Potential alcohol tax bottled up in Sandpoint

SANDPOINT - Localvoters won't have to approve or shut down a per-drink tax on alcohol this November after all.

They will, however, decide on an increase from 5 percent to 7 percent to the Sandpoint bed tax.

Sandpoint City Council members approved the decision in a 5-1 vote Wednesday after considering the opposition leveled by local restaurant and bar owners at the previous council meeting in late August. Business owners feared the alcohol tax would eat into their profit margins and be difficult to manage.

In response, the council determined to keep the measure off the ballot this year and instead form a committee to examine other methods of revenue generation that would have less impact on local residents and business owners.

However, the bed tax - a long-standing tax on hotel, motel, bed and breakfast, and tourist home rentals less than 30 days in length - will be returning to the ballot. Council members decided to enact a 2-percent increase to the tax following supportive statements from meeting attendees.

"If you think about capturing those tourism dollars, (the bed tax is) exactly how you do it," said Greater Sandpoint Chamber of Commerce president Kate McAlister.

That reflects the council's general consensus established two weeks ago. They largely supported the bed tax since almost all hotel stays come from out-of-towners, while residents and tourists alike would pay a tax on alcohol by the drink. However, council members wondered whether raising the tax might drive tourists toward Ponderay hotels, since the bed tax there is less. McAlister and local business owner Steve Meyer believed it wouldn't make a significant difference.

"No one has ever said (to us at the chamber), 'Boy, I'm not staying in Sandpoint because your bed tax is too high,'" McAlister said.

Meyer echoed those sentiments, saying local taxes were often much higher in many of the cities and towns he has visited. He said when he selected a hotel while traveling, convenience to his locations of interest was a much more important consideration than taxes.

"If it's saving me 5 percent and I'm driving 15 more miles, that's just not a part of the formula in my decision-making," he said.

Both the bed and alcohol taxes were originally proposed last month as a way to offset impact to city services and infrastructure from the tourism industry. The alcohol tax was expected to bring in $110,000 in revenue, while the originally 5-percent bed tax was anticipated to bring in $250,000. With its increase to 7 percent, it could generate as much as $100,000 in additional revenue. If voters pass the measure, it will go into effect in January 2016 and carry a 10-year life span.