Gov. Holds Line Against Tourism Tax Bill

By Beacon Staff

While the 2007 Montana Legislature is long over, last week the deadline ran out on lawmakers’ chances to override any of Gov. Brian Schweitzer’s vetoes – marking the true end of any legislative politicking for this year.

The deadline came and went with little fanfare, but many in Flathead Valley’s tourism industry were closely following the vote count for a bill that would have pumped significantly more money into Montana’s promotional marketing: Senate Bill 284. They were not pleased with the results.

SB 284 came up just short of a veto override, with 62 votes in the House and 28 in the Senate, according to the secretary of state’s office.

By law, any bill that passes the full Legislature with a two-thirds majority, but is then vetoed by the governor, can be overridden by legislators voting by mail. It takes 67 votes from House representatives and 34 votes from senators to override the governor.

“I was very disappointed because tourism is the number two economic engine in the state,” said Dori Muehlhof, executive director of the Flathead Convention and Visitors Bureau. “To see it all fall apart was just heartbreaking.”

Out of the 7 percent tax levied on hotel beds and rental cars, 4 percent is redirected to marketing and advertising to drum up even more tourists, and 3 percent goes straight into the state’s general fund. SB 284 would have funneled the entire 7 percent to tourism related programs. The governor’s fiscal analysts projected the bill would cost the general fund about $11.9 million in 2008 and $12.5 million in 2009.

SB 284’s supporters said the history behind the bed and rental car tax explains why money should be redirected from the state’s general fund. Until the 2003 Legislature, the bed and rental car tax was at 4 percent, with all funds going to tourism. But state money was tight in 2003, so the Montana tourism industry successfully lobbied to bump the tax up to 7 percent, to give the state general fund a 3 percent cash infusion when it was badly needed.

Now that the state is enjoying a projected budget surplus in excess of $1 billion, supporters of SB 284 say that money deserved to go entirely to tourism promotion.

Rhonda Fitzgerald serves on the board of the Whitefish Convention and Visitors Bureau and owns the Garden Wall Inn. She estimates the Kalispell and Whitefish CVB would have received $30,000 to $40,000 each in additional money for marketing and promotion, had the bill passed.

According to Fitzgerald, SB 284 would have more than paid for itself because one dollar spent on tourism generates $50 in spending by an out-of-state visitor, $3.50 of which goes back into state coffers.

But the 2007 regular session adjourned without passing a budget, so when Schweitzer vetoed SB 284, along with two other bills May 3 before the special session, he explained in a letter that he was “unable to determine how these measures” would affect state spending or tax laws in the absence of a budget.

“This was not a thing they felt was prudent to permit, and so they worked hard to prevent the veto from being overridden,” Fitzgerald said. “In the end, on the last day, enough votes changed back and forth that it didn’t pass.”

But the campaign to promote SB 284 has succeeded in galvanizing the tourism industry, with everyone from tribal alliances to state parks to historic preservation societies working towards a common goal – a fight Fitzgerald said the alliance plans to continue in 2009.