HELENA – Ten resort communities from around Montana are asking state lawmakers to let them increase the resort tax to help pay for infrastructure needs.
Leaders from several of the communities testified before the Senate Taxation Committee Wednesday in support of Senate Bill 241, sponsored by Sen. Jeff Welborn (R-Dillon).
They said it’s a challenge to pay for the impacts they see from an annual influx of tourists. At their busiest times of the year, these areas see far more visitors than the number of full-time residents.
“You’ve got 1,300 people trying to provide services for 10,000, 12,000, 14,000 people a night,” said Dan Sabolsky, West Yellowstone’s town manager.
“You can’t tax our real estate enough to pay for it,” said former West Yellowstone mayor and business owner Glen Loomis. “Can’t be done.”
The state allows these communities to make up some of the difference through the resort tax — a tax of up to 3% on things like hotels, restaurants, bars, ski resorts and gift items.
That money can go toward a variety of uses, including property tax relief, emergency services and infrastructure improvements.
SB 241 would allow voters in resort communities to approve up to an additional 1% tax that would be used exclusively for infrastructure. Leaders would have to specifically identify the projects the money will be used for.
Community leaders say, in most cases, they would use the additional tax to help pay for large, expensive projects, like water and sewer upgrades. Several told the committee they have put off needed improvements because they didn’t have enough revenue available.
Steve Johnson, a member of the Big Sky Resort Area District Board, said his community is looking to spend at least $24 million to improve its wastewater treatment system and improve capacity.
Currently, the treated water is only certified for use in irrigation. That means the district must store it in ponds throughout the winter — the busiest season in Big Sky — then pump it out to places like the Yellowstone Club during the summer.
“This is the cycle that we live every year, year in and year out: fill it up all winter; empty it out all summer — once you can turn it on,” said Johnson. “The pumps that empty that stuff out run literally full-tilt all summer long.”
Last year, Johnson said the storage ponds nearly overflowed because of high visitor traffic and heavy rain and snow.
Sabolsky said West Yellowstone has implemented a “water and sewer moratorium” because of the limitations of its systems. That limits residential growth and stops most commercial growth.
He said some hotel rooms have already been built, but they can’t yet be attached to the town sewer system.
Sabolsky said they are planning to install a mechanical wastewater treatment plant for around $10 million and replace five to six miles of decades-old sewer lines for another $10 million.
“These are realistic projects; these have realistic costs,” he said. “This is not pie-in-the-sky, to say, ‘Hey, look, we’ve got all this infrastructure.’ These are serious infrastructure needs that we have to deal with now.”
Leaders asked lawmakers to give them this additional tool to meet their infrastructure needs.
“We have to do more to welcome our guests to Montana,” said Loomis. “They are our guests.”
In order to qualify as a “resort community,” an incorporated city or town must have a population of less than 5,500 and get most of its economy from tourism.
An unincorporated area can become a “resort area” if it relies on tourism and has fewer than 2,500 residents. The Montana Department of Commerce must approve a community’s request to be classified as a resort.
The ten communities that currently have resort taxes are Big Sky, Cooke City, Craig, Gardiner, Red Lodge, St. Regis, Virginia City, West Yellowstone, Whitefish and Wolf Creek.
SB 241 was not the only bill on the resort tax that received a hearing Wednesday. Rep. Dave Fern (D-Whitefish) introduced House Bill 449, which would raise the maximum population for a resort community to 10,000 and for a resort area to 3,000.
Fern said he brought the bill because people in Livingston — which had a population of just over 7,000 at the last census — have expressed interest in becoming a resort community.
He said he also wanted to make sure that Whitefish — which has exceeded the maximum population — and Big Sky, which is approaching it — will remain eligible for collecting resort tax.