Resort taxes have yielded big improvements for five cities

Whitefish is in an elite class of communities able to tap into the state law that allows local-option taxes in resorts communities.

Big Sky, St. Regis and West Yellowstone and Red Lodge are the other Montana communities with such a tax; all are 3 percent except Whitefish, which has held the tax at 2 percent for the past 10 years.

When Whitefish wanted a resort tax, it first needed to persuade the state Legislature to raise the population cap from 2,500 to 5,500. Lawmakers also had to designate Whitefish a "resort community."

AS CITY leaders were deciding how to set up Whitefish's tax structure, they traveled to West Yellowstone to learn how. That city of 1,200 near the Wyoming border wrote the book on resort tax in Montana.

"We were in dire straits in the 1980s," remembers West Yellowstone Town Clerk Liz Roos. "People who can remember what it was like before the resort tax remember it was a big mud puddle."

In place since 1986, West Yellowstone's resort tax has brought in $25.5 million for road and infrastructure improvements that have included a fire-suppression system, new fire hall and sewer upgrades.

"That little town has so much going on," said Mark Svennungsen, who visited West Yellowstone recently. "It's nicely done. All of their municipal improvements are such nice touches."

Roos pointed out that West Yellowstone's resort tax has dropped the mill levy from 75 to 44 mills, easing property taxpayers' burden. The town just renewed its tax for 20 more years.

Communities wanting to learn about resort taxes still go to West Yellowstone for advice, she said. The city has a PowerPoint presentation ready and waiting for inquirers.

IN BIG SKY, resort-tax revenue has also been spent largely on infrastructure projects, but it also helps fund the bus service between the ski resort and community, said Al Malinowski, chairman of the five-member Big Sky Resort Area District board. A small sliver of the revenue goes to the Big Sky Chamber of Commerce for marketing.

Big Sky began charging a 3 percent resort tax 15 years ago, and to date it's produce $19 million for the unincorporated community of about 2,000.

"Our board is talking about extending the sunset," Malinowski added.

RED LODGE came on the scene with a 3 percent resort tax in 1998 and has raised just over $4 million in that time. Assistant City Clerk Janie Michelcic said most of the revenue has gone into replacing water and sewer lines and paving streets. The funding formula allocates 15 percent to property-tax relief and 79 percent to capital improvements. Businesses keep 5 percent for collecting the tax, and 1 percent is used to pay tax administrators.

ST. REGIS, off Interstate 94 northwest of Missoula, has raised roughly $1 million in the 12 years it has collected a 3 percent resort tax. Most of the money - $69,000 a year to be exact - is used to pay off the city's sewer system.

"Our district is not really rich," said Sharon Patterson, the administrative assistant of tax collections. "But we're one of those communities where the [resort tax] money definitely comes back into the community."

The resort-tax board routinely gives grants to entities such as the fire department, visitors center and local youth projects.

St. Regis doesn't conjure up the picture of a resort community per se, but the community was able to prove to the state Legislature that a majority of businesses rely on tourist dollars for their livelihood, Patterson said. Most of the tourists are just passing through, on their way on or off the Interstate.

In fact, the four-way stop at the intersection of Montana 135 and Old Highway 10 East that funnels motorists onto the Interstate is now the focus of a project that will use $100,000 in resort-tax revenue. With help from the state, St. Regis is realigning the intersection to make it safer.

LOCAL-OPTION TAXES have been proposed and discussed by Montana lawmakers for years. The Montana League of Cities and Towns has supported local-option authority in every legislative session since 1981.

"The persistence of this advocacy is based on the simple and compelling idea that voters in Montana should have the power, which is granted by most other states, to decide the type and amount of taxes they will pay to support their local governments, the league's Web site states.

In the last legislative session, the league pushed for a bill that would have removed the population limit and economic criteria from the resort-tax law. Such a measure is yet to be approved.

Sen. Greg Barkus, R-Kalispell, is among the local lawmakers who have supported legislation that would give cities the ability to ask voters if they're willing to impose a local-option tax. But he doesn't favor such a tax for Kalispell.

"If the locals want to vote a tax upon themselves, that's fine, but I don't think it's a good tax for Kalispell," Barkus said. "Kalispell is a hub, a trade center. People from Columbia Falls, Bigfork, Eureka shop here. If we impose a local-option tax, then we're preying on the region."

Features editor Lynnette Hintze may be reached at 758-4421 or by e-mail at lhintze@dailyinterlake.com