Polson voters receive ballots for proposed resort tax
POLSON — Ballots were mailed Wednesday to registered Polson voters for a special election on a three percent resort tax. The ballot measure aims to raise revenues to fix the community’s dilapidated streets and related infrastructure, including curbs, sidewalks and storm drains. A percentage of the revenue would also go to local property tax relief.
The city commission initially approved the ballot measure Sept. 9, and voted again Oct. 6 to place it on the ballot after a procedural snafu voided the first vote. But it’s not the first time a resort tax has surfaced as a funding mechanism. Voters rejected a resort tax in 2009, and when it was broached again in 2016, the city commission opted not to place it on the ballot.
The current effort also has detractors, most visibly, Murat Kalinyaprak, who has repeatedly opposed the measure, describing it as “immoral and illegal.” He contends that the Department of Commerce erroneously designated Polson as a resort community back in 2009. After a lengthy presentation at last week’s commission meeting, he encouraged commissioners to pass a resolution abandoning the tax initiative, and at the conclusion of his narrative, such a measure was proposed, seconded, and unanimously rejected.
According to state law, the Department of Commerce may designate incorporated towns as resort communities if the population is under 5,500 and a major portion of an area’s economy is based on tourism. The DOC labeled Polson a resort community in 2009, and it continues to hold that designation.
According to the Montana Department of Transportation website, “the fundamental idea behind resort taxes is to allow places with high numbers of visitors but relatively few residents to manage the wear and tear on local infrastructure without overburdening local citizens.”
The condition of city streets is undeniably an issue for Polson residents. Ed Meece, who stepped into his role as city manager a few months ago, says street upkeep is consistently the top concern expressed by constituents.
“When I was in the process of interviewing for this job, literally every conversation I had with someone in the community was about streets,” he says. “I routinely hear, ‘We’ve got some street issues, but other than that, this is a really great little town.’”
Even now, he estimates that people raise those concerns at least half a dozen times each week. “It’s a big topic.”
And the remedies are limited.
Currently, the street department’s budget of $440,000 a year is generated by property taxes and fuel-tax revenue. That pays salaries for the crew and finances equipment upkeep, snow removal and street maintenance.
However, the estimated cost of rebuilding one city block, including curbs, sidewalks and storm drains, is estimated at $335,000. While not every block needs the full treatment, “you can see that even if we closed the street department we’d only be able to do one or two blocks a year,” says Meece. “And we’d have no street department.”
The resort tax, he believes, is the most palatable remedy because it spreads the burden of street repair among residents and visitors alike. The three percent tax would be assessed on goods and services sold at hotels, motels, restaurants, taverns, bars and destination recreational facilities, such as golf courses, and cover an array of “luxury items,” including gifts, such as jewelry and artwork, recreational equipment and tourist-oriented clothing and goods.
Those goods and services deemed essential would not be taxed. That includes most groceries, medicine and medical equipment, appliances, tools and hardware supplies and everyday clothing. Enrolled Confederated Salish and Kootenai tribal members with a tribal I.D. and tribally owned businesses are exempt.
While the Montana Department of Revenue estimates that the tax could raise around $1.3 million annually, the city opted for a more conservative estimate of $700,000.
Of the money collected, three percent goes back to the vendors to cover the cost of collecting the tax. Of the remaining funds, 17 percent pays for property tax relief; three percent goes to the city for administrative costs; and the remaining 80 percent funds street repair and maintenance.
The resort tax isn’t the only remedy for pothole-infested thoroughfares. Citizens could approve a citywide street maintenance district, as an addition to the property taxes currently assessed. In order to raise the $700,000 that the resort tax is expected to bring in, non-exempt property owners would pay an additional $77 a year on a home valued at $100,000 and $154 on a $200,000 residence.
A Special Improvement District is the most expensive option. It requires the majority of property owners in a given area to agree to share the tab for fixing their particular section of street. The city estimates that to completely refurbish one city block, it would cost property owners in an SID an estimated $2,450 a year for 20 years.
In a quest to “educate not advocate,” members of the city staff have been offering interactive public presentations on the resort tax, with the final one slated for 7 p.m. Jan. 19 via Zoom.
“Anyone with internet access can go to the city’s website, pull that up and click on it and be in the presentation,” says Meece. “It’s a pretty painless process.”
While the pandemic has limited the ability of city staff to meet face-to-face with voters, outreach has taken many forms. In addition to four public meetings, they’ve made presentations to the Tribal Council, Chamber of Commerce, Polson Business Community, Greater Polson Community Foundation, Mission Bay Homeowners Association, and members of the city’s advisory boards. Staff members also field several calls a week from private citizens.
The city website is loaded with information as well (www.cityofpolson.com/bc-edc/page/resort-tax-ballot-initiative), and a mailer was recently sent to the household of every registered voter within the city limits.
“We’ve tried to push that information out there in as many different ways as we can,” says Meece.
The most frequent objection he hears is the most obvious one. “Usually, it starts with ‘yes, I know we have a problem but I don’t want to pay more in taxes.’”
Residents have suggested levying the resort tax on non-residents (which is prohibited), while non-residents protest not being able to vote on the matter.
Members of the business community worry that the resort tax will encourage shoppers to go elsewhere and aren’t looking forward to collecting the tax. As to the latter concern, Meece says “our goal is to make it as simple as possible” for businesses to document and collect.
He points out that among the other communities that have assessed the resort tax in Montana (including Whitefish and Columbia Falls), none have reported widespread economic fallout to local businesses.
“But there’s certainly that fear and I’m not saying it’s totally ungrounded,” says Meece. “I’m not an economist or a business expert. I’m just saying that from what I’ve seen in other communities, that hasn’t turned out to be the case.”
Instead, “the ability to collect the resort tax and put that investment back into the community has just driven local quality of life so that more people actually want to come visit, which creates a cycle of success,” he says. As evidence, he points out that the communities that have voted for the tax have also chosen to renew it.
If approved, Polson’s resort tax would be implemented July 1 and continue for 20 years, with voters having the option to renew, even if the community’s population has, by then, surpassed 5,500.
For more information, call the city manager at 406-883-8207, email email@example.com or visit www.cityofpolson.com/bc-edc/page/resort-tax-ballot-initiative.