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Gov. Steve Bullock has signed a bill into law that lets Montana’s 10 resort areas ask voters to raise their local option sales tax to fund infrastructure projects.

Gallatin County’s resort areas — Big Sky and West Yellowstone — may bring the tax hike to voters because it could help them address their high levels of tourist traffic.

“This gives Big Sky and West Yellowstone an important tool because they have small tax bases and few people but huge infrastructure and capital needs due to all the tourists that come in,” said Gallatin County Commission Chairman Joe Skinner, who advocated for the bill before the Legislature in April. “There is just no way to meet the capital needs with the tax bases they have, so this gives the opportunity to tax the tourists a small amount to do those necessary projects.”

The new law gives voters the option to approve a luxury sales tax hike from 3% to 4%, with the additional 1% going toward infrastructure projects. The ballot question brought to voters must include the projects the new revenue would finance and their costs. The increase would expire when the projects are completed.

The Big Sky Resort Tax Board, which oversees collection and distribution of Big Sky’s local option sales tax, does not yet have plans to ask voters for a tax increase, said chairman Kevin Germain. The board anticipates using input from residents and government officials to inform what — if any — infrastructure projects they will ask voters to fund with the tax increase.

Among the possible projects could be about $21 million in upgrades to Big Sky’s wastewater treatment operations, which must be expanded to accommodate the area’s growing tourism industry.

“The Resort Tax Board has heard of needs in the community, and this tax just gives us another tool in the toolbox to fund them,” Germain said.

West Yellowstone Town Manager Dan Sabolsky has said he plans to ask voters soon — either in November or by next spring — to approve a 20-year bond issue for several projects that must be completed over the next few years. The tax increase would expire after the bond is repaid.

Sabolsky foresees most of the infrastructure projects would address the town’s overburdened water and sewer systems at a cost of about $48 million. Half the funding would come from the new 1% tax, if approved by voters, and the remainder would come from rate and fee increases to residents.

Gallatin County officials, including those in Big Sky and West Yellowstone, advocated throughout the legislative session for several new taxes to help them address the area’s rapid growth. The option for resort areas to increase their sales tax is one of a few such efforts that has become law.

Both Germain and Sabolsky said the new tax likely passed the Legislature because resort areas have shown the benefits of their local option sales tax and because the law provides targeted funding within a constrained time frame.

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