HELENA - For a local option tax to win legislative approval, it must reduce local property taxes, share revenues with surrounding areas and be marketed as a tax targeted at tourists, panelists said Thursday.

That was the consensus of speakers at a summit in Helena by the Billings Chamber of Commerce/Convention and Visitors Bureau.

The chamber sought to develop ideas to build support for passing a local option tax at the 2009 Legislature. A local option tax, usually a sales tax, is one put on the ballot by a local government that must be approved by local voters.

Larry Swanson, director of the O'Conner Center for the Rocky Mountain West, said local governments "aren't growing hog wild." Some are struggling to keep up with the rapid population growth.

"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 local taxes.

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 them.

"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, adding: "We're as 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 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.

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, it would roll back local tax mills to 1995 levels, he said.