Whitefish Lawmaker’s Bill to Expand Resort Tax Eligibility Moves through Legislature
The proposed legislation would increase population caps for resort tax areas and allow certain communities to levy an additional 1% in resort taxes to fund workforce housing.
By Denali Sagner
A bill introduced by Sen. Dave Fern, D-Whitefish, that would expand how certain communities — including Whitefish and Columbia Falls — can levy and spend resort taxes passed a House committee vote last week after clearing the Senate with wide support. The bill would increase the population limits for communities that can levy a resort tax and would allow more resort tax revenue to go toward workforce housing.
Eligible communities in Montana are currently permitted to impose a resort tax — or a local-option sales tax on certain goods and services that is designed to direct tourism revenue towards community projects. Resort tax revenue is currently used on street and trail improvements, property tax relief, water system repairs and emergency service funding, among other projects. Resort taxes can be set at up to 3% and are approved by voters. In addition to the standard resort tax, municipalities can ask voters to approve an additional 1% resort tax that can be used only for infrastructure — such as road and utility improvements. In order to be an eligible resort tax community, an area’s economy must be more than 50% dependent on tourism.
There are currently 11 communities in Montana that levy a resort tax: Big Sky, Columbia Falls, Cooke City, Craig, Gardiner, Red Lodge, St. Regis, Virginia City, West Yellowstone, Whitefish, and Wolf Creek. Under current law, resort taxes can be implemented in tourism-dependent unincorporated areas with a population of less than 2,500 or incorporated communities with a population of less than 5,500.
In Whitefish, resort taxes have historically been popular. Whitefish voters approved an initial 20-year resort tax in 1996 by a 12% margin. In 2015, voters approved bumping up the resort tax from 2% to 3% to protect a 3,000-acre conservation easement in Haskill Basin with 84% of voters in favor. Between 1996 and 2015, the resort tax brought around $27.5 million in revenue to the city.
Columbia Falls voters in 2020 approved a 3% resort tax with 53% of voters approving the measure. The majority of resort tax revenue in Columbia Falls goes toward public safety, with about a quarter going toward property tax relief.
Most recently, residents of the Big Mountain Resort Area District, an area north of Whitefish that includes Whitefish Mountain Resort, approved a 3% resort tax, which was proposed primarily as a means to fund the local fire district.
Yet, as Fern, the bill’s sponsor, testified before the Senate Taxation Committee last month, while Whitefish has outgrown the state’s resort tax population parameters, it has not outgrown the wear-and-tear tourism has on local resources. Columbia Falls, Fern said, is poised to outgrow the population cap soon.
If passed, Senate Bill 172 would increase the population caps for resort tax-eligible areas to 10,000 residents for incorporated communities and 3,500 for unincorporated communities.
Last year, Whitefish reported a population of 9,163 residents, and the city is expected to surpass 11,000 residents by 2045.
“Over the years, it’s come to my mind that Whitefish, in particular, has nearly doubled in population and yet we haven’t grown ourselves out of the problem — the problem being increased visitation has had a continued impact on the need for infrastructure. The resort tax helps a great deal in addressing the problems,” Fern said.
The bill would also allow municipalities to spend the additional 1% resort tax currently restricted to infrastructure uses on workforce housing, a lack of which has presented major issues in resort communities like Whitefish and Big Sky, where local workers and longtime residents have been pushed out by rising prices.
The proposed legislation does not offer an explicit definition of workforce housing, which Fern said will give municipalities greater control in defining their community’s housing needs.
Speaking on behalf of the Whitefish housing nonprofit Shelter WF during the Senate Taxation Committee hearing, Jake Brown called Senate Bill 172 a much-needed additional step to help local governments address the state’s pervasive housing crisis.
“[The resort tax is] popular in Whitefish. This bill will allow the popularity to continue should the voters approve,” Brown said.
After clearing the Senate, Fern’s bill passed the House Taxation Committee last week with four Republicans joining all Democrats to advance it to the House floor. Flathead Valley Sens. John Fuller, Mark Noland, Matt Regier and Carl Glimm voted against the bill on the Senate floor. Sen. Greg Hertz, R-Polson, who worked with Fern to craft the bill, spoke in favor of the legislation and voted for it.