McCall council directs staff to draft ballot measure raising lodging tax, keeps 1% sales tax unchanged

McCall City Council members spent the bulk of a work session discussing options for the city’s local-option taxes, focusing on the existing 1% local-option sales tax and the 3% lodging (heads-and-beds) tax. Councilors directed staff to prepare a ballot measure for voters that would keep the 1% sales-tax rate unchanged and increase the lodging tax to 4% for a 10-year term, and asked staff to return a draft ordinance for a first review in January.

Why it matters: The local-option-tax (LOT) revenues pay for the city’s transportation capital and maintenance program. Councilors and staff framed the possible lodging-tax increase as a way to offset rising construction costs, maintain grant-match capacity and preserve the city’s ability to deliver street, sidewalk and multimodal projects.

The council’s discussion emphasized three constraints: political acceptability, revenue yield and project delivery timeframes. Council members repeatedly noted that raising the 1% sales tax would be difficult to sell to voters and that the lodging tax is generally more acceptable to the electorate. Staff told councilors that, based on the city’s revenue models, roughly a 1-percentage-point increase in the lodging tax would produce about $300,000 in additional annual revenue (estimate provided by staff during discussion). That figure guided the council’s assessment of how much extra project work the increase would buy and how it could be used as grant match.

Council direction and next steps - The council coalesced around keeping the 1% sales tax at its current rate and pursuing a lodging-tax increase to 4% for 10 years. Councilors asked staff to draft ordinance language reflecting that policy direction and to return a “first touch” ordinance in January so the council can review the proposed ballot question and supporting materials. - Staff was asked to prepare public-facing materials that explain how LOT revenues are spent, the list of typical projects and the city’s history of leveraging LOT funds with grants. - Councilors discussed sequencing with a separate lodging-tax renewal expected later in the decade and cautioned that voter fatigue and messaging would be critical to passage. Staff noted that if a May ballot question fails, state rules require waiting a year to try again.

What councilors told staff to prioritize in outreach and ordinance language included: tie LOT spending to the city’s capital-improvement program (CIP) and maintenance-improvement plan (MIP), explain how funds support multimodal transportation (streets, sidewalks, bike lanes and stormwater in street corridors), and show past LOT leverage with grant funding and completed projects.

Financial context and project timing Staff reported that LOT revenue peaked during the pandemic-era visitation surge and has since leveled, while construction costs have risen roughly 30% from pre-COVID levels, reducing purchasing power. Council members emphasized the importance of a multiyear (10-year) term to allow sufficient time to plan and carry out larger reconstruction and grant-funded projects, and to avoid repeated renewals that create staff workload and potential voter fatigue.

No final ballot language or ordinance was adopted at the session; the council’s action was direction to staff to draft an ordinance reflecting the 4%/10-year scenario and to return it for formal consideration in January. The council also asked staff to prepare revenue exhibits and illustrative project examples that show what incremental increases would fund.