Ponderay abandons sales tax idea

PONDERAY — Despite its financial needs, the Ponderay City Council recently voted to abandon a controversial plan to increase the city’s sales tax.

When the council put forward a plan to raise its sales tax by a half cent last February, the city’s business community heartily objected, claiming the added fee would drive away customers when businesses could least afford it.

After hearing their pleas, the council agreed to table the matter for six months to allow city and business leaders to find alternative means of financing much-needed road improvements, stormwater drainage fixes, sidewalks and emergency services.

The council estimated the increase, which would have brought the sales tax up to 6.5 percent, could have generated anywhere from $500,000 to $1 million in revenue. Mayor Carol Kunzeman said the money is needed to make up for what she feels is an unfair redistribution of state sales tax.

Idaho’s sales tax distribution currently brings in about $75,000 to the city each year,

which is far less than what’s needed to catch up on infrastructure improvements. Had the council stuck with its original plan, the issue would have been put on November’s ballot for a public vote, but Kunzeman said the time was not right.

“We were unanimous,” Kunzeman said. “We felt that the economic time right now wasn’t right. We don’t look at (the tax increase) as a mistake, we look at it as one of the few ways the city can keep its money where it can be best used. We felt that part was good, but economically, right now, it’s just not good timing.”

The decision will likely pacify local business owners, but it leaves the council wondering where it will get the money to keep its infrastructure intact. Ponderay officials put together a number of public forums with the goal of finding new funding sources, but, so far, nothing substantial has materialized.

Kunzeman has lobbied Gov. C.L. “Butch” Otter and a number of state legislators to create a more equitable tax distribution system, but she said the best way to fix the problem is for all of Idaho’s small towns to stand united against the system.

“I’m not here to reinvent the wheel, but it seems to me that we’re not the only small city with this issue,” she said. “I think all the cities have the same issue, we just happen to be unique in that so much money goes to Boise and we get so little back.”