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City looks to local option tax to address shortfall

January 18, 2023

After discussing a range of options to offset a 2017 Idaho Supreme Court decision that declared a funding source the City of Bonners Ferry has relied on since the 1950s unlawful, the city council on Tuesday evening opted to proceed with putting a local option tax before city voters in May. Bonners Ferry, like several other Idaho cities offering utilities for its residents, billed to realize a small profit so as to help pay for other city services.

Called "enterprise" funds, utilities are funded by rates and fees and don't require tax dollars to operate, as do "general fund" services such as police, fire protection, recreational facilities, planning and zoning and more.

In Bonners Ferry, five percent of its annual enterprise revenue, between $350,000 and $450,000 collected from utilities including electricity, water, sewer and garbage pick up, was transferred to the general fund each year. The city learned of the Supreme Court ruling in August, after the FY2023 budget had been approved, immediately eliminating the year's general fund transfer.

Among the options considered and discussed in public workshops were eliminating city services. Cutting services such as Mirror Lake Golf Course, the city pool and planning and zoning wouldn't near make up the shortfall, and eliminating the major services; police, fire, the street department, were considered too disruptive.

A property tax increase was considered, but a 63-percent increase would have a deleterious impact affecting both residents and businesses.

While distasteful, the majority of those taking part in the discussions felt a one-percent local option tax on all sales at city businesses subject to sales tax was preferable, generating an estimated $500,000 per year spread out among all who do business in Bonners Ferry.

In addition, state law requires a strict definition, to include the tax rate, the specific purpose and the duration ... and can't be amended without voter approval.

A series of workshops will be scheduled to hammer out the ballot language so that it can be submitted to the county clerk by the March 17 deadline for the May 16 election. To pass, it must receive at least 60-percent "yes" votes.

Questions or Comments? Send us an email!

Mike Weland, Publisher

6931 Main St.
P.O. Box 1625
Bonners Ferry, ID 83805
(208) 295-1016

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