Cities following legislation on housing, sales taxes, local control

Municipalities in Northwest Montana are keeping a close eye on the 2023 legislative session with a number of proposals on the docket that would change tax laws, impact housing and improve infrastructure.

Kalispell City Manager Doug Russell said the city is following potential legislation that would provide options for a voter-approved sales tax or resort tax. Under current rules, only cities with a population under 5,500 can qualify for the local-option resort tax that assists with wear-and tear on local infrastructure in communities with heavy tourism.

According to the city’s legislative priorities, increasing the resort tax population limit or providing the option of enacting a voter-approved sales tax would help “maintain infrastructure and services for [the] community that is impacted by a large number of people that do not reside within the city of Kalispell.”

In an email to the Inter Lake, Russell said residents deserve the ability to make decisions for themselves as it pertains to a local option tax.

While the city did not list any specific bills in its priorities, there are currently a few bills going through the Legislature that address local-option taxes. Senate Bill 199, which passed through the Senate Local Government Committee, looks to revise population eligibility for resort communities to 2,500 people and resort areas to 5,500. Kalispell’s population is roughly 25,000.

Funding and programs that would facilitate the development of affordable housing is another area of interest for Kalispell, Russell said. There are currently 11 introduced bills regarding housing, with a total of 84 that have yet to be introduced.

Currently under consideration, House Bill 244 would revise the administration of the Housing Montana Fund by removing restrictions on federal money from 2001. House Bill 318 would provide a tax incentive for housing with a refundable individual income tax credit to tenants using housing choice vouchers or for converting a short-term rental into a long-term rental.

Kalispell officials are also watching measures that would create special districts and bills providing assistance in local infrastructure costs associated with growth.

Kalispell opposes the current requirements in place for setting up a special district, stating that they cause an unnecessary financial and procedural burden. Special districts include cemetery districts, museum districts, park districts, road districts, television districts and solid waste districts. There are draft requests for bills regarding special districts, such as LC 2453 by Rep. Lyn Hellegaard, R-Missoula, that have not yet been introduced.

Regarding infrastructure, House Bill 355, sponsored by Rep. John Fitzpatrick, R-Anaconda, looks to create the State-Local Infrastructure Partnership Act of 2023 which would provide grants for eligible cities, counties, towns, school districts, and special districts to complete infrastructure projects.

According to Russell, the city’s attention on certain bills changes depending on when in the session they get introduced.

“The legislative session is a fluid process,” said Russell.

WHITEFISH HAS similar priorities. According to the city manager’s report published Jan. 10, the city is focusing on bills dealing with property, rentals and transportation.

“We anticipate the number of bills tracked to grow as the session continues,” Dana Smith, the city manager of Whitefish, said in an email. Her Jan. 10 report did mention some specific bills officials are watching.

For example, Senate Bill 142, sponsored by Sen. Keith Reiger, R-Kalispell, is opposed by the City of Whitefish as it is an ongoing project of the city’s class action lawsuit with many of the items directly related to the specific complaints: negative impacts on collection, capital funding and planning, and use of impact fees.

“The city adamantly opposes this bill as it would negatively impact the collection, capital funding and planning, and use of impact fees,” Smith’s report states. “Furthermore, legislation should not be passed based on one lawsuit that is still ongoing.”

She wrote that the city has attempted to discuss the bill and propose changes to Regier, “but he was not willing to make any amendments.”

Senate Bill 105, sponsored by Sen. Steve Fitzpatrick, R-Great Falls, would take rent control away from local governments. While rent control is already preempted by the state, Whitefish opposes the bill “based on principle,” Smith stated.

Smith said the city is also watching potential legislation focused on short-term rental zoning that is expected to be introduced by Sen. Greg Hertz, R-Polson. According to Smith, under the measure, short-term rentals would be deemed a residential use and would have to be expressly prohibited in zoning.

“However, zoning could not prohibit the short-term rental of a property owner’s primary residence or a property adjacent to the property owner’s primary residence,” Smith stated.

She said the city was opposed to the legislation as currently written, but was waiting on possible amendments.

The City of Whitefish also expressed support for other bills.

Senate Bill 145, sponsored by Sen. Keith Regier, would provide 50% of the sales tax currently retained for marketing by the state to local governments to reduce property taxes. Whitefish taxpayers would benefit from the bill, Smith said.

“Furthermore, it retains the amount allocated to the Whitefish Convention and Visitors Bureau,” Smith stated

Whitefish also expressed support for House Bill 76, sponsored by Rep. Jerry Schillinger, R-Circle. The bill has already passed the House and is now in the Senate Highways and Taxation Committee. The bill looks to revise transportation laws by eliminating redundant code, replacing three separate distributions of motor fuel tax to local governments and two separate allocations to the Montana Department of Transportation, and creating a local government road construction and maintenance restricted account and repeal the bridge and road safety and accountability restricted account.

ACCORDING TO Susan Nicosia, the city manager of Columbia Falls, the City Council voted to support the legislative resolutions as adopted by the MT League of Towns, a nonpartisan, nonprofit association of all 127 incorporated cities and towns in Montana.

Some of the key general principles the League is supporting in the 2023 Legislature include preservation of an equitable property tax system, promoting improvements to the creation of special districts, maintaining programs to fund infrastructure improvements, and opposing anything that limits municipal authority.

The group has published its own legislative tracker with notes of support or opposition from the League. House Bill 76, mentioned earlier, has a mark of support from the MT League of Towns as well.

Columbia Falls officials also indicated they were “carefully watching bills that reduce local control, add additional requirements to local government or reduce the City’s ability to provide services to [their] community.”

Nicosia said she did not have specific legislation to list as priority bills at the time.

Reporter Kate Heston can be reached at 758-4459 or at kheston@dailyinterlake.com.