The City of Lava Hot Springs may be in hot water with the state of Idaho after its repeated noncompliance with transparency and auditing requirements, according to documents obtained by Idaho Freedom Foundation (IFF).
For tourists seeking natural hot springs and an Olympic swimming complex, the city in Bannock County is a prime destination. Taxpayers seeking accountability, however, may want to look elsewhere.
Long Time No Transparency
Documents acquired through a public records request show Lava Hot Springs has been noncompliant with the State Controller’s Office’s (SCO’s) Local Government Registry for at least eight years.
The city has failed to report financial data to the SCO since 2021, according to public data from Transparent Idaho. A list of local government entities and their compliance status, obtained by IFF, shows Lava Hot Springs as “not compliant” from the 2017 through 2024 registry years, excluding 2021. Additionally, Lava Hot Springs was not compliant in 2025, according to an April 2026 spreadsheet obtained by IFF.
The city was only listed as compliant in the years 2015, 2016, and 2021, the records show.
Previously, the Legislative Services Office (LSO) managed the compliance status process, but the SCO told IFF it took over during the 2022 reporting year after House Bill 73 passed in 2021. Most entities were labeled as compliant or “not applicable” during 2021, with the exception of certain special districts, likely because of the data transfer.
Notably, Transparent Idaho has data on the Lava Hot Springs Foundation, a state agency. IFF’s Fred Birnbaum previously covered how the Legislature allowed the Lava Hot Springs Foundation continuous appropriation in 2021, meaning the Foundation no longer needs an annual appropriation bill. As of 2024, its budget did not appear in the Legislative Budget Book.
Furthermore, Lava Hot Springs failed to complete annual audits for at least seven fiscal years, according to LSO records obtained through the SCO. In seven out of the eight listed fiscal years (2014-2021), it failed to complete an annual audit. The city conducted one in Fiscal Year (FY) 2015 but allegedly had “outstanding obligations,” and its registry review status from registry years 2015 to 2022 was deemed not compliant.
The city told IFF in a statement it is working to achieve “full compliance” with state law.
“The City of Lava Hot Springs is aware of the reporting requirements identified by the Idaho State Controller’s Office and is actively working toward compliance,” Lava Hot Springs City Clerk and Treasurer Amantha Sierra told IFF in a statement.
“The City has been in direct communication with the State Controller’s Office regarding the outstanding reporting requirements and is working to provide the required information and establish a plan for completing the outstanding annual audits,” she continued. “The City’s last completed annual audit was for fiscal year 2015. The City is currently working with its auditing professionals to address the outstanding audit years and move the City back into full compliance with state requirements. The City remains committed to completing the required financial reporting and audits as efficiently as possible.”
But the City of Lava Hot Springs is not the only entity facing scrutiny.
The SCO sent Bannock County a notice alleging the county was noncompliant with the legal reporting requirements mandated in Idaho Code § 67-1076, as of April 3, 2026. The notice was published in the Idaho State Journal on June 27.
“Bannock County has been notified by the Idaho State Controller’s Office of Local Governing Entities that are not compliant with the legal reporting requirements… as of April 3, 2026,” the notice read. The City of Lava Hot Springs, Inkom Cemetery District, Downey Volunteer Fire District, and the City of Pocatello would face penalties.
Bannock County commissioners appeared unfazed by the noncompliance status during a summer meeting.
“We have been made aware of some noncompliance of some organizations inside of Bannock County and been advised under statutes that it is our responsibility to make public notice of those noncompliance letters,” a county commissioner stated during the June 23, 2026, meeting.
“We do have a Bannock County notice of noncompliance that is being ready to be published,” he continued.
The commissioners laughed while discussing the resolution to publish the notice.
“I thought it was the authorization to embarrass these organizations that did not meet their requirements,” a second commissioner joked in response to an off-camera voice stating there needs to be authorization for the notice to be published.
“Which I think is in the statute,” the first commissioner replied.
Bannock County Commissioner Jeff Hough, who does not appear to have been in the meeting, is also chair of the Lava Hot Springs Foundation.
Bannock County told IFF in a statement that the authority to investigate noncompliance rests with the SCO and State Tax Commission.
“State law requires the County to publish a list of entities that are not in compliance with the legal reporting requirements outlined in Idaho Code § 67-1076. Following publication of that list, any noncompliance is investigated by the State Controller and the State Tax Commission,” the statement read. “Counties only have jurisdiction over non-taxing entities. The entities in question are taxing districts. State law does not provide the County with authority to assess noncompliance fees or cause a special audit to be conducted in this situation. The County will continue to fulfill the requirements established by state law and work within the authority provided to counties under the statute.”
Local accountability is so lacking that a noncompliance notice strikes about as much fear as, well, a piece of paper. Yet actual consequences, such as financial penalties, have also not ensured transparency.
Lava Hot Springs has faced tax penalties for years, and those consequences did not seem to prompt immediate compliance (although according to the city, it is now working towards adhering to auditing and reporting requirements).
“Final Reminder”
A screenshot obtained by IFF shows the SCO responding to the Lava Hot Springs city clerk on Jan. 5, 2026, and sending a “final reminder” to submit additional information for compliance.
“We kindly ask that you complete these requested changes no later than January 9th,” the message read in part. “This will ensure that our team has enough time to process the changes and mark you compliant before the January 15th deadline to report to the Tax Commission. If these changes are not completed by the deadline, you will be reported as non-compliant.”
As of publication, the state has withheld tax revenue from Lava Hot Springs for noncompliance in 18 quarters since the start of FY 2021, according to public documents from the Idaho State Tax Commission (ISTC).
Idaho Code § 67-1076 lists the penalties for failing to report information to the local government entities central registry. “[T]he state tax commission must withhold the quarterly distribution of sales tax distribution… for any noncomplying entity,” the statute states.
There have only been four quarters in which Lava Hot Springs has not had tax revenue withheld for noncompliance since FY 2021, according to ISTC records. Most recently, in the quarter ending in June 2026, it had $10,865.60 withheld.
No entities had revenue withheld in 2022, except for the quarter ending on Dec. 31, where Lava Hot Springs is listed as noncompliant, according to ISTC documents. As IFF previously noted, it was listed as not compliant in 2022 for reporting requirements. (It is unclear why tax was withheld during the prior year, when Lava Hot Springs was considered compliant, but it likely had to do with the data transfer from 2021–2022.)
Lava Hot Springs also did not have money withheld for noncompliance in the quarter ending on Dec. 31, 2021, while other entities faced penalties, although the city did have $33,190.79 in released money withheld.
In Hot Water?
IFF asked the SCO what steps it plans to take to ensure Lava Hot Springs complies with reporting and auditing requirements.
“We are aware of the concerns raised and actively involved in seeking an appropriate resolution. We have communicated with the City of Lava Hot Springs our concerns regarding this compliance status. Currently, we are continuing that dialogue and we will be seeking their insight regarding a proposed roadmap to resolve their noncompliance,” the SCO said in a statement.
“Additionally, we have collaborated with key stakeholders, such as the Association of Idaho Cities, as a means to understand their perspective and identify the best path to resolve the compliance concerns. Furthermore, in coordination with the State Tax Commission and as outlined in Idaho Code 67-1076, the Tax Commission is currently withholding tax revenue for non-compliance,” the statement continued. “Please know that we are engaged in a due diligence process to best resolve City of Lava’s noncompliance with Idaho Code 67-1076. We will continue to actively pursue all appropriate actions until compliance is achieved.”
Lava Hot Springs is home to roughly 375 residents. It may be that smaller entities with less staff and resources have more difficulty complying with reporting requirements, but the city’s noncompliance is not a one-off incident. It’s a routine (and seemingly unresolved) issue.
It’s easy to find examples of waste and alleged malfeasance at state agencies or large cities like Boise. But other municipalities often fly under the radar, even after repeated noncompliance. While audits and transparency are not as flashy as other topics, they are still critical for accountable and representative government.
Eight years of continued noncompliance should trigger audits and further scrutiny, but aside from tax withholdings, not much seems to have changed. Why is there such a lack of accountability?
As IFF previously noted, the chair of the Lava Hot Springs Foundation is also a Bannock County commissioner, which raises questions about why an elected official would hold more than one government position. The SCO’s noncompliance notice specifically called out Lava Hot Springs, but, curiously, that didn’t seem to spur any sense of urgency from the commissioners.
IFF will continue investigating local governments and ensuring transparency. Idahoans may submit tips about their counties and cities HERE.
