Ponderay puts off decision on local option tax

PONDERAY — A plan to ask residents to approve a half-percent local option sales tax is in the cooler, but the City Council is turning up the heat on businesses to come up with a taxation alternative to raise money needed for infrastructure and services.

The council voted unanimously on Monday to postpone a decision on whether to move ahead with the local option tax for six months so merchants can help identify funding solutions.

“If you don’t step up to the plate to help us, we’re going to be stuck in the same place again,” Mayor Carol Kunzeman warned after a two-hour discussion on the proposed tax which drew a standing-room-only crowd.

City officials estimated the half-a-cent sales tax could generate anywhere from $500,000 to $1 million in revenue to pay for road improvements, stormwater drainage fixes, sidewalks and emergency services.

Idaho’s sales tax distribution is currently bringing in only about $75,000 to the city annually, which is far less than what’s needed to catch up on infrastructure improvements.

But Ponderay merchants turned out in force Monday to rip the tax proposal as poison to consumers, a threat to their businesses and an invitation for shoppers to take their money elsewhere in an increasingly desperate economy where pennies can influence a purchase decision.

Even though the tax grab is relatively small, business owners reminded the council that the perception that things will cost more in Ponderay would be huge.

 “That half a percent is a big mind game for some people,” said Pampered Pets owner Tim Tillberg, who added that businesses are already trying to cope with fuel surcharges product distributors are tacking on.

Although the city conducted workshops on the tax proposal, they were poorly attended. Some business owners said they were caught off guard and were unaware the workshops were even being held.

Councilman Steve Geiger proposed scaling back the duration of the tax to seven years and exempting vehicles and construction materials. But some voiced concern that picking and choosing what is taxed and what isn’t would put the city on a slippery slope lined with litigation.

“You’re getting yourself in a really hairy spot by saying, ‘We’re going to tax this and not that,’” said Sears Manager Dan Lister.

Councilwoman Sherry Blood opposed putting the measure on a ballot because there were still too many unanswered questions. Although the city has a very rough idea how much tax revenue could be generated, it is by no means clear until the money starts coming in.

Business owners challenged the city to seek funding by looking inward and seeing where bloated spending plans could be cut back.

Councilman Dale Daugharty was prepared to move ahead with the ballot measure and expressed skepticism that the cooling off period would spur more involvement from the businesses.

“They’ve had the opportunity,” said Daugharty.