Resort Tax meeting highlights public priorities and life without it

By 
Alastair Baker
News Editor
Thursday, January 16, 2020
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Photo by Alastair Baker
Colleen Stevenson, RTRB member, explains how life would be in Red Lodge without the Resort Tax.

A public meeting at the Roosevelt Community Arts Center on the Resort Tax outlined what people’s top priorities are and how the town would lose essential monies if the tax is not renewed this year. The Resort Tax will be included in a primary election ballot, June 2. This year there are options for inclusion of the one percent (1%) Resort Tax increase on top of the 3 percent authorized by Senate Bill 241.

Since its inception in 1997, the Resort Tax has brought $11.6 million into the community.  In 2019 it totaled $858,000. 

For the period 2018-2019, 79% was used for Capital Improvements; 15% Property Tax relief; 5% was retained by businesses collecting tax and 1% for administrative costs of the City.

Red Lodge’s Resort Tax collections are from 11 % liquor, 25 % motels, 38 % prepared food, and 26 % retail. From this, the money has been spent primarily on water, sewer, and streets.

The additional 1% on offer would immediately add $250,000 a year for infrastructure projects covering water, sewer, roads, and stormwater. This 1% is only permissible for a specific project that can have multiple aspects to it, such as tying in stormwater and fixing Haggin.  It cannot be used towards the pool. 

Resort Tax Renewal Board (RTRB) member Tom Kuntz told the 80 plus crowd that what the public appeared to want most from the tax was to see results.

“Where has most of our resort tax money gone? It went underground because our water system had not been updated. We had main water lines coming into the City that were made of wood,” he said. 

Kuntz also pointed out that Resort Tax collections versus Property Tax collections are “relative stable.” In 1998 Property Tax collected was $452,289, the Resort Tax $495,624; 2008 Property Tax was $782,838, the Resort Tax $664,122 and in 2018 Property Tax was $303,051, the Resort Tax $897,271.

Also present at the meeting were other members of RTRB, Tim Weamer, Jeremy Battles, Jodie Ronning, and Colleen Stevenson.

The mission of RTRB is to advise the Red Lodge City Council on Resort Tax options, applicability, and scope. 

Stevenson spoke about the cold hard facts of life without the Resort Tax.

“The City of Red Lodge collected  $850,000 for the fiscal year 2018-2019.   Let that figure soak in. $850,000. That’s almost double the amount from the first year,” said Stevenson. “It has been calculated that of the total amount of Resort Tax collected, over 60% is paid by visitors to our town.  For the current fiscal year July 1, 2019 - June 30, 2020, as of December we have already collected $554,000 which is over 65% of the total amount collected last fiscal year.” 

“If there were no Resort Tax, the 15% property tax relief would be lost and an immediate impact of increased property tax would be experienced by all. If there were no Resort Tax, there would be a $150 increase in each and every water and sewer bill every year to pay down the existing debt of $250,000 which now comes out of the Resort Tax. If there were no resort tax, snow plowing and removal of snow from city streets would almost cease to exist due to not being able to purchase trucks and equipment.  Remember, Broadway is cleared by the state with assistance from our Public Works Dept. If there were no Resort Tax, maintenance on parks and trails would be at a very minimum. There would be serious setbacks for Parks and Trails improvements. If there were no Resort Tax, it is unlikely there would be a new community pool. If there were no Resort Tax, Districts would have to be created such as streets, lights, etc. If there were no Resort Tax, the matching funds required for Urban Forestry Grants and State Gas Tax Grants would no longer be available.  Those grants have funded such projects as the sidewalk from IGA to the Civic Center, the park benches, some of the trees planted and others.”

She emphasized the importance of the extra 1 % now on the table.

“How could the 1% be spent...Stormwater ($11 million project estimate according to the preliminary engineering report). The Dept. of Environmental Quality will eventually require improvements for which fines will be levied if the improvements are not made. A community pool at the current location at a projected cost of $160,000 annually for 20 years.  The pool would not be eligible under the MCA definition of infrastructure for the 1%.  But if funding other items that would be eligible for the 1% were moved from 3% to 1%, it would free up sufficient funds from the 3% to rebuild the pool. Water, sewer, and roads would be other projects that could be funded with the 1% if passed,” she said.

One of the sticking points comes with the wording in one part of the Resort Tax Ordinance which states, “All remaining tax revenue collected must be utilized for capital improvements to streets, alleys, roads, the municipal water system, the municipal sewer system, parks, and recreational facilities, or emergency services.”

“We’ve had a lot of the issues related to the wording in this last paragraph. Our main goal to get rid of the ambiguities in this language so the Resort Tax reflects the needs of the community and their priorities and is acceptable to auditors,” said Battles.

Resort Tax spending is audited each year by an independent auditor.

“Part D” that refers to the above paragraph is the bulk of the Resort Tax to fund projects. Prior to 2017, each audit approved the use of “Part D” funds for capital improvements including the maintenance of the capital improvements that meant the City could use Resort Tax to build a park and maintain it. After 2017, a new audit limited the city of Red Lodge to use “Part D” to capital improvement projects only.  Meaning the City can no longer use Resort Tax money to maintain the parks, only build them.

There are presently 10 Resort Tax communities in Montana; Big Sky, Cooke City, Craig, Gardiner, Red Lodge, St. Regis, Virginia City, West Yellowstone, Whitefish, and Wolf Creek. Several were outlined to show what they do with their Resort Tax. 

West Yellowstone collects approximately $1.7m per year and it has helped to bring the mill levy down from 75 mills to 43 mills - property tax relief and allowed them finances to cover infrastructure projects, purchase of snow removal equipment, police vehicles and contribute annually to community programs include the 4th of July Fireworks, Shakespeare in the Park, the Summer Recreation Program and the Galavan Bus. In November 2019 the City extended it to 3% Tax and passed the additional 1% to pay for infrastructure. Specifically: a new wastewater treatment facility, street, and sidewalk improvements, a new water tank and replace aging water and sewer lines.

Cooke City collects approximately $150,000 per year with 5% for merchant collection fees; 10% for property tax relief; 1% for county administration; and 84% for capital improvements, emergency services, tourism development and projects which provide for the public health, safety, and welfare. With the money, the town has constructed a community center, upgraded emergency services equipment, purchased snowmobile trail grooming equipment and made upgrades to the water system.

Red Lodge’s future requirements were outlined for streets, stormwater sewer, parks, water, to the tune of  $55 million. 

In a recent survey sent out by RTRB to gauge the public’s feelings, 65.3 percent said no to the Resort Tax being limited to capital improvements, costing over $5,000 and project to last more than 10 years; 

66.5 percent agreed that the Resort Tax should be used for operational costs covering snowplowing and park maintenance; 

78.5 percent said the Resort Tax has had a positive impact on the community; 

68 percent said they would vote for its renewal; 

51.8 percent felt the appropriate items were taxed.

When it came to ranking priorities, streets and sidewalks got top billing with upgrade infrastructure to allow for city growth/development next, then stormwater improvements, then park and trails construction and maintenance, followed by tourism infrastructure and finally a community pool.

Further down the list was snow plowing - equipment and drivers; water and sewer - rate support; community services - a library, recycle center; fire/EMS services; Economic Development.  

The lowest rankings included workforce housing; property tax relief; police and protective services; marketing to increase Resort Tax revenue; City buildings; City services - such as Resort Tax enforcement, clerks, City Hall, courts, legal and local event funding/grants.

In closing out the evening, Weamer stressed the importance of retaining the Resort Tax saying that “without it, a lot of projects would not be possible and residents would have seen a rise in taxes.”

“The City has done a good job using the money for what it was needed for,” said Weamer, using 95% for improving and maintaining the City infrastructure, 4 percent for emergency services and less than half a percent to miscellaneous.

Weamer said the Resort Tax had “Benefitted residents with water and sewer and streets and the quality of emergency services. As good as it is how do we make it better? How do we collect more without burdening residents? We increase visitor traffic and they will spend more on lodging, merchandise, dining and entertaining.” 

“$7.2 million of our Resort Tax income comes from outside Red Lodge, from day-trippers to visitors making this a vacation place. Over 50 percent of the collections come in 3 months, June, July, August. Tourism contributes greatly to our city budget. It is the only tax to increase the city budget without burdening the residents, without creating Special Districts,” he said.

“The Resort Tax has outpaced inflation but the goal is we should do better. We are on 3-4 percent growth over the life of the Resort Tax,” said Weamer. 

At 3 percent visitation contributes $38 million to the budget over 30 years he said.

“If we increase visitation to Red Lodge by 5 percent, the growth would be $54 million over the next 30 years. How do we get to the 5 percent growth? I liken Red Lodge to an inviting storefront. By rewriting the ordinance to include the improvements? We’ve been talking about the maintenance of existing assets and adding tourism infrastructure projects like pools, parks, bike lanes, as well as the maintenance and beautification downtown. The survey showed it was one of the highest-ranking among people,” said Weamer. 

For more on the Resort Tax please go to www.carboncountynews.com and click on the PowerPoint link