History of Whitefish's resort tax
Whitefish’s resort tax was first approved in 1995 with 56 percent of city voters in favor and 44 percent against. The tax was approved for a 20-year term.
In November 2004, voters approved an extension through 2025 by a 76 percent to 24 percent margin.
Various proposals have come before the city council to increase the tax to 3 percent, but the council has never before approved a public vote on an increase.
When the tax was first discussed prior to the 1995 election, business owners spoke out saying the tax would hurt sales and drive customers to Kalispell. A proposed increase in 2002 drew the same comments and several business owners said they were negatively impacted after the tax first took effect.
Under state law, resort communities can collect up to 3 percent in resort tax. Whitefish is the only city in Montana with a rate below the state limit. A bill is before the state Legislature that would allow for cities to collect up to 4 percent.
What is taxed
The resort tax is 2 percent on sales of collected at restaurants and bars, retail and lodging in Whitefish.
The city collected $2.09 million in resort taxes in fiscal year 2014.
Since the tax has been in place, retail shops have contributed about 45 percent of the money collected. Motels have brought in about 18 percent, and bars and restaurants add 37 percent to the total.
About $27.5 million has been collected since 1996.
How the money is spent
Revenue collected from the resort tax is sorted into four different categories.
Twenty-five percent is for property tax reduction for those in the city limits. The average annual tax rebate is currently about $125.
The city can use 65 percent of the funds collected for repair and improvement of existing streets, stormwater systems, underground utilities, sidewalks, curbs and gutters. Between 1996 and 2013, more than $14.4 million has been used for street improvements.
Five percent is used for bicycle paths and other park improvements, and five percent remains with the merchants as an administration fee.
If the increase in the tax is approved, additional funds would be distributed with an additional 25 percent going to property tax relief. No more than 70 percent would be used for repayment of a loan or a bond to finance the conservation easement. Five percent would go to merchants for administering the tax.
1 percent
If approved, the 1 percent increase is estimated to generate about $1 million in additional funds annually. The city is projecting a 5 percent increase in collections per year. For the last four years collections have increased by at least that much.
From the first year of collections, 2016, the increase is expected to bring in about $1.1 million. For 10 years of collections, the city is projecting $13.8 million in additional revenue.
The city projects a cost of $9.9 million for the 10-year loan to pay for its portion of the conservation easement.
The estimated amount that would be returned to property tax owners through a rebate would total about $3.6 million at the end of 10 years. The average yearly tax rebate for property owners is expected to be an additional $60.
The additional 1 percent would sunset along with the resort tax in 2025.