Local-option sales tax fails in Senate

HELENA — Montana’s resort towns could have bumped their local sales taxes up to 4 percent under a proposal that lasted about 24 hours in the Legislature before its apparent demise on Thursday.

Passed easily by the House Thursday morning, amendments added by Gov. Steve Bullock to a local-government bill failed to pass the Senate on a tie vote Thursday afternoon. In addition to the optional 1 percent resort tax increase for affordable housing, it also would have given some communities dependent on natural resources the option of a local 4 percent sales tax on lodging.

Several Republican senators successfully argued against the sales-tax amendments Thursday afternoon, noting that communities would be putting the majority of the tax burden on visitors and questioning whether the resort-tax provision would actually increase affordable housing for residents.

The Senate deadlocked on a vote for the bill, 24-24, hours after the House approved it on a 70-30 vote. The vote mirrored the outcome of a measure on which the governor’s amendments were based, a local-option tax bill that received a tie vote in the Senate last month.

The language was slid into House Bill 405 — which mainly addresses local-government vacancies and election rules — just before it passed a preliminary House vote Wednesday, and while a forthcoming vote on a major infrastructure-bonding bill took center stage.

Sponsored by Rep. Rob Cook, R-Conrad, the measure initially passed the Legislature by a wide margin, but Bullock on Wednesday issued an amendatory veto of the bill that requested the sales tax language be added into the bill.

The amendments would have given communities the ability to vote to create special taxing jurisdictions called “natural resource impact areas” with populations of 20,000 or less that have experienced significant growth in energy or timber development. Those communities could also vote to approve up to a 4 percent sales tax on purchases made at campgrounds and lodging facilities.

Cook characterized the new provision as a means for small communities to generate their own funding for public-works projects.

“The intention here was to be able to give communities, whether you’re a natural-resource community or a vacation destination, to give these communities the ability to more quickly address the additional loads on their infrastructure,” Cook said in an interview after Thursday’s vote. “I think what we’ve got is a very nice method to address impacts locally.”

While he has repeatedly said he is opposed to a state sales tax, Bullock said in an interview Thursday that he supports the local option to finance basic infrastructure, “as long as it’s local communities making those decisions.”

“If local communities want to address local impacts and infrastructure needs, putting that in local communities’ hands makes sense,” he said.

Local-option sales taxes have long been requested by many of Montana’s non-resort communities struggling to keep pace with the impacts of seasonal or resource-driven impacts to local infrastructure. But Republican lawmakers have largely resisted those proposals, including two bills that failed earlier this session.

House Speaker Pro Tem Greg Hertz, R-Polson, has been consistently opposed to sales taxes, and criticized the brisk manner in which the amendments to the bill passed an initial House vote Wednesday.

“I think a lot of people didn’t know it raised the local option resort tax 1 percent,” Hertz said Thursday after the morning floor session. “That happens in the end [of the session]. We’ve got a lot of things coming and you run out of time.”

No debate occurred when Cook brought the amended bill before the House on Wednesday, prior to its initial vote.

Cook objected to the characterization that the language represented a significant policy change from the original bill, or that lawmakers didn’t have enough time to properly vet the amended version.

“I think it’s your job to know,” he said.

With the Senate’s rejection of the amendments, the Legislature’s rules allow for a conference committee between the two houses to find a compromise version, which would need re-approval before being sent to the the governor. Otherwise, the bill will head back to the governor once more, minus his amendments.

Reporter Sam Wilson can be reached at 758-4407 or by email at swilson@dailyinterlake.com.