By Daniel Bierschwale EBS COLUMNIST
Following our recent column outlining 2024 Big Sky elections, I met with someone interested in learning more about the Big Sky Resort Area District (BSRAD). In our conversation, they referenced resort tax as “the silver bullet” for solving Big Sky’s most pressing needs. I paused, thought about the statement, and ultimately expressed, “the funding is certainly an amazingly unique opportunity thoughtful community leaders worked hard to attain. However, it does not have the power to rid Big Sky of werewolves as a silver bullet.”
The statement, however, did make me realize that some basic building blocks are in order to understand what resort tax is capable of and what it isn’t.
Resort tax 101
Typically, property taxes fund critical public services and infrastructure, like schools, fire protection and roads. In tourism-based communities, despite visitors providing a significant benefit to the local economy, they also strain that infrastructure. In 1985, Montana House Bill 826 was passed giving qualified communities the authority to impose a tax on luxury goods and services, thus helping offset the financial burden that would otherwise fall on the shoulders of those paying property taxes.
The Big Sky resort tax of 4% is collected and remitted on luxury goods and services including restaurants, short-term lodging and souvenirs. Exemptions called necessities of life, include unprepared food, medicine, medical supplies, appliances, hardware supplies and tools. Businesses collect the tax on applicable sales and remit those collections to the Big Sky Resort Area District, generally on a monthly basis. Businesses retain 5% of collections to help offset the costs of administering the tax.
Governing authority—county, district, municipality
Today, there are 12 locations in Montana that impose a resort tax: Big Sky, Columbia Falls, Cooke City, Craig, Gardiner, Red Lodge, Red Lodge Mountain, St. Regis, Virginia City, West Yellowstone, Whitefish, and Wolf Creek. Some collect year-round and others seasonally. Each location imposing the tax approves ordinances outlining administrative procedures for collections, compliance, and allocation of the public funds. Revenues generally support infrastructure and core government services.
The Montana Department of Commerce is responsible for designating a “resort area.” The major portion of that area’s economy must be derived from businesses catering to the recreational and personal needs of persons traveling to or through the area for purposes not related to their income production—simply put, a “tourism economy.” Three forms of governing bodies with decision making authority exist as follows:
- Resort area: an unincorporated area administered through the board of county commissioners.
- Resort area district: a resort tax area administered by a locally elected district board of directors.
- Resort tax community: an incorporated municipality administered by the municipal governing body.
Each classification has varying population density requirements, bonding authority, and governing authority. Both the community and the district have bonding authority, which can be used to fund larger capital projects.
So, now that we know generally what resort tax is, how it’s collected and on what, and who collects it, let’s dive into Big Sky’s resort tax specifically.
History in Big Sky
In April of 1992, the general electorate of Big Sky voted in favor of imposing a resort tax, effective on June 1, 1992. Prior to becoming a formal district, the Big Sky Resort Area was administered by the Madison and Gallatin County Commissioners and a local nine-member board of advisors. In 1998, the general electorate voted to create the Big Sky Resort Area District, formalizing governing authority under the management of a locally elected, five-member BSRAD Board of Directors.
Over the span of 31 years, collections have totaled over $131 million. Those funds have been directly reinvested into projects and programs within district boundaries—funds cannot be spent outside the boundary. In 2020, the electorate voted in favor of the additional 1% dedicated for infrastructure, bringing the total tax rate to its maximum amount of 4%. BSRAD is unique because in addition to traditional funding of vital infrastructure and government services, it has also funded nonprofit projects.
Future of Big Sky’s resort tax
As we near a forthcoming renewal of the resort tax, it’s important to acknowledge its vital role in our community and to plan for the future. Several initiatives underway will likely transition use of these public funds. The updated Big Sky Capital Improvement Plan (CIP) will be a multi-year community planning tool outlining large-scale projects, estimated costs, timelines, and a myriad of funding sources.
Another effort underway with potential impact on resort tax is incorporation. BSRAD is committed to working together to understand the goals, pressing issues, and potential solutions by forming a municipality. As exploration continues, there are many factors to take into consideration. Who would be responsible for administering and appropriating the funds? How much of those funds would be needed to finance municipal operations? If we incorporate, how does the municipal government convert to a resort tax community with an existing resort area district? These are questions we, as a community, need to answer.
As always, I encourage you to be a part of the conversation. Attend board meetings, reach out to local officials, understand the topics and join in the discussions about your resort tax dollars. While it may not be a “silver bullet,” resort tax does give us protection against the scariest monster: property taxes.
Daniel Bierschwale is the Executive Director of the Big Sky Resort Area District (BSRAD). As a dedicated public servant, he is committed to increasing civic engagement and voter education. Many ballot issues impact government services and public funding including subsequent property tax impacts. BSRAD is the local government agency that administers Resort Tax, which offsets property taxes while also funding numerous community-wide nonprofit programs.
