Columbia Falls eyes 3 percent resort tax

The Columbia Falls City Council during a workshop last week took a first look at the pros and cons of a resort tax as a way to pay for emergency services and reduce property taxes to landowners.

As the city sees growth in its population and an increase in tourism traffic, the strain on emergency services is beginning to show. The Columbia Falls Volunteer Fire Department now responds to more than 300 calls a year. The police had 10,673 incidents in 2017, compared to just 6,344 five years prior. The number of arrests has about doubled as well, from 210 in 2012 to 451 in 2017.

In other words, things are busy, especially in the summer when about 20,000 cars pass through the city en route to Glacier National Park and other tourist destinations daily.

There are two considerations at hand for how to pay for more firemen and police as the growth continues. Current state law will eventually require the city to have a paid fire department. Right now the city has one paid position in Fire Chief Rick Hagen. The rest are volunteers. In the next census, it’s projected the city will have 5,200 residents, which will make it a second-class city.

The city can still have volunteer firefighters, but some of its staff must be paid.

Once it hits 7,500 residents, however, the city will have to provide 24/7 round the clock coverage. A full-time fire department with three staffers and two part-timers to fill in the gaps will cost about $450,000 annually.

Enter the resort tax. The city estimates a 3 percent resort tax will conservatively provide the city with an additional $450,000 in revenue per year. The tax is placed on goods and services, like hotels, motels, RV Parks and campgrounds and vacation rentals, fast foods, restaurants, alcohol and other luxury items, but not groceries.

Right now, the plan would be to split the funding from a resort tax equally four ways — 25 percent each for the fire department, police, roads and finally, property tax relief.

Under a resort tax, a homeowner with a $200,000 assessed value would see a 7 percent tax rebate, or about $44 a year.

The council also looked at a special emergency services levy, which would pay only for police and fire. In order to raise $450,000, the city would have to ask homeowners with a $200,000 assessed value home an additional $178 a year, or 65.844 mills. That amounts to a 29 percent increase in city taxes.

The council took no action, but many members seemed in favor of the resort tax, which would, at the very least, capture more visitor dollars.

Councilman Darin Fisher, who also owns Backslope Brewing, had a pragmatic view.

“I don’t think the consumer will notice it,” he said. “No one wants to pay taxes, but we all want services.”

There’s still a ways to go before either option could be implemented.

For one, the city still needs to be classified as a resort city by the Department of Commerce to qualify to levy the tax. Council approved sending a formal request to the department of commerce at Monday’s meeting.

Under state law, the city only qualifies as a resort community if its population is below 5,500.

If the department of commerce concludes the city is a resort community, the tax would still have to be approved by voters.

Police Chief Clint Peters, who gave a presentation to council on the resort tax, likened Columbia Falls to Red Lodge, which has similar numbers.

Red Lodge implemented its resort tax back in 1998 and uses the funds for infrastructure. It raises about $700,000 annually.

Whitefish, conversely, raises more than $2.2 million annually.

But Columbia Falls, while it may be close geographically to Whitefish, is far removed. It’s still a blue collar town and it doesn’t have a ski resort out its back door.

Perhaps most interesting is that resort tax revenue over the years either holds steady or increases.

Red Lodge, for example, saw a 40 percent increase in resort tax revenue from 2005 to 2015 and revenue stayed stable, even in the recession years.

People want to visit Montana, recessions or not, it seems.