Local Option Sales Tax

A Shopper strolls through downtown Bozeman on Jan. 28.

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A second attempt in the Legislature to allow Montana cities and towns to enact local sales taxes is dead in the water.

A bill introduced by Sen. Chris Pope, D-Bozeman, which garnered the support of officials from Bozeman and Missoula, was tabled by the Senate Taxation Committee on Friday. The bill would have allowed cities to implement local sales taxes on non-essential items with the approval of voters.

A previous bill introduced by Rep. Dave Fern, D-Whitefish, failed in the House Taxation Committee in January.

Bozeman and other cities have pushed for local option sales taxes in past legislative sessions with no avail. Mayor Cyndy Andrus said Friday she was disappointed but not surprised that Pope’s bill was tabled.

“It’s just a shame that they won’t let the people of a community decide what’s best for their community,” Andrus said.

During a committee hearing on Wednesday, Pope emphasized his bill was different than previous iterations: The bill would have allocated 50% of the funds raised from a local option tax for infrastructure and affordable housing, 25% to property tax relief, 5% for administration and 20% to counties.

The bill proposed giving cities the option of asking voters for up to a 4% tax on non-essential items like bar and restaurant tabs or outdoor guide services. It proposed to sunset the tax after 10 years if voters don’t reapprove it.

Mostly, opponents cited concerns that a sales tax in some Montana cities would be regressive and would unfairly burden rural residents who come to those places to shop.

Supporters stressed that property tax relief is sorely needed, and sales tax could let cities benefit from tourist dollars.

Pope, who could not be reached Friday afternoon, was open to tweaks to the bill during Wednesday’s committee hearing.

Local sales taxes, Pope said, are a crucial need for some local governments.

“This is an essential request of local governments to be able to deal with some issues on the ground that are becoming an alarming existential crisis for our cities and towns,” Pope said. “Our cities are breaking. You can hear the creaking of the boat. Something’s going to give here.”

Andrus and City Manager Jeff Mihelich both testified in support of the bill Wednesday, as did elected officials from Missoula. Andrus said Friday she expects they will keep pushing for a local tax.

“I think we’re not going to stop trying and until we’re able to come up with something that helps to give some property tax relief,” Andrus said.

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Nora Shelly can be reached at nshelly@dailychronicle.com or 406-582-2607.

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