Council considers resort tax rebate changes for seasonal residents

Since Whitefish’s resort tax was initiated in 1995, at least 25% of it has been allocated to property tax relief. At a work session last week, the City Council had a preliminary discussion about potential changes to the allocation of those funds.

The main question was whether part-time residents, such as second homeowners, should benefit from the property tax relief. The staff report states the wealthiest of the property-owning constituents receive the greatest benefit in property tax relief.

According to state statute, only 5% of the resort tax funds are required to be returned to property owners, but Whitefish has always returned substantially more.

“I've been studying this since I campaigned,” said Councilor Giuseppe Caltabiano. “Whitefish has rebated up to 40% in certain years, 36% I think, last year.”

One option in the staff report was to apply criteria similar to what the state uses for its Property Tax Rebate program. To qualify, one must own a residence in Montana and live in it for at least seven months. The applicant must also have been billed for property taxes on the residence and have paid the property taxes.

The report said that incorporating new criteria for determining who would receive resort tax-generated property tax relief and in what amount, would entail an annual process that would be taxing on staff, making consideration of an additional paid position necessary.

“Staff … thought it was unwieldy to have to try to determine who lived here 70% of the time or constantly maintaining the database of who moved in, who moved out, who lived here full time,” said Whitefish Finance Director Lanie Gospodarek.

Gospodarek said staff took the topic to the Resort Tax Monitoring Committee and they are looking to pursue less labor-intensive options for reducing the property tax relief for part-time residents. She also said they’d like the council to clarify its desired outcomes. 

“The county does our property tax assessments,” Whitefish City Manager Dana Smith said. “We don’t have a means of determining if a property is a full-time resident at this point.” 

Smith added the purpose of the work session was to get a better feel for whether the city wanted to allocate the funds differently and said that nothing is set in stone.

Caltabiano said that while the law requires the city to rebate 5% of the resort tax funds to property owners, the city has always rebated more than 25%. He proposed rebating funds to residents.

“My suggestion is this: We take the 5% and we rebate to all the property owners,” Caltabiano said. “What’s left, it’s cut equally in checks rebated to every single registered voter, who has to be a resident. And I don’t care if it's a renter, a tenant or a property owner.”

He said the city could afford to hire someone to work on implementation of his plan with the money left over after rebating the 5% required by law, an amount he said was “a couple million bucks.”

“Hire the staff to calculate how much money to give to the residents, not property owners, residents who are registered to vote, hence live in town, within the city limits,” he added. “I don't care if they pay rent, if they stay in the homeless shelters or if they are wealthy property owners. That’s my proposal.”

Mayor John Muhlfeld responded, saying renters and tenants don’t pay property taxes, in general. Councilor Steve Qunell questioned the use of voter registration rolls and called Caltabiano’s proposal a “sea change in what the initial resort tax was designed for.” 

The discussion continued at the end of the regular meeting when Councilor Ben Davis said, “If we’re actually going to talk about fairness of the resort tax property tax rebate, I think it needs to address the fact that a huge percentage of it goes to a small number of people.”

The council will consider the topic again at a later date.