Drop in state bed-tax revenue impacts visitor bureaus, parks

The novel coronavirus outbreak has brought into focus just how intertwined Montana’s economy is. When one segment struggles, it’s likely the effects of that will be felt far and wide. So when Gov. Steve Bullock ordered residents to stay at home and coronavirus concerns prompted non-essential travelers to cancel their plans, the 4% lodging facility sales and use tax guests normally would pay ran dry as well.

The tax is collected primarily as a means to promote tourism in the state and over the years, certain agencies have come to rely on their allotment of the collections. In 2019 alone, the Montana Office of Tourism and Business Development collected more than $35 million in lodging taxes from six different tourism regions. Lodging taxes from Glacier Country Region alone, which includes Flathead, Lake, Lincoln, Glacier and Missoula Counties, contributed more than $11 million of that figure.

More than 60% of this tax, commonly known as a “bed tax,” goes to the Montana Office of Tourism and Business Development.

But the next largest distributions go to regional convention and visitors bureaus and to Montana Fish, Wildlife and Parks to support maintenance at state parks. And officials with these two entities say the steep decrease in bed tax revenue is troubling as Montana rounds into the summer tourist season with empty hotels.

Both Diane Medler with the Kalispell Convention and Visitors Bureau and Dylan Boyle, Executive Director of the Whitefish Convention and Visitors Bureau, said they anticipate anywhere from a 75% to 90% decrease in lodging revenues in their area for the April to June quarter, as compared to last year.

Boyle said for Whitefish, lodging facilities took big back-to-back hits in March when Whitefish Mountain Resort ended its season early and Bullock ordered Montanans to stay at home. In March, he said hotels experienced a 30% drop in guest capacity.

“For the January to March quarter, our hotels were down 11% compared to last year. So we were able to squeeze out a few good months at the beginning of the year, but saw that decline start in mid-March,” Medler said. “It will likely be a slow summer and typically that’s when the majority of bed tax revenue comes in.”

Both Medler and Boyle said they are hopeful lodging facilities can find a financial foothold sometime in June, but are ultimately unsure what the year will bring. They said it’s likely that it could take a year or longer before capacities and revenues — and thus bed taxes — rebound to 2019 figures.

“There are so many variables with this current situation that play into tourism,” Boyle said. “Looking into the future, we are really focused on what summer could look like.”

Both visitors bureaus are heavily supported by bed taxes. According to the state Office of Tourism, about 22% of bed tax collections for fiscal year 2019, or about $7.7 million, went to regional convention and visitors bureaus statewide.

VISITORS BUREAUS receive the second-highest distribution of lodging facility use tax collections. Following this, the third-highest distribution goes to Montana’s state parks. In fiscal year 2019, about $2.3 million was divided up among parks statewide, with highly trafficked parks such as Wayfarers in Bigfork receiving more funds than less busy parks such as Les Mason on Whitefish Lake.

Montana’s 55 state parks — about a dozen of which are located in the Flathead Valley — have an annual operating budget of about $9.2 million. About 19% of that budget comes from an “accommodations tax,” or bed tax, according to a recent report titled “State of Montana State Parks 2019.”

Dustin Temple with Montana Fish, Wildlife and Parks said it is still too early to know exactly how big of a dent the decline in bed tax will make in the parks department’s budget, but he said there is currently “enough funds on hand to finish out this fiscal year,” that ends June 30.

“The problem is we just don’t have enough information yet,” Temple said. “The summer is typically when we generate the most revenue, so we’ll have a better idea come August or September of how we’ve been impacted.”

Although a good chunk of the department’s funding comes from the bed tax, Temple said that revenue stream is just one of “the big four” that fund park maintenance and operations. About 58% of the Montana State Parks budget is “earned revenue” that consists of light vehicle registrations, park fees and enterprise revenue.

The biggest budget contributor is vehicle registration, which “has remained steady throughout the outbreak,” he said. Since 2004, Montanans have had the option to support Montana State Parks when they register their vehicles. If residents opt to pay more for the light vehicle registration, they pay no entrance fees upon visiting the park and according to one report, about 83% of Montanans take advantage of this.

So even though one portion of the budget may be impacted by a decrease in bed taxes, Temple said, “we at least have these other funding means in place and those are looking stable.”

He added that park managers need to be conservative with their spending, saying “we are being told to do what we have to, to keep the parks open and safe, but no more than that.”

Montana’s state parks department is widely considered to be underfunded as is and receives no general fund dollars. According to one audit performed by the state, Montana has more state parks than most neighboring states by a wide margin, but receives far less funding. Montana has more parks than Utah, South Dakota and Idaho, but each of those states receives at least $15 million for operations and maintenance compared to Montana’s $9.2 million. Colorado has 11 fewer state parks than Montana, but receives nearly $30 million.

Reporter Kianna Gardner can be reached at 758-4407 or kgardner@dailyinterlake.com.