The government grind for SB 241
Legislative effort to raise resort tax threshold continues
Heavy hitters traveled from all over Montana to argue the merits of Senate Bill 241 at the Senate Taxation Committee hearing on Feb. 20 in Helena.
The bill has been spearheaded by West Yellowstone and the Big Sky Resort Area Tax board. All 10 resort tax areas in the state support the effort which would allow communities to vote on raising the resort tax by 1 percent for infrastructure projects. The focus of proponents remained steadfast throughout the hearing: infrastructure and local control.
This backing by resort tax areas is no great surprise considering many are mired with aging infrastructure and demands from exponential population growth during peak season.
Big Sky Resort Tax Board director Mike Scholz outlined many of the issues during the February Big Sky Area Resort Tax Board meeting:
“Take the letter from Red Lodge. We think we have problems? Red Lodge says their deferred infrastructure [cost] is $100 million. Then you have West Yellowstone with a sewer/water moratorium, anyone who has been around here long enough knows what that does to you. They’re looking at $50 million plus. We know just from our sewer, the two proposals from the canyon of eight years ago – $20 million and the new one at $23-plus means that we’re over the $50 million,” said Scholz.
Resort tax districts are nearly always on rivers, said Scholz, because they are located in desirable places. So, it becomes a matter of not just “cleaning up messes of the past” but creating infrastructure with the highest technology possible to have less environmental/ecological impact.
“We don’t know when our system breaks down or when the technology outdates us so much,” he said.
In the case of West Yellowstone, the spring which has supplied the town with water for decades began unexpectedly underproducing. The community nearly ran out of water and had to drill a well.
While that was going on, West took a closer look at their sewer pipes, and discovering five to six miles of pipe that needed to be replaced, said West Yellowstone Town Manager Dan Sabolksy.
Further, a mechanical sewer plant is required and must be completed in the next three years. The “realistic project; realistic cost – not pie in the sky numbers” is estimated around $48 million. The 1 percent increase, said Sabolski, would allow for the community to pursue bonds for funding to move the projects forward.
In Helena, Scholz joined BSRAD tax board Vice Chair Steve Johnson – with whom he is on the subcommittee monitoring the legislation – along with Chairman Kevin Germain as local representatives from the resort tax board.
Germain was further asked to represent the resort areas which could not attend. He explained to the Senate committee that all matters of opposition from the previous effort were confronted: Many in opposition to the legislative effort two years ago now offer support.
An amendment request made by Germain during a Resort Tax Board meeting made it into the bill, expanding the definition of infrastructure to include “other transportation needs.”
Other Big Sky community members present in an attempt to bolster the bill were Candace Carr Strauss, representing the Big Sky Chamber of Commerce and Dustin Shipman, superintendent of Big Sky School District, who spoke representing his district’s board of trustees. He described the structural needs of his schools, in the second-fastest growing school district in the state.
Water and sewer infrastructure, said Shipman, would help BSSD grow. “We are in strong support of local control… let the community decide,” he said.
Sen. Jeff Willburn (R) Virginia City sponsored SB 241. He briefly addressed the committee, outlining unique struggles of resort areas and stated that the bill “was narrowly crafted to assist in in funding of critical infrastructure needs.”
Virginia City town council member Erin Leonard said that the modest 178-person year-round population in Virginia City sees an influx of over 500,000 visitors a year during the summer.
“A small increase [to resort tax] will reduce the burden on the locals,” Leonard said, requesting advancement of the bill to provide the opportunity for her community to vote on a 1 percent resort tax increase. “That 1 percent would allow for an additional $30,000 per year for infrastructure.”
Glen Loomis from West Yellowstone, who previously served as mayor and on town council, and is a business owner in the area, also spoke in favor of the bill. “How do we survive? A community of 1,300 that supports 2.5 million visitors a year,” he said. “They all want to flush the toilet, I assure you.”
The questioning begins
No opponents or informational witnesses stepped forward at the chairman’s invitation. Then, Sabolksy with West Yellowstone and other proponents were faced with nearly a half an hour of dogged questioning from senators dissecting the bill line by line, demonstrating how committees serve as filters of government.
Minority Whip Sen. JP Pomnichowski (D) Bozeman wanted clarification of language in the bill and assurance that the electors would be consulted for every capital improvement project, even if not funded by bonding. Sabolsky said electors would be approving the increase of 1 percent for specific large-scale capital improvement projects and at project completion, the increase for another project would again be put to a vote of the people.
“I like the idea that this would be voter approved, project specific and time limited,” Sen. Pomnichowski said while questioning SB 241 sponsor Sen. Willburn. “If this were to apply, would you be amenable to an amendment to the bill that specifies that’s true for everything and not just for bonded projects?”
Willburn asserted he thought the bill was well-written, but it remains in the hands of the committee.
“So, that would be your prerogative,” he said.
Sen. Brian Hoven (R) Great Falls asked about bonded level of indebtedness, which, for West Yellowstone, Sabolsky estimated at about $6.5 million and mill levy details and the value of a mill, which Sabolsky said he will provide later.
Sen. Hoven and Sabolsky later ran through numbers: $11.8 million the last few years; around 4 million a year from the existing 3 percent resort tax. Resort tax has been in effect since 1986 in West Yellowstone.
“30-plus years, so you’ve received a bunch of money from this,” Sen. Hoven said, asking where money has been spent in the last few years.
Sabolsky said money went to the Chamber of Commerce, an ice skating rink, 911 system, and a risk management system for the police.
“That is exactly my concern,” Sen. Hoven interjected. “That was the whole point of the resort tax was for infrastructure and infrastructure in my mind is sewer and water. That was the initial point of it and now infrastructure – that definition has grown and it’s continuing to grow.
Now it’s healthcare. I guess I just have a real problem with that. I can identify with infrastructure for sewer, water. Street paving should be done by bonding through property tax payments. I see an awful lot of money that in my mind is not going to infrastructure.”
Sabolsky countered by saying that was the reason for the narrow definition of infrastructure in SB 241 – to make sure capital improvement projects can be funded.
Sen. Jill Cohenour (D) Helena offered a redirect to senators by explaining that resort tax was set up not just for infrastructure but also for the impacts resulting from visitors coming to these areas.
“A 911 system and EMS services and healthcare for folks that come and work there; all of that is considered to be part of the impacts of people coming to visit you, while also supplying the needs of the community,” she said.
SB 241 made it past the first reading and the committee hearing. The committee now votes on recommending passage of the bill, killing tabling it. The majority of bills do not make it past committee. If SB 241 does garner approval from the committee it will go to the Senate floor where it will be debated and potentially amended in the second reading.