By Bay Stephens and Michael Somerby EBS Editors
BIG SKY – Concerns over a Montana bill that could enable a 1 percent increase in resort tax that the Big Sky Resort Area District Tax Board is lobbying for surfaced during both the Big Sky Chamber of Commerce board meeting Feb. 12 and the resort tax board meeting Feb. 13.
The legislation, known as Senate Bill 241 and sponsored by Sen. Jeffrey Welborn, R-Virginia City, would give Montana’s 10 resort tax areas and communities the ability to levy an additional 1 percent resort tax should individual areas or communities vote to implement it within their respective boundaries. The effort has been led by West Yellowstone, which is under a building moratorium due to infrastructure issues.
This increase may spell trouble for local businesses trying to compete with no-tax markets like nearby Bozeman or online retail giants like Amazon if it passes the Legislature and is approved by the Big Sky electorate.
The financial gains from this additional percent, as proposed by SB 241, will be used exclusively for infrastructure, defined by the draft bill as, “tangible facilities and assets related to water, sewer, wastewater treatment, storm water, solid waste and utilities systems, fire protection, ambulance and law enforcement, and roads and bridges.”
As currently drafted, any utilization of the up-to-1-percent increase would be project-based and not in perpetuity, the bill states.
Along with the boards of the Gallatin River Task Force and Big Sky Community Organization, the Big Sky Chamber of Commerce voted to approve a letter of support for the bill, and requested it be amended to replace “roads and bridges” with the broader term “transportation” in order to include the Big Sky Transportation District.
The chamber vote, like the BSCO vote, was not unanimous as Grizzly Outfitters co-owner and chamber board member Ken Lancey voted in opposition.
“I’ve talked to a lot of people in retail [in Big Sky] and they are not super psyched about [the bill],” Lancey said at the meeting, wondering how representative the action was of the chamber’s constituency of Big Sky business owners.
“This was a deeply divided, I’d say community-wide [issue] the last time around,” Lancey said of the 2017 legislative session. “It drove a pretty big wedge in Big Sky. I guess I’m just cautious about where we as a board send our message to the community.”
Candace Carr Strauss, CEO of Big Sky’s Chamber of Commerce, said that because they are a representative board and the bill isn’t a local issue yet— rather one regarding 10 resort areas and communities statewide—the chamber had not sought out constituent input. If the bill passed the Legislature, she said, and a petition was drafted to increase the tax in the Big Sky Resort Area District, the chamber would survey its members.
“We’re asking for enabling legislation that puts a funding tool in the toolbox,” Carr Strauss said in a Feb. 13 phone interview.
Kevin Germain, who serves on both the chamber and resort tax boards, said in the chamber meeting that large local projects coming down the pipeline—such as the estimated $21.7 million wastewater treatment plant upgrade proposed by Big Sky Water and Sewer District to meet current peak demand—call attention to Big Sky’s limited funding options as an unincorporated entity.
“There’s only two funding mechanisms for infrastructure projects in this community: property tax or resort tax,” Germain said, estimating that for every dollar locals pay in resort tax, visitors pay $50. “If it’s not resort tax, it’s property tax, and property tax is paid 100 percent by the locals.”
This is the third attempt to get similar bills through the Montana Legislature, having come just short in the 2017 legislative session of the simple majority vote in the Montana Senate required to keep the bill alive for House review.
The Big Sky chamber, which represents and supports member businesses, receives half its budget from resort tax.
The following morning, the BSRAD tax board met for an open board meeting at the resort tax office in Town Center, the meeting’s focus centered on the 1 percent increase legislation.
According to the BSRAD website, “On April 13, 1992, the general electorate of the Big Sky area created the Big Sky Resort Area and adopted a 3 percent Resort Tax to be charged on ‘luxury’ goods and services not deemed necessities of life.”
Andrew Schreiner, co-owner of Grizzly Outfitters with Lancey, was in attendance Wednesday and expressed his concerns and want for addressing the issue to become a priority.
“We have … locals ordering goods on Amazon and having them delivered for free,” Schreiner said. “Or they just go down to Bozeman. I’m not concerned with the tourists, I’m talking about locals purchasing higher-end goods.”
Schreiner also noted an inconsistency in what was taxed.
“A pair of Carhartt pants, a necessity for many, won’t have a tax applied. And then a pair of Mountain Khakis will be taxed,” he said. “It would be nice to have some consistency.”
According to the draft bill, “‘Luxuries’ means any gift item, luxury item, or other item normally sold to the public or to transient visitors or tourists. The term does not include food purchased unprepared or unserved, medicine, medical supplies and services, appliances, hardware supplies and tools, or any necessities of life.”
Ambiguity in the verbiage has been a problem in the past, since it is open to some interpretation and can vary between each resort tax area and community.
Mike Scholz, director of the resort tax board, brought another issue to the table: compliance. According to Scholz, it is often unclear what has and has not been taxed until an audit is performed.
“We don’t have a list of what you sell,” Scholz said. “We only know what you collect with an audit.”
EBS reached out to Big Sky Resort, the largest collector or resort tax in the district, but the resort declined to comment at this time.
SB 241 will be heard on the Senate floor in the Montana Legislature on Wednesday, Feb. 20 at 8 a.m.
“We’ll be up there,” said Steve Johnson, vice-chair of the BSRAD tax board. “This is the first opportunity to show up and weigh in [on the bill] if you want to.”
The board voted in favor of a motion to approve SB 241 as submitted.
The meeting commenced on a lighter note, touching on BSRAD’s “Community Vision Process.” Kicking off with events slated for the week of Feb. 25, the board’s hope is to incorporate the voices of community members within the decisions of the board.
The objective of the strategy, called “Our Big Sky,” is “… to guide future development and plan for, prioritize and budget capital improvement projects and strategic investments within Big Sky over the next 10 years,” according to a press release from Colorado-based environmental planning firm Logan Simpson, which BSRAD hired to guide the process.
Events will include opportunity for public comment, one-on-one interviews, online questionnaires, advisory committee meetings and photo contests, according to the press release.
On Tuesday, Feb. 26 and Wednesday, Feb. 27, one-on-one interviews will be held at Compass Café and Caliber Coffee, respectively.
Kickoff group events, dubbed “Polaroid’s and Pints,” will occur on Wednesday, Feb. 27 and Thursday, Feb. 28 at the Gallatin Riverhouse Grill and the Beehive Basin Brewery, respectively.