Council to vote again on backing local option tax idea

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A local option tax would raise a lot of money from tourists passing through Billings—and from locals and other regional residents who shop the mega-stores like the Wal-Mart in the Heights.

The Billings City Council will decide Monday night whether to endorse efforts to pass a new kind of statewide local option sales tax—or to postpone a decision until a bill draft lays out more details on the proposal.

The council also will be asked to approve a two-page list of priorities that the city will pursue during the 2017 Montana Legislature, one of the priorities being a commitment to support a local option tax of some kind.

The vote on local option taxes will have some parliamentary complications to it. On Nov. 14, the council voted 7-2 to table endorsement of an initiative being promoted by an organization called Authorize Community Transformation, or ACT.

No ticket required

Tonight’s meeting of the Billings City Council will begin at 6:30 on the second floor of City Hall. Use the Police Department entrance at 220 N. 27th St., or park in the parking garage over City Hall and enter through the garage.

That group, which has gathered the support of a handful of individuals and organizations in Sidney, Glendive, Miles City and a few other Montana cities, is made up mostly of dozens of interests in Billings, including the Chamber of Commerce, Big Sky Economic Development, Mayor Tom Hanel and the Downtown Billings Alliance.

The initiative would give local governments the authority to ask their voters to approve a local option sales tax of up to 3 percent to fund specific projects. Citizens would have to vote every time a new tax is proposed to fund a new project, and the tax would be levied only until enough money was raised for that project. No local option tax could be levied for longer than 10 years.

The vote on Nov. 14 was to table consideration of an endorsement until ACT had a bill draft ready. But then, at its Nov. 28 meeting, the council voted to reconsider that earlier vote. Under council rules, this Monday’s vote will have to deal with the same motion last voted on—which was to table the matter.

If a majority decides not to table the matter, anyone on the council could then move for a vote on city’s staff original recommendation, which was to endorse the ACT initiative.

The initiative is the latest in a long line of efforts to seek legislative backing for the authority to seek local option taxes. Some bills have sought to expand to all cities Montana’s so-called resort tax, which allows small towns reliant on tourism to levy a tax of up to 3 percent on goods and services related to tourism—meaning a tax on restaurants, hotels, campgrounds, ski areas, luxury items and the like.

Those efforts have always failed, as have efforts to simply allow local governments to seek voter approval of a general local option tax, with no attempt to tie the tax to tourism. Several times in the past, bills included complicated reimbursement provisions that would have sent money back to cities and counties that were close to cities that chose to levy the tax.

Counties around Yellowstone County, for instance, whose residents often come to Billings to shop and go out, would have gotten a cut of the proceeds if Billings had imposed a local option tax.

In the last legislative session, with the reimbursement provisions stripped out, the local option sales tax backed by the city of Billings died when it was still in draft form.

Ed Bartlett, who will be lobbying on behalf of the city for the fifth time in the 2017 session, which convenes Jan. 2, thinks the ACT initiative has a fair chance this year.

“There are some legislators who like the idea of tying it to specific projects,” he said, and others have shown support for the idea of a 3 percent cap and the “sunset” provision, which would end each levy after a specific period of time.

But then Bartlett laughed and said, “That doesn’t mean they like the whole concept”—reflecting the traditional legislative antipathy toward local option taxes. Some legislators are opposed to any kind of sales tax, while others favor a statewide sales tax and view creation of a patchwork of local taxes as an obstacle to that goal.

There would be exemptions under the local option taxes being proposed by ACT, primarily on groceries and prescription drugs. On its website, ACT points out that Montana sees nearly 12 million tourists a year, and they spend an estimated $3.66 billion a year.

In its memo to the City Council, city staff estimated that a 3-cent local option tax in Billings would raise about $47 million a year. The ACT website also said that 38 states already allow local option taxes.

As regional examples, ACT said Salmon, Idaho, with a population of 3,300, used a local option tax to modernize its swimming pool, while Cheyenne, Wyo., population 62,000, used the tax to pay for more than $18 million worth of road construction.

Barlett and Assistant City Administrator Bruce McCandless will be at the City Council meeting tonight to talk to the council about the ACT initiative and other items on the list of legislative priorities.

The council has already shown its support for another initiative that involves local option taxing authority. It did so by voting to pay $5,000 to join the Montana Infrastructure Coalition, which is proposing a package of revenue measures that would be used to support local infrastructure projects, like building roads, improving water and sewer systems and upgrading bridges.

The three main measures call for increasing the state gas tax; capping the coal severance tax trust fund and steering more money to local infrastructure projects; and expanding the resort tax concept by allowing all local governments to seek local option taxes on tourism-related spending.

Barlett said the infrastructure coalition will have its work cut out for it because “it will be difficult to get new funding for any new purpose” this session, including an increase in the gas tax.

Barlett, who has been lobbying in Helena since 1981, said the good news is that with revenue projections trending down, there should be more cooperation between legislators of both parties and between the Democratic governor and the Republican-controlled House and Senate.

“In lean times,” he said, “legislators and parties tend to compromise and work together better.”

Legislative priorities

In addition to local option taxes, the legislative priorities that City Council members will be asked to vote on include other finance and taxation matters, bills dealing with local government powers, public health and safety issues, land use laws and environmental regulation and support for the legislative goals of other area governmental entities and coalitions.

An overarching goal will be to fight against any reductions in state funding to local governments. There have been losses in such “entitlement” disbursements in recent years, Bartlett said, and there undoubtedly will be new efforts this year to divert money from local governments to help the state weather a downturn in projected revenues.

Another Billings-centric goal is to seek passage of legislation allowing local governments to adopt ordinances that would create incentives for people with chronic substance abuse—and repeated public incapacitation—to get into treatment programs.

A similar bill failed last year. McCandless said what will be new this year is that the bill will be broader, not focusing solely on alcohol abuse but on substance abuse of any kind.

You can see the entire list of legislative priorities by going here.

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