Voters to Decide Whitefish Resort Tax Renewal on Nov. 2

A quarter-century after its adoption, the levy on lodging, restaurant and luxury retail goods has paid for street improvements, property tax relief, public works, and conservation

By Tristan Scott
Parking spaces in downtown Whitefish along Central Avenue as seen on July 2, 2019. Hunter D’Antuono | Flathead Beacon

Twenty-five years after Whitefish’s voter-approved resort tax took effect — and a half-decade after the electorate overwhelmingly approved raising it from 2% to 3% to conserve thousands of acres of prized forestland girding Whitefish Lake — the decision of whether to renew the once-controversial levy will again be put to local constituents when they cast their ballots on Nov. 2.

The idea is that seasonal influxes of visitors place a higher degree of pressure on streets, sewers and public spaces, and local taxpayers shouldn’t have to bear all the financial responsibility. As Whitefish nears the expiration of its current resort-tax term, city leaders are asking voters for a 20-year extension, without which the community would eventually have to forgo the option altogether, having surpassed the Legislature-designated population threshold of 5,500.

Unlike the first time voters were asked to sign off on the resort tax, however, it now has a proven record of putting money back into the pockets of property owners in the form of tax relief, as well as contributing tens of millions of dollars to street improvement and other public works projects. The money has manifested in other tangible ways as well, including patching Subaru-swallowing potholes, improving parks, maintaining pedestrian and bicycle paths, and permanently protecting the city’s municipal water supply, which it accomplished in 2015 when voters turned out in droves to approve a 1 percentage point resort tax increase to protect a 3,000-acre tract of land situated in Haskill Basin.

This go-round, local business leaders and community stakeholders hope the renewal request will be an easy sell, particularly as the proposed new iteration of the resort tax includes some funding for the maintenance of streets, parks and paths. Although the current iteration includes capital improvement projects, it excludes annual maintenance costs. The proposed renewal would also provide 2% of the collected resort taxes, or an estimated $100,000 each year, to fund maintenance of the Whitefish Trail system’s 43 miles and 14 trailheads, which are an economic boon as well as a community asset. However, those trails and trailheads have seen a significant uptick in use.

“This new funding source would ensure that visitors who enjoy the trails also pay their share,” according to Margosia Jadkowski, of Whitefish Legacy Partners, the nonprofit that oversees development of the popular trail system.

Dylan Boyle, executive director of the Whitefish Convention and Visitors Bureau, emphasized that the resort tax does not fund any form of tourism promotion, but instead provides a mechanism through which visitors shoulder some of the financial responsibility for maintaining and improving the local recreational amenities that make Whitefish unique.

“Paying the resort tax means that everyone who shops here is safeguarding drinking water, outdoor recreation, city parks, wildlife habitat, trails and the spectacular scenic backdrop of Whitefish — not to mention street improvements and giving rebates to our citizens for property taxes,” Boyle said. “Supporting our locally-owned businesses is how we pay it forward and it makes shopping in Whitefish truly meaningful.”

By assigning a so-called “tourism tax” to bar and restaurant sales, lodging and non-essential retail goods, the city has had the means to offset the wear-and-tear on local infrastructure without overburdening year-round residents with mills and levies. According to the city of Whitefish, the resort tax has generated more than $14 million in property tax relief, amounting to roughly $1.3 million a year. It’s also funded $26.6 million in street improvement projects and provided more than $2 million in park improvements, including to the WAG Dog Park and area tennis and pickleball courts.

Doug Reed, owner of the Whitefish Lake Restaurant and chair of the Whitefish Resort Tax Monitoring Committee, said the funding has been a critical asset to maintaining the city’s character. Its renewal will be key, he said, as the city faces new challenges associated with immense growth, both from seasonal visitors and newly minted full-time residents. An estimated 1.2 million visitors converge on Whitefish annually, according to figures compiled by the University of Montana’s Institute of Tourism and Recreation Research, and the resort tax ensures those guests help shoulder the costs of maintaining and improving the town’s infrastructure, relieving the local population of 7,700 residents from the burden of funding it alone.

“Whitefish is going through a remarkable transformation in terms of its growth and the volume of traffic we are experiencing, so investing in infrastructure is paramount,” Reed said. “And our parks and recreation department has been grossly underfunded over the years, even as we keep creating more recreational green space. The maintenance dollars just aren’t there for our parks and paths, and this resort tax renewal will address that.”

The proposal being submitted to voters in the coming weeks will determine whether to approve the existing 3% allocation for another 20-year term, with the resulting revenues slated to begin Feb. 1, 2025. If renewed, 25% of the revenue would be assigned to property tax relief; 58% to street improvements and public works; 10% to improvements and maintenance of bike paths and parks; 2% to maintenance of the city-owned Whitefish Trail system; and 5% to the businesses for cost of administration.

Longtime Whitefish residents can recall when the specter of a resort tax was a point of controversy in the mid-90s, when it was enacted. Although some locals still gripe about it or opt to shop in Kalispell to circumvent the tax, the city’s adoption of a resort tax has generally been accepted as a positive, said Vanessa Gailey, co-owner of Glacier Cyclery and Nordic in downtown Whitefish.

“Most visitors don’t notice it because they’re so accustomed to paying taxes on products and services elsewhere,” Gailey said, referring to Montana’s rarefied status as one of just five states without a statewide sales tax, alongside Alaska, New Hampshire, Delaware and Oregon. “To the few people who do question it, we explain that we’re a small resort town situated near Glacier National Park and receive millions of visitors each year. So to maintain our downtown streets, sidewalks and recreational amenities, we have a 3% tax. As soon as I phrase it that way, most of our customers are happy to contribute.”

Similarly, Hidden Moose Lodge owner Kent Taylor said his guests never question the addition of a 3% tax.

“We’ve been open 26 years and our guests don’t even notice the resort tax,” Taylor said. “If anything they’re shocked we don’t have a statewide sales tax. But you know what our guests would notice? Potholes. Sidewalks in disrepair. And those are the kinds of things the resort tax helps fix.”

Further, because many of Gailey’s customers are cycling or skiing enthusiasts eager to hit the trails, the inclusion of trail-specific maintenance dollars in the resort tax renewal should make it an even easier sell.

“The trails and recreational access are a big draw and a lot of businesses benefit from them, including us,” Gailey said. “Occasionally, the resort tax has cost us a bike sale to someone who knows they can go to Kalispell and bypass the 3% tax. But the question is, aren’t we still better off for it? I think so.”