Resort tax could pave roads

POLSON – City officials are considering an option that would potentially retain millions of tourism dollars here to use on public projects.

Speaking at a recent Polson Chamber of Commerce luncheon, Mayor Heather Knutson said the city and surrounding area are poised for an economic boom.

“Overall, Polson is in a unique position with new opportunities,” she said. “But we do have to address challenges and threats.”

To take advantage of this growth, City Administrator Mark Shrives said commissioners will consider forming a committee to decide whether and how to create a “local option tax” on tourism-based businesses.

Shrives said restaurants, recreation rentals and certain retailers could collect the “resort” tax.

“But we have to show our residents what we will use the money for and tell them why it’s a good value,” Shrives said.

He said the money can be used for local road maintenance and public projects, even possibly to help pay for the new wastewater plant.

Regardless, if passed, Polson can use those added funds as a strong leverage to add to civic works funding.

“Stretching the dollars collected (in taxes) with grant dollars would be an excellent way to get added value,” he said. “Any time you have match to offer, that will always make your grant application stronger.”

His plan is to establish an “Economic Development Committee” which would include stakeholders who would discuss the pros and cons then recommend a strategy to educate residents, he said.

“We have already completed a study of the other cities and towns in Montana who have the tax and so we can get that committee started with a lot of information,” Shrives said.

“I’m sure if some of the money were used to offset the wastewater costs that would certainly be popular.  But I think we also need to be very concerned about the streets.”

He said road maintenance is the top issue that came out of the citizen-driven Heart and Soul process.

Ken Avison, Polson Business Community president and restaurant owner said the city tried to get the citizens to pass this type of tax before.

“We went through this a few years ago and it went down badly,” said Avison, who was not commenting on behalf of the PBC. “I think we would need to do a better job notifying the public.”

Avison supports the concept but wants to see the details first.

“I would be in favor of a citizen’s committee, whoever they are, and depending on what they decide, my opinion might change,” he said. “But we need to improve the roads and I don’t see any other way to fund that.”

He said some of the taxes in Whitefish are actually used to pay down residential property taxes.

“I followed that closely and (the city) actually give some of it back to the taxpayers,” Avison said. “It might have an impact on us (business owners) but for the greater good, I would hope they would look at it very carefully,” Avison said.”

The city of Whitefish hoped to collect a few hundred thousand dollars a year. But according to an April story published in the Whitefish Pilot, the city collected $2.09 million in fiscal year 2013-14.

It’s the first time collections from the 2 percent tax on restaurants and bars, retail, and lodging topped $2 million, according to the report. It was a 10-percent bump from the previous year.

The resort tax is generally used as an indicator of how local businesses fared in a particular month or year.

Dylan Boyle, director of Whitefish Convention and Visitor Bureau, expects more steady growth in 2015.

“From what I’m seeing, I don’t see why we wouldn’t be above last year,” he said.

Resort tax collections are used for street reconstruction and property-tax rebates for city residents. Five percent is used for parks and the remaining 5 percent for administration.

Whitefish, with a population of about 6,600, depends on Glacier Park tourists to sustain its local economy.

Officials in Polson, a city of about 4,600, hope to make tourism a bigger part of the economy.

Because of Whitefish’s success, Bigfork tried to implement the same type of tax but did not have enough qualified people in the tax district, according to the Bigfork Eagle newspaper.