Transportation Department, he said.
The city pays the Custer County Sheriff’s Office about $24,000 a year for police protection and pays about $15,000 a year to the South Custer Fire District for fire protection. Visitors rely on law enforcement, fire and search and rescue services, along with the city’s infrastructure, including streets and parks, he said.
If the tax is approved, council members would budget specific dollar amounts for specific items in the city budget where the additional tax money would go, Olsen said. If more money is collected than is budgeted, the council can’t spend that excess on anything else, he said. It must be placed in a fund and used for property tax relief in Mackay. City leaders haven’t run any analyses to determine how much money a resort tax might generate.
The mayor and council plan multiple public meetings and hearings on the issue in the coming months. Olsen said people can call him or any council member to ask questions or stop by City Hall and speak to the city employees to learn more. Olsen also reminded people that Mackay City Council meetings are open to the public, including people who live outside the city limits. The council meets at 6 p.m. the second Tuesday of each month in City Hall.
Thirteen Idaho cities have implemented resort taxes: Salmon, Stanley, Sun Valley, Ketchum, Hailey, Lava Hot Springs, McCall, Riggins, Ponderay, Sandpoint, Donnelly, Driggs and Victor. Most of those communities tax lodging, prepared food and liquor by the drink. Rates range from 0.5 of a percent to 4 percent in those cities.