Bozeman City Commissioner Terry Cunningham was among those who urged the state Legislature’s revenue interim committee Monday to explore statewide and local option sales taxes in advance of the 2021 session.

After a full day of discussion in Helena, the committee has decided it will spend the next several months examining a number of existing and potential taxes, including sales taxes and a local option fuel tax. They also plan to look at simplifying and revising property taxes and income taxes.

In looking at these topics, lawmakers said they hope to modernize the tax system as revenue from oil and gas taxes declines and tourism becomes increasingly important for Montana. They also said they’d like to create a tax system that provides more reliable and adequate funding for state and local services.

In his testimony before the committee, Cunningham said Bozeman has limited tools — besides increasing property taxes — to pay for the services associated with a growing population. He offered his and other city officials’ time and expertise to help committee members understand the revenue challenges cities like Bozeman face.

Bozeman’s elected officials have been pushing for a sales tax for more than a decade.

Other officials from across the state also spoke to the committee about the need for a sales tax. Darryl James, executive director of the Montana Infrastructure Coalition, said Montanans are experiencing “property tax fatigue.” He said a sales tax could finance the backlog of infrastructure projects many cities and towns have.

This summer, James met with Livingston officials to discuss how a sales tax would make it easier for the town to pay for $2 million of improvements to downtown because property taxpayers are struggling to absorb the cost of the project.

Missoula City Council member Gwen Jones and member-elect Amber Sherrill told the committee that rising property taxes burden residents, contributing to the city’s lack of affordable housing. They also said residential property taxes are a large portion of the city’s budget, so they would like to diversify and expand their tax base.

Like Cunningham, they offered to provide information about the challenges cities have, which, they said, could help lawmakers as they examine Montana’s tax system.

The revenue interim committee next meets on Jan. 13.

One of the only successful sales tax bills was an option for towns with a resort tax to increase the tax rate from 3% to 4% and use the additional revenue for infrastructure. In elections earlier this month, West Yellowstone and Virginia City implemented the additional tax to pay for projects that include water and sewer upgrades and the purchase of a parking lot.

Perrin Stein can be reached at pstein@dailychronicle.com or at 582-2648.

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