Tax on Tourists to Pay for Infrastructure and Homeowner Property Tax Relief

Jan 30, 2017

Senator Mike Phillips, left, listens to discussion on the Senate Floor.

State Senator Mike Phillips, D-Bozeman, had a local option sales tax bill drafted, even though past Legislatures have rejected such proposals.

Phillips said what makes this proposal different is it would be temporary. The tax, to be enacted by local voters, would be in effect only long enough to pay for what he calls "critical" public works or infrastructure project and a minimum of 10% of the revenue raised would have to go to homeowners in the form of property tax relief.


“Here’s an approach that’s independent of Helena, that has a decided beginning, middle, and an end to address critical needs, property tax relief, infrastructure, maintenance and establishment,” he said.

Phillips said the problem with the current process to fund infrastructure projects is everyone has to come to Helena and plead with legislators to fund their water, sewer, or building projects. In recent sessions, lawmakers have failed to pass a major infrastructure bill because of disputes over which projects should get funding and over how to pay for them, use cash on hand or borrow by issuing bonds.

Phillips predicted while some will object to funding infrastructure projects with what in essence is a new tax – a limited sales tax - he argued this is really a matter of local control.  

“It’s all about saying to local folks you need to engage,” He said. “It’s your community. You know it best. What do you want it to be in the future? Stop looking to Helena to make all of these tough decisions.”

The local option sales tax is based loosely on an existing tax that voters in some of Montana’s smaller communities, like Red Lodge or West Yellowstone have already enacted to pay for their infrastructure needs.  The resort tax, however is on-going. In these communities it is imposed on prepared foods or alcoholic beverages in restaurants or bars, or so-called luxury items purchased primarily by tourists. Under Phillip’s proposed local option tax, the rate could be no more than 4% that is also aimed a so-called luxury items targeted to capture impacts from tourism. It also calls for a minimum of 10% of the revenue collected go toward property tax relief for homeowners, although it would be up to each community to decide.

This proposal is still in draft form and has yet to be introduced.  The Bozeman Democrat hopes to have a Republican lawmaker take the lead sponsor role or at the least be a co-sponsor.

“I’m smart enough to realize that sometimes a great message can be messed up by the wrong messenger,” Phillips said, noting Republicans control both the House and Senate.