Lift Local Idaho: The growing movement for a local option tax in Idaho

IDAHO FALLS — A group striving to help community leaders meet community needs, Lift Local Idaho is providing a solution to help cities throughout Idaho deal with increasing “growth, tourism and commerce,” and the accompanying strains on local infrastructure.

Lift Local Idaho Project Manager Kate Simonds presented to members of the Greater Idaho Falls Chamber, political officials and business leaders Tuesday at the Westbank Convention Center. The nonprofit, nonpartisan organization is working to build a statewide coalition of supporters for a local option tax in Idaho.

“It’s held locally, and it’s also extremely transparent. … People like seeing their tax dollars spent in their own backyard. So it’s a transparent and effective form of revenue generation,” Simonds said.

To date, 22 cities in Idaho have implemented a local option sales tax. However, by state law, this opportunity is limited to communities with fewer than 10,000 residents and are primarily resort towns with tourism-based economies, she said.

The list includes Driggs, Lava Hot Springs, Mackay, Salmon, Swan Valley and Victor.

Meanwhile, Idaho cities across the board face rising costs for essential infrastructure upgrades.

“A report from the Society of Civil Engineers gave — across the state — infrastructure in Idaho a C-minus, which is not great,” Simonds said.

To address these upgrades, three-quarters of Idaho cities face a combined cost of $4.78 billion for 488 “wastewater projects, roads and bridges, water projects, highways, airports, waterways, broadband, natural disasters, public transportation, cybersecurity, energy, freight and site cleanup projects,” according to a 2023 Idaho Cities Project Data survey from the Association of Idaho Cities, Clearwater Financial and Live Local Idaho.

The survey only included responses from “149 of Idaho’s 199 cities representing 79% of Idaho’s population and 90% of its businesses,” according to the Live Local Idaho website, and does not include projects funded at the federal, state or county level.

Gov. Brad Little’s Idaho First initiative, passed by the Legislature during its 2023-2024 session, provided $150 million for water infrastructure, $117 million in continuing property tax relief, $200 million for roads and bridges and $92 million for water projects in rural regions, Simonds said.

Idaho’s systems are aging at a time of record growth throughout the state. Idaho’s population increased by 100,000 individuals between 2020 and 2022, states the U.S. Census Bureau. Most counties have a growth rate higher than 1.6% annually.

This means cities need tools to address the backlog and deferred maintenance they’re facing for necessary, major capital projects not covered by the state.

Currently, cities can pay for infrastructure projects through property taxes or raising fees for services such as water or trash collection, Simonds said.

But Lift Local Idaho is working to expand the ability for citizens in municipalities to vote on whether to enact a local sales tax for their own needs.

According to the Idaho State Tax Commission, a local option tax “includes everything covered by the state sales tax,” though some communities restrict it to “lodging, alcohol by the drink and restaurant food.”

The option is available in five of the six states bordering Idaho — Montana, Wyoming, Utah, Washington and Nevada — the nonprofit’s fact sheet states.

A local option tax funds 65% of the Utah Transit Authority in Utah.

In the Gem State, the local option tax shifts Lava Hot Springs’ public safety and maintenance costs away from property taxes for its 450 residents (the city has 50,000 visitors per month). It is also the “most significant revenue stream” in Stanley, which hosts approximately 700,000 visitors a year with a permanent population of 116, according to Lift Local Idaho’s website.

In Driggs, visitors provide “$6 for every dollar local residents pay toward city infrastructure, roads, pipes and sewer systems.”

Just about two years since its founding, the coalition consists of more than 350 members and organizations from across Idaho.

Simonds believes that model could be expanded to help communities around the state fund significant projects they’ve already invested in.

“We partner with chambers, advocacy groups, economic development folks, big and small businesses — really anybody who will be a stakeholder in protecting the quality of life that we enjoy as Idahoans,” she said.

What the tax could mean

Idaho Falls is the state’s fourth largest city with a population of 64,818 people in 2022. The city contributes about $108 million annually to sales tax. With a half-a-cent local option tax, the city could raise $9,004,803. Funding a 1% local option sales tax would bring in $19.6 million each year.

Pocatello had a 2022 population of 56,320 and produces approximately $58 million in sales tax revenue. A half-a-penny sales tax would generate about $4.9 million, while a penny tax would accumulate to $9.7 million.

University towns such as Rexburg, Pocatello, Boise and Moscow can also benefit from a local option sales tax because it is paid by the more transient student population in addition to the property owners in a city. Rexburg’s population is 39,409 with $38 million in projected sales tax revenues. A half-penny tax would raise $3.2 million, while a penny sales tax would generate $6.45 million.

Ammon’s population of 17,694 generates $23 million in sales tax revenue with projected local option sales tax revenues of $1.9 million for a half-penny and $3.8 million for a penny tax.

Ammon Mayor and Legislative District 32 candidate Sean Coletti spoke about the impact those funds could have on the city he represents.

“The 1% number that you put on the screen would completely dwarf our property tax 100%. We raise about $2.5 million in property taxes a year, and you’re showing 1% would raise $3.8 million,” Coletti said.

This May, Ammon voters will be asked to approve a street levy for $1.5 million “because we cannot afford to keep up with the street maintenance that we need in the city,” he said. “We could cut our property tax in half and cover the amount of that street levy with the 1% local option tax and not put them on the backs of our citizens.”

Tax exemptions could be made for groceries and large ticket items such as farm equipment, machinery and trucks, Simonds said.

The Greater Idaho Falls Chamber has not taken an official position on a local option sales taxes.

“As far as what we’re doing as a chamber, we’re just going to keep an eye on the conversation as it’s progressing,” Idaho Falls Chamber CEO Paul Baker said. “When there’s an item of legislation, we’ll talk about it in our Advocacy Committee.”