Has summer arrived for option tax?

Inter Lake editorial

Never mind that it's been defeated time and time again since the 1980s, the Montana League of Cities and Towns plans to press for local-option-tax legislation yet again next year.

Enough of the same-old, same-old. If the league and other backers want a fighting chance with legislators who will be predictably hostile to the proposal, they should really try to make it more appealing.

Taxes, after all, are not popular. So why not try to mitigate the natural hostility by trying something new? For instance, would it be feasible to propose legislation that would allow local-option taxes to be in effect only for the busiest four months of tourism in Montana - say, mid-May to mid-September?

The primary argument supporting local-option taxes, after all, is for local governments to capture windfalls of non-resident revenue. During a recent visit to the Flathead Valley, the league's executive director trotted out this statistic: A 2003 Department of Revenue report calculated that a theoretical statewide resort tax would collect 48 percent of its revenue from non-residents.

That percentage would be substantially higher if we were talking about a summer option tax applied across Flathead County, with revenue sharing for the cities.

It could be an easier proposition to sell to legislators, and it certainly would be a better sale for voters who may be asked to approve another tax on themselves. No doubt about it, a year-round option tax may capture a good share of non-resident revenue, but locals know darn well that they would be providing a big share themselves.

There are legitimate reasons why the Legislature repeatedly rejects the standard local option tax proposals. Some have regarded it as taxation without representation. Example: an option tax approved for Kalispell would be paid by residents from across the county who now rely on Kalispell as a retail center. Some legislators believe that Columbia Falls residents, for example, would be subsidizing the city of Kalispell and they just won't go for it. That's why some insist that there be a provision requiring option taxes to be applied countywide.

Historically, much of the opposition to option-tax proposals comes from Eastern Montana legislators who have no interest in subsidizing growing Western Montana cities when they visit. But in some way that goes against the very notion of fairness, since each municipality ought to be able to determine for itself what is needed to make ends meet.

The political reality is that no one wants to approve more taxes, but in this case it is time for legislators to get innovative to make local-option taxes more palatable.