Columbia Falls could benefit from resort tax

Columbia Falls has long branded itself as the “Gateway to Glacier National Park,” and with good reason.

A state study to determine the city’s eligibility as a resort community under state law has revealed that 1.2 million vehicles travel through Columbia Falls en route to Glacier Park from July through September. That amounts to 62 percent of all traffic traveling through the park’s west entrance. What’s more, over a quarter of all businesses in the city are either entirely or partially dependent on tourist demand.

The state Department of Commerce just completed its due diligence and has declared that Columbia Falls qualifies as a resort community. Its residents now have a big decision to make. Do they approve a resort tax to bring in revenue to offset the impact of tourism-related activity? Or do they go it alone, raising property taxes to help pay for more law enforcement and first-responder services that come with increased visitor traffic?

Whitefish went through this same discussion 24 years ago when that resort community decided to ask voters to support a 2 percent tax on lodging, restaurant and bars, and retail “luxury” goods. There were heated discussions before Whitefish voters passed the measure in November 1995 and it took effect in February 1996.

Many Whitefish business owners initially opposed the resort tax, claiming it would send folks down the road to Kalispell to shop, and Canadians wouldn’t bother to stop in Whitefish because of the tax. There were long, laborious discussions at City Council meetings about which retail items to tax. Is underwear a luxury? What about art supplies?

It’s hard to argue that Whitefish’s resort tax has been a detriment to the community or its businesses. Quite frankly, business is booming in Whitefish. Since the resort tax began Whitefish has, to date, collected more than $43 million on taxable sales valued at $1.9 billion. This revenue has rebuilt streets, improved parks and provided property-tax relief to its residents.

Whitefish voters overwhelmingly approved a 1 percent increase to the 2 percent tax in 2015 to help purchase a permanent conservation easement on 3,000 acres in the Haskill Basin to protect the city’s water supply. Whitefish began collecting a 3 percent tax on July 1, 2015.

Last fall the city of Columbia Falls estimated a 3 percent resort tax would conservatively bring in $450,000 annually to city coffers. That money could go a long way in helping the city offset the impact of visitor traffic. One potential plan would be to split the resort tax revenue equally four ways — for the fire department, police, streets and property-tax relief.

To be sure, there will be naysayers in Columbia Falls, just as there were in Whitefish, when it comes time to decide whether to impose such a tax.

For communities heavily impacted by tourism, it makes sense to want to spread some of the cost to those throngs of visitors traveling through our towns. Columbia Falls now has the opportunity to decide whether or not to embrace a resort tax. It’s an option many communities throughout Montana — Kalispell included — would love to have.