The Polson City Commission is considering asking residents in November if it should implement a local resort tax to help pay for infrastructure improvements.
On March 23, the city commission created an economic development committee to consider the optional sales tax. The tax is usually placed on lodging, food and drink from restaurants and other “luxury” items. Whitefish has had a 2 percent resort tax since 1996 and since then it has brought in more than $25 million to the city for road improvements and property tax relief. In 2014, it brought in an additional $2 million to the community.
“We’re open minded about it at this point,” said Polson Mayor Heather Knutson. “The committee will look at it and see what type of positive or negative impacts it could have… (Then) the decision rests in the hands of the citizens and the voters will decide.”
West Yellowstone was the first town in Montana to implement a local option sales tax after the Montana Legislature passed House Bill 826 in 1985. The bill allows resort towns of 5,500 people or less to create a tax to help offset the wear and tear on roads and infrastructure brought on by additional visitors. The Montana Department of Commerce determines whether a town is a resort community and if a significant part of its economy relies on tourism. The sales tax rate can’t exceed 3 percent and must be approved by voters within the community.
In 1995, Whitefish voters approved a sales tax on lodging and luxury items, according to city manager Chuck Stearns. The tax was originally supposed to end in 2015 but has since been extended another 10 years. Stearns said the tax has grown in popularity with voters and it has helped the city complete much-needed improvements, including the recent road reconstruction project on Second Avenue, just east of town. Sixty-five percent of the funds are used forstreet and road reconstruction and 25 percent goes toward property tax relief. The other 10 percent is split between parks and trails maintenance and vendors who get to keep 5 percent of the tax for administrative costs.
Whitefish’s resort tax is currently at 2 percent, but this month voters will consider raising it to 3 percent to help pay for a conservation easement in Haskill Basin to permanently protect the town’s water supply.
Knutson said that the economic development committee in Polson would be looking at Whitefish and other communities that have implemented resort taxes. The committee will consist of seven people, mostly from the local business community. Those who are interested in serving on the committee should send an application to the city by April 13 and the members will be selected during the April 20 city commission meeting. The first meeting of the committee is scheduled for April 27 and a public hearing will be held sometime in May. After that the committee will make a recommendation to the city commission on whether to put the issue on the November ballot.
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