Bill to raise resort tax limit likely dead
A bill before the state Legislature to give resort communities the option to raise the resort tax an additional 1 percent is probably dead for now.
After approval in the state House of Representatives, the bill has been postponed indefinitely in the Senate, meaning it likely won’t receive any further action during this Legislative session.
A tie vote on the second reading of the bill led to a 30-20 vote for postponement. Local legislatures Sen. Dee Brown, R-Coram and Sen. Bruce Tutvedt, R-Kalispell voted in favor of the postponement.
The bill made it out of the Senate Taxation Committee with approval on an 8-4 vote, with committee chairman Tutvedt as one of the dissenting votes.
State law currently caps the resort tax at 3 percent. Whitefish’s resort tax is at 2 percent, but the city is holding a special election this month asking voters to raise the rate to 3 percent to fund a conservation easement in Haskill Basin.
Rep. Kerry White, R-Bozeman, wants to give resort communities the authority to raise the tax to 4 percent, providing the additional revenue funds workforce housing or historic preservation projects. The bill would require resort communities to approve the tax increase with a public vote.
It’s estimated Whitefish would raise an additional $968,000 annually with the 1 percent increase.
The initiative received strong support during a March 19 hearing, particularly from officials and businesses representing the Big Sky area.
Big Sky Chamber of Commerce board member Kevin Germain noted that 83 percent of the community’s workers commute from Bozeman.
“People can’t afford to live there,” he said. “Second and third homeowners do not make a community. We need employees who live there year-round so we have a true community.”
He said the issue isn’t unique to Big Sky, but that most resort communities grapple with affordable housing.
The lack of workforce housing is often discussed by Whitefish City Council, and the topic was a highlight of neighborhood meetings hosted last year by the Whitefish Chamber of Commerce.
“All resort communities face this issue,” Germain said.
Greg Loomis, a resident of West Yellowstone, said the bill isn’t a request for the Legislature to raise taxes.
“We’re asking you to amend the legislation so we can have our community decide if they want to increase the tax to deal specifically with these two issue we haven’t been able to solve,” he said. “They can decide for themselves. It’s the American way to let local people decide for themselves how to solve their problems.”
At the hearing, the bill also received support from the Montana Chamber of Commerce and the Montana Lodging and Hospitality Association.
Still, some committee members showed apprehension.
Sen. Taylor Brown, R-Huntley was uncomfortable earmarking the money for a specific use.
“We don’t know the needs in Whitefish or Red Lodge that well,” he said. “Are you sure we are the ones who should pick [what the money goes to] and not the people with the local control of the money?”
Loomis responded that the earmark for historical projects and workforce housing is necessary to make sure the money goes to those areas.
“Help us protect ourselves from ourselves,” he said.
“Historic preservation and workforce housing always comes in last,” he added. “But they’re one of the very important parts of our community. How do we make sure that happens. When you have an income stream you can count on, then it will happen.”
Sen. Brian Hoven, R-Great Falls said he didn’t like that resort communities were asking others to pay for projects that only benefit their community.
“What bothers me is you want other people to spend money in your area for your benefit, but you’re not doing it yourself,” he said.
Sen. Duane Ankney, R-Colstrip, countered that he’s visited nearly all of the resort communities and never noticed the tax.
“I think this is a good way for those small seasonal communities to fund their needs,” he said. “People coming in there are used to paying sales tax in their own states.”