By CHARLES S. JOHNSON
Gazette State Bureau

"Many areas don't need this," he said. "That's the beauty of the local-option tax."

If the Legislature authorizes local governments to place these taxes on the ballot, Swanson said, there should be flexibility in how the money is spent.

"Hopefully this money doesn't get rat-holed in (local government) operating expenses," he said.

Montana attracts 10 million out-of-state tourists annually, but they pay little in taxes. "Where do you go where you don't pay taxes?" Swanson said. "What are we doing?"

Local governments and some business groups have been pushing unsuccessfully for a local-option sales tax for several decades to boost local government funding, relieve pressures to raise property taxes and even reduce them.

Alec Hansen, executive director of the Montana League of Cities and Towns, has lobbied for passage of such a tax for 26 years. He explained why it's so hard to pass this tax here, even though 47 states have enacted a similar tax.

"Most of the Republican members of the Legislature have the political fantasy of a statewide general sales tax," he said, so they oppose a local-option tax.

And many union Democratic legislators "promise their mothers on their death beds that they would vote against a sales tax in any and all circumstances," Hansen said.

Still, Hansen said, Montana cities haven't given up: "We're as a patient as a wolf and as persistent as winter."

Local-option tax backers must emphasize that some of the money raised would go for local property tax reductions, he said, and point out that 40 percent of the tax would be paid by tourists.

He pointed to Whitefish and West Yellowstone as towns that passed local resort taxes to fix up their roads and reduce property taxes.

Sen. Jeff Essmann, D-Billings, said he's given up on trying to pass a general sales tax after failed attempts in 2005 and 2007 and is looking at a local-option tax.

He analyzed the two 2007 Senate votes that killed local-option taxes and found that all suburban senators voted against it.

Any local option tax must provide for sharing money with surrounding areas, he said.

Essmann said it's critical that any local-option tax require a certain percentage of money raised go to reduce property taxes.

He proposed calling the levy "a tourist tax" and targeting goods and services that tourists buy.

Bozeman City Manager Chris Kukulski said he previously favored letting local governments decide how much property taxes would be cut if they proposed a local-option tax. He now believes the bill should require that 50 percent of any local option tax revenue go for property tax cuts.

If Bozeman adopted a local option tax like Whitefish on the same goods and services, it could raise $7 million annually, Kukulski said.

If half went for property tax reductions, the sales tax would roll back local property tax rates to 1995 levels, he said.

Published on Friday, September 12, 2008.
Last modified on 9/12/2008 at 1:07 am