26 December 2014 • 11:32:43 MST

Kalispell’s city government covets a local sales tax

All tax reform, the late Sen. Russell Long (D-LA) observed, is based on a simple principle: “Don’t tax you, don’t tax me, tax the fellow behind the tree.” Whitefish, for example, has a two percent resort tax that nicks local residents, but also nicks tourists, who are the fellows behind the tree. Kalispell also wants to tax the fellow behind the tree, but its population exceeds the resort tax ceiling of 6,000, so it wants the Montana Legislature to approve a local option sales tax:

Local Option Sales Tax: The City of Kalispell supports legislation that would provide local communities the option of enacting a voter approved sales tax within municipal limits that would provide an opportunity to maintain infrastructure and services for our community that is impacted by a large number of people who do not reside within the City of Kalispell.

Passing a local option sales tax bill is the first of two steps. The second is putting the issue to the voters in the community that wants to tax those fellows behind the trees

In theory, a Kalispell sales tax could finance filling potholes, building grander roads, installing more streetlights to pollute the night sky, and other infrastructure projects while providing some sort of property tax relief. Whitefish, for example, kicks back some of the money to property owners.

What kind of transactions would be subject to a Kalispell sales tax? Whitefish provides a guide:

Whitefish’s resort tax is a 2% tax on the retail sale of lodging, restaurant and prepared food, alcoholic beverages, ski resort goods and services, and defined luxury items. Whitefish voters allocated the use of the resort tax as follows:

Property tax reduction for taxpayers residing in the city in an amount equal to twenty five percent (25%) of the resort tax revenues derived during the preceding fiscal year;

Provision for the repair and improvement of existing streets, storm sewers, all underground utilities, sidewalks, curbs and gutters, in an amount equal to sixty five percent (65%) of resort tax revenues derived during the preceding fiscal year;

Bicycle paths and other park capital improvements in an amount equal to five percent (5%) of the resort tax revenues derived during the preceding fiscal year;

Cost of administering the resort tax in an amount equal to five percent (5%) per year.

Whitefish’s list of goods and services subject to the two-percent sales tax excludes, as it should, groceries, medicine, and medical care. Were Kalispell to get greedy and slap a sales tax on groceries and medicines, citizens on fixed incomes would suffer a decline in their purchasing power. Therefore, any local option enabling legislation should forbid taxing groceries, medicine, and medical care.

Sen. Cliff Larson (D-Missoula) has asked for a bill (LC0599) with the short title of “Generally revise local option sales tax on tourism laws.” So far, no draft of the bill is available for public review, so whether it would affect Kalispell remains unknown. And as of the time of this writing, no Kalispell area legislator has introduced a local option sales tax bill.