Battle brewing over Ponderay's local option tax

PONDERAY — There is a fight brewing between businesses and the City Council in “The Little City with the Big Future.”

In one corner are the mayor and council members. The council voted unanimously in February to put a 0.5 percent sales tax increase and a 3 percent increase in lodging and liquor by the drink here in front of voters.

The council will meet at 6 p.m. Monday to decide when to hold the election.

In the other corner is a majority of the business community. The group, led by Sandpoint Furniture, new car dealers and the Bonner Mall, maintain they weren’t informed about the tax increase, are upset it will drive business away and are perplexed there are more questions than answers coming from the mayor.

“This is almost reprehensible,” said Sandpoint Furniture co-owner Mike Gunter. “This proposal will be the most polarizing, divisive thing in the history of Ponderay.”

Mayor Carol Kunzeman said the local option tax is the only way to quickly raise money to address a whole host of safety and infrastructure issues facing Ponderay. While she admits she could have communicated better with the businesses, she said the city held several informational workshops but nobody attended them.

“We are not trying to go around anyone,” she said. “I’m a new mayor and I will make mistakes (about communicating) but we have a very bright, forward-thinking council that has the city’s best interests at heart. This will be the hardest decision they will have.”

While most people believe Ponderay should be flush with sales tax money from Wal-Mart, Home Depot and the like, Ponderay only receives a small amount back from the state of Idaho.

“It’s a formula based on our 1,000 people population and not on sales receipts,” she said. The city receives about $70,000 a year from sales tax receipts from the state.

“It has taken us 10 years to save money for storm water drainage, catch basins and to rebuild Bonner Mall Way,” she said. “We can’t wait another 10 years to  save up for the kind of work that needs to be done here.”

One of the biggest issues that irks business leaders is the fact that Kunzeman doesn’t apparently know how much money will be raised through the tax, who will administer and collect the funds and what the priorities for projects is.

“There is also the psychological issue that shopping in Ponderay will be too expensive for people and they won’t come here,” said Sandpoint co-owner Dwight Sheffler. “It won’t be hard to figure out what will happen to Ponderay’s tax base when businesses start shutting down.”

Sheffler, who was once Sandpoint’s mayor, said that Ponderay has a reputation of being “business friendly” and has seen its business base grow at the expense of Sandpoint.

The Bonner Mall, Wal-Mart, Yoke’s and Home Depot make great anchor stores and are a regional shopping draw.

“This is a great place to shop,” Gunter said. “Ponderay is like one big mall. Why would we want to chase businesses and shoppers away?”

“If I am a new business, do I really want to move to Ponderay and instantly be more expensive than Sandpoint because of this tax?”

Kunzeman admits she doesn’t have all the answers. She is not sure how much money the taxes will raise but has a working figure she was not willing to share with a reporter. She told a local radio reporter that she figures the tax can raise between $500,000 to a $1 million a year.

She also isn’t sure how much it will cost to administer, collect and deal with the 300 or so Ponderay businesses that will be impacted by the tax.

She also doesn’t have a “set in stone” priority list of projects to be funded but streets and sidewalks and “all the important things that make a city a city,” she said.

“This will keep tax money here,” she said. “We will also create local jobs to do all of these projects.”

Kunzeman said most businesses and people she talks with are in favor of the proposal.

“This tax won’t affect a lot of businesses and is really a small amount of money,” she said. “This is such a tiny place with such a small staff. I feel I have to do what is right to improve Ponderay.”

With only 400 or so registered voters, Gunter is worried that misinformation might muddy an election enough to swing the vote in favor of the tax.

“The current impact of this tax will dwarf the danger in the future,” he said.

Gunter and Sheffler recommended Kunzeman and the council have a cooling off period and postpone Monday’s vote to bring the business community and the council together.

Kunzeman wasn’t sure she would allow testimony at Monday’s meeting but all sides expect a big crowd.

“Let’s start over,”  Gunter said. “There is nothing precipitous and nothing is going to collapse in Ponderay if we all step back and take a deep breath. We all want what is best for Ponderay it just seems like we are coming at it from different directions.”