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Here’s a figure or two worth pondering if you’re a Bozeman resident worried about rising property taxes:

A 4 percent sales tax levied on select items inside Bozeman city limits could bring in $30 million a year for local government programs, according to an analysis by the Montana Department of Revenue. Countywide, it would mean $50 million in revenue.

That $30 million figure, for context, is substantially more than the $20.2 million in property taxes collected by the city last year — and, city leaders say, enough revenue to make tax relief possible without breaking the city’s books.

The revenue department’s analysis bolsters a case local city leaders have made repeatedly in recent years as they worry about finding money to tackle a road construction to-do list with a price tag in the tens of millions.

It could also, they hope, help address the concerns of residents worried about rising property taxes as the city, county and school district look at projects like a new police and courts building and a second high school.

Adopting a sales tax, city leaders say — using some of the proceeds to lower property taxes and some to address needs like streets — would give local government a way to divide the cost of its services between residents and two groups who they say don’t currently pay their fair share: commuters from outside city limits and tourists.

“A significant share of this would come from tourism,” said City Commissioner Chris Mehl. “I don’t think it would discourage visitors, and it would give us the ability to pay for those roads.”

A Four Corners resident who works in downtown Bozeman, the argument goes, puts wear and tear on city streets without paying directly into the property-based taxes that fund city maintenance programs. Same with the millions of tourists who pass through Bozeman every year.

Back in 2013, a city impact fee study estimated that more than 16,000 people worked in Bozeman but lived outside city limits — a number that’s swelling as population growth and the city’s expensive housing market push more and more residents to outlying communities like Four Corners and Belgrade.

Similarly, the UM Institute for Tourism and Recreation research estimated non-residents spent a total of $662 million on goods and services in Gallatin County in 2014.

Under Montana law, smaller towns or unincorporated entities can collect sales tax in the form of a local option resort tax, an option used by places like West Yellowstone, Big Sky and Whitefish. The state also allows counties, with voter approval, to institute a two-cent gas tax for road upkeep, though that’s been something of a nonstarter with the fiscally conservative Gallatin County Commission.

Beyond that, though, the state keeps cities’ revenue options largely limited to property taxes and assessments — one reason Bozeman is hiring a lobbyist for this winter’s legislative session.

If he had his way, Mehl said, he’d see legislators give cities like Bozeman the ability to ask their voters to approve a resort-style sales tax with “appropriate safeguards.”

Specifically, he said, that would include a sunset clause requiring renewal every five years, having revenues dedicated to a specific purpose like roads and — most notably — a provision that at least a quarter of proceeds be dedicated to property tax relief.

A quarter of $30 million comes out to enough to reduce city property taxes by 37 percent. A back-of-the-envelope calculation indicates that could lower the $680 a median Bozeman household pays in property taxes each year by roughly $250.

In comparison, it would take $6,250 in spending taxed at 4 percent to end up paying the government $250 with a sales tax.

While homeowners would see immediate relief in the event property taxes are lowered, it’s unclear whether the benefits would end up passed on to renters, at least in the short run.

Given Bozeman’s competitive rental market, Mehl acknowledged, landlords might not immediately offer lower rents. But, he maintained, there would likely be a long-term effect.

And, in any case, as the needs of local government add up, the city can only raise property taxes so much.

“With the schools and the county all banging on that property tax drum,” Mehl said, "it’s getting pretty disproportionate."

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Eric Dietrich can be reached at 406-582-2628 or edietrich@dailychronicle.com. He is on Twitter at @eidietrich.

Eric Dietrich covers city government and health for the Chronicle.

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