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BSRAD clarifies stance on alcohol and tobacco: Tax them like everything else

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BIG SKY – In their Aug. 14 meeting, the Big Sky Resort Area District board made clear their intent to subject alcohol and tobacco to resort tax, reasoning they are not “necessities of life” that are exempt from the tax, but rather fall under the umbrella of “luxuries” designed to be taxed in a resort tax area to provide relief for the local population.

“We’re trying to be equitable and fair,” said Sarah Blechta, BSRAD treasurer. “I personally do not believe that alcohol is a necessity of life, I believe it’s a luxury. I also believe that tourists buy it and locals buy it.”

Frank Kern, owner of the Hungry Moose Market and Deli, and Renae Schumacher of the Big Sky Conoco Travel Shoppe presented a petition signed—at both their businesses, as well as at the Big Sky Exxon and The Cave Spirits and Gifts—by 652 private individuals who didn’t want alcohol sold at grocery and convenience stores to be taxed. Big Sky residents comprised 376 signees, with the remaining 190 residing outside of Big Sky or in another state.

Currently, the 3 percent resort tax is only levied on booze sales at establishments where alcohol is formally served, such as bars and restaurants.

“We are ending up taxing locals and we are impacting local businesses and we are doing something we haven’t done for 27 years, maybe because of confusion, but we haven’t taxed,” Kern told the board. “So we put up a petition asking people if alcohol and tobacco shouldn’t be [taxed].”

Schumacher echoed Kern, telling EBS after the meeting that she doesn’t think the change would bring in much more resort tax because alcohol and tobacco operate on slim margins. Her concern is that the shift misses the intended purpose of resort tax.

“This will hit locals and transient workers who can’t live up here because there’s no housing and they can’t afford to live here,” Schumacher said. “They’re going after the wrong subset of people.”

This discussion falls in the midst of the board’s revision process of the ordinance that defines what should and shouldn’t be taxed. The primary goal of the revision process is provide clarity about what is subject to tax, for the sake of businesses that remit the tax and for compliance.

The draft ordinance includes a new section outlining the purpose of resort tax, the cornerstone of the rest of the document, according to the board, and they intend to align any other items in the ordinance with this section, including alcohol and tobacco.

At this point, the board has determined that the purpose of resort tax is to tax goods and services sold to tourists and transient visitors, but which locals and other members of the general public may also purchase, luxury items, exempting any necessities of life.

“This is clarification,” board chair Kevin Germain said of the move toward taxing the goods. “I do think there was intention and we’re just trying to clean it up. The tobacco [is] new because tobacco and alcohol go hand in hand when you’re talking about these things. If you’re taxing alcohol, how can you argue not to tax tobacco?”

The board also pointed out that, though alcohol sold for off-premise consumption has not been taxed, it should have been starting in 2015 when the last ordinance revision to that aspect took place, stating that “all alcoholic beverages” are subject to resort tax.

“I helped write this, so I can tell you what the intent was and what I still believe it says,” board director Mike Scholz said. “It says, ‘all alcohol.’”

Depending on interpretation, review of the past ordinances indicate that all alcohol sold in the district should have been taxed beginning as far back as 2002, potentially leaving 17 years-worth of resort tax on alcohol sold in grocery and conveniences stores uncollected.

The board said part of this oversight is likely because of an eight-year period prior to 2011 when they conducted no audits. According to the board, the 2015 ordinance change was supposed to make the wording clear enough to remit tax on all alcoholic beverages in the district, but a 2017 audit revealed that the change was universally disregarded, leading to the current attempts to clarify, and enforce, the ordinance as it relates to taxation of alcohol.

Scholz also pointed out that the tax is designed to hit the contract workers commuting into Big Sky, helping to pay for the emergency and law enforcement services.

“That little extra on their tallboy or whatever, is the little bit they pay for that protection, and that was one of the reasons we were able to get [resort tax] through the legislature,” Scholz said.

“We’re only applying to you the same criteria we apply to everything else,” Sholz told Kern and Schumacher. “Do tourists buy it? And if they buy it, we think it should be taxed. It was quoted in the [Lone Peak Lookout] as a sin tax. It’s not a sin tax. It’s a tourist tax.”

The board added that it’s time alcohol and tobacco pull their weight for the community in financial terms, considering numerous issues the substances usher in for many in Big Sky.

“There are clearly impacts on our community—public health and safety, law enforcement, whatever you want to say—resulting from the use of alcohol and possibly tobacco as well,” BSRAD Vice Chair Steve Johnson said. “And we have no compensation for that and that’s part of the purpose of resort tax, is to tax things that have an impact on our community that we can otherwise not fund.”

Although not happy with the board’s stance, Schumacher and Kern expressed their support of resort tax and its process.

“I’m just glad they’re at least giving us a chance to voice our opinion,” Shumacher said. “And locals can speak up too if they don’t want alcohol to be taxed. In the end we’ll collect and remit the tax however they want to do it.”

In other news:

  • The board discussed adding an appeals process to the ordinance that would allow businesses to ask BSRAD staff for clarification as to whether specific goods and services should be taxed, and appeal to the board if they don’t like the answer.
  • The board approved bonds allocated during the 2019/2020 allocations meeting in June: $500,000 for the Big Sky Community Organization’s BASE Community Center and $414,185 for Gallatin County 911’s radio network based on Lone Mountain.
  • The board is waiting on responses from a survey the Big Sky Chamber of Commerce has distributed among its members as to how beneficial a “tax holiday,” a period in which resort tax isn’t collected in the shoulder seasons, would be to area businesses.
  • The board approved a request from the Big Sky Community Housing Trust to use a portion of the funds allocated for the 2019/2020 fiscal year to pay off debt from the first phase of the Meadowview Condominiums development, of which all 18 units are under contract for sale but have not closed because they are awaiting Fannie Mae approval of the HOA.

The board will do an official first reading of the revised ordinance on Sept. 10. Visit for more information on how to get involved in the revision process.

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