Page 8 - Flathead Beacon // 10.12.16

COURT BEAT 14 COUNTY BEAT 15 CITY BEAT 15 Newsworthy
Kalispell Stays Persistent in Plea for Sales Tax Choice State agency says city could accrue $26.64 million annually with local option tax
BY DILLON TABISH OF THE BEACON
In response to booming residential and commercial growth on the north side of town, Kalispell needs to build a $14 million sewer pipeline before the current line reaches capacity, which is expected to occur in the coming years.
To pay for this urgent project along- side the gamut of standard services and infrastructure needs, city o cials have a few options. They could increase prop- erty taxes to the maximum allowable levy amount for the roughly 8,000 tax- payers in city limits. They could increase impact fees, heightening the costs for developers. Or they could cut funding for services and other projects in the budget.
Grappling with persistent growth, city o cials have turned their attention to another funding source that is con- troversial but could remedy the current funding dilemma.
With a 4 percent sales tax, the city of Kalispell would accrue roughly $26.64 million this year, nearly half of its gen- eral budget, according to an analysis by the state Department of Revenue.
With a 3 percent local option sales tax, similar to White sh’s, Kalispell would similarly reap the signi cant bene ts of collecting revenue from the sales of goods and services while dropping prop- erty taxes for residents, city o cials say.
Yet, unlike White sh 10 miles up the road, Kalispell is unable to venture a guess as to whether residents would even consider enacting a local option sales tax, or resort tax, if they could. Under state law, only cities with a population under 5,500 that are deemed “resort communi- ties” — meaning they draw a high number of visitors compared to local residents — have the ability to enact a resort tax.
“Why is White sh di erent than Kalispell?” City Manager Doug Rus- sell asked, pointing to Kalispell’s role in the greater valley’s expanding tourism sector.
“We t the de nition of a resort community.”
As the retail, professional and medi- cal center of Northwest Montana, Kalis- pell does serve a greater population than simply within its city boundaries. It also stands out as the largest city in Flathead County, which is the state leader in non- resident tourist spending at more than $668 million annually.
Kalispell o cials say residents inside city limits are bearing the brunt of pay- ing for road maintenance, city services
Kalispell Mayor Mark Johnson listens to Montana gubernatorial candidate Greg Gianforte as they discuss a local-option sales tax with members of the Kalispell City Council on Oct. 6. GREG LINDSTROM | FLATHEAD BEACON
now,” he said. “I don’t know that (a bill changing the law) can get through the Legislature, but I think this education that you’re doing, you have to convince people ... I’ll listen to the constituents.”
When asked his opinion, Gianforte’s opponent, incumbent Democratic Gov. Steve Bullock, responded to the Beacon in a statement, “I’m rmly against any statewide sales tax. As with any other bill, I will sure take a look at the local option if it gets to my desk, but it didn’t even make it out of committee last session.”
In Montana, a ourishing tourist des- tination that is one of ve states without a general sales tax, the topic is both thorny and enticing. The last time Montana res- idents were pitched a statewide sales tax — in 1993 — they resoundingly rejected it by a 3-to-1 margin. It was the second time in 22 years that the e ort fell at. Any attempt at adding a sales tax has histor- ically received pushback from the retail and dining sectors, as well as county and rural residents who say the tax would unfairly shift the burden onto them.
The topic was recently thrust into the forefront of the gubernatorial race with Democrats accusing GOP candi- date Gianforte of previously supporting a sales tax that “would hurt hard-work- ing middle-class families,” Jason Pitt, a spokesperson for the Montana Demo- cratic Party, said.
Gianforte responded by saying he is opposed to a statewide sales tax. Bull- ock used the opportunity to propose an amendment to the state constitution that would prohibit any future sales tax. Gianforte called Bullock’s proposal a stunt “to cover his failed record on tax relief for Montanans.”
In previous legislative sessions, any attempts at changing the law to allow cities such as Kalispell the chance to ask voters has also zzled out early and often. In the 2009 session, Sen. Je Essmann, R-Billings, proposed a bill allowing larger cities such as Bozeman to enact resort taxes, but the Legislature killed it. Last session, a similar bill failed to make it out of committee.
Essmann, chairman of the Montana Republican Party, said the challenge remains convincing rural areas — and their legislators — that enacting the sales tax would be bene cial to them instead of simply a new cost that they would be incurring.
“It’s got to be perceived as a win-win,” Essmann said.
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and other projects that people in the sur- rounding area, as well as tourists, also bene t from. Opponents of a sales tax say it could hamper consumer spending and place an added burden on seniors with xed incomes, low-income residents and young people.
Mayor Mark Johnson and the Kalis- pell City Council has been persistently pleading its case to state lawmakers and governor candidates, alongside other cit- ies such as Billings and Bozeman, which recently hired a lobbyist to try to sway lawmakers during the upcoming legisla- tive session.
Last week the Kalispell City Council held a forum with current and prospec- tive legislators, as well as Greg Gianforte, the Republican candidate for governor, and at both events councilors repeatedly brought up the contentious topic and the desire for local governments and their residents to decide their own fates.
“It shouldn’t be up to Helena to keep us from deciding which funding mecha- nism we want,” Councilor Phil Gui rida told Gianforte. “Let (Kalispell residents)
make the informed decision to govern themselves.”
City o cials say the addition of a sales tax could provide relief for property taxes, which are a key source of fund- ing for public schools while also being divvied out to city, county and state gov- ernments. In White sh, homeowners receive a 25 percent reduction in annual property taxes to help o set the resort tax.
In 2015, Kalispell residents paid $30.46 million in property taxes, and of that amount, $7.11 million was lev- ied, or distributed, to the city of Kalis- pell, according to the state Department of Revenue.
“I don’t mind paying my fair share,” Kalispell Councilor Rod Kuntz said. “We’re just paying a lot of other people’s shares also.”
Gianforte told the Kalispell council- ors that he did not favor any new taxes for residents, but he understands their predicament.
“I hear you loud and clear that (the current funding structure) is not working
“WHY IS WHITEFISH DIFFERENT THAN KALISPELL? WE FIT THE DEFINITION OF A RESORT COMMUNITY.”
- DOUG RUSSELL, CITY MANAGER
dtabish@ atheadbeacon.com