A renewal of a city tax that funds street work in McCall would include a 1% lodging tax increase under a proposal supported last week by the McCall City Council.
On Friday council members and city staff spent nearly two hours reviewing proposed language for the tax renewal, which is expected to be on the ballot for McCall residents during the May 20 election.
The language agreed to by the council defines allowable uses for the tax collections and would raise a levy on short-term rental and motel stays from 3% to 4%.
The council must adopt an ordinance for the proposed tax by March 31 to include it on the ballot for the May election. Approval requires 60% or more of voters to be in favor.
The current streets tax is set to expire at the end of this year after raising more than $17 million for city street maintenance and improvement projects since it was passed by McCall voters in 2015.
The tax accounts for most of the Streets Department’s annual budget for improvement projects.
Local housing assistance
The ordinance language supported by the council would allow the tax money to be used for street improvements, sidewalks, and stormwater drainage infrastructure associated with local housing projects.
“You wouldn’t be able to use this money to pay for the appliances in the units, but you would be able to use it to pay for street infrastructure improvements.” McCall Public Works Director Nathan Stewart said.
That money would count toward the $10,000 credits the city currently offers to developers who agree to deed-restrict housing units for use only by people who live and work in McCall.
Recently, the city has been discussing updates to its housing program that could see those credits increase to $20,000 per unit for each unit built with permanent affordability requirements.
Balance sought between flexibility, certainty
The council also urged the need for a balance between flexibility to use the tax funding as needed amid shifting city priorities over the course of 10 years, while also building in certainty surrounding what voters would get by approving the tax.
“We don’t know the full spectrum of what we’re going to be seeing in 10 years,” council member Julie Thrower said.
The potential uses for the tax funding are broad, but all relate to street improvement work, transportation infrastructure, and stormwater management.
However, the city also plans to develop a five-year plan to outline projects to be funded by the tax to show voters what the money would do.
“We feel like it’s flexible or broad enough to account for things that are going to come up over the course of 10 years, while being specific enough so that you and the public can understand where the money is going,” City Manager Forest Atkinson said.
1% lodging increase
The proposed ordinance also includes a 1% increase to the existing 3% lodging tax, which is paid by people who stay in short-term rentals and motels within city limits.
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The increase would raise the city’s collections from the lodging portion of the tax to about $1.3 million, compared to about $950,000 currently.
About a third of the $2.9 million per year earned by the streets tax since 2021 stems from the lodging tax. The remaining two-thirds are earned by a 1% general sales tax that excludes groceries and gas.
Public survey
An online survey conducted by the city in September showed that most respondents supported increasing the lodging tax, but not the 1% sale taxes.
About 69% of the survey’s 438 respondents supported the lodging tax increase, compared to about 12% who supported increasing the sales tax. Another 12% said neither tax should be raised.
What has the current tax funded?
Nearly a third of the $17.6 million earned by the streets tax has been used to rebuild streets and sidewalks in downtown McCall, including Second, Lenora, and Park streets.
Those rebuilds have included building new sidewalks, installing streetlamps and new stormwater drainage infrastructure, and adding landscaping to the streets.
The tax has also been a primary funding source for rebuilds and maintenance of other city streets, including Commerce Street, Idaho Street, and Spring Mountain Boulevard.
All major street rebuilds included in the city’s original plan for the tax funding have been completed.
Before the streets tax was passed by McCall voters in November 2015, city street projects were funded using grant money or property taxes paid by city residents.
From 2011 to 2015, the city had about $510,000 per year for city street projects, equipment replacement and facilities improvements, according to city budget documents.
