The Columbia Falls City Council on Monday approved a draft version of a 3 percent resort tax that will go voters later this spring.
Fifty-five percent of the funds raised by the tax are slated for public safety, 25 percent toward a property tax rebate for city property owners, 14 percent toward public infrastructure, 5 percent back to businesses for the cost of collecting the tax, and 1 percent toward city administration.
Council had a lengthy discussion on the tax. Resident and Columbia Falls businessman Dave Petersen, who was on the committee that worked on the tax, made the case for a 30 percent rebate for property owners, claiming it would make it easier to pass. He noted the recent school bond passed by a slim margin and he is worried taxpayers might not go for the resort tax.
But in the end, council noted the rebate for city property owners was just that — a rebate. It wasn’t designed to be property tax relief, it was meant to offset the cost of the tax to city property owners.
If approved, the resort tax would be in effect for 20 years.
Conservative estimates are the tax initially would raise about $450,000 annually. The city expects to hire at least two full-time firefighters in the near future as it continues to grow, and its volunteer ranks are strained by the sheer number of calls.
Mayor Don Barnhart noted the current city budget simply doesn’t have the funds to pay for a fire department. The other option would be to float a public safety levy to voters. But to raise the same amount of money would cost city homeowners more than $200 a year.
The resort tax is seen as a way to capture tourist and visitor revenue without the tax burden on property owners. During the tourist season, the fire and police departments are very busy. The fire department alone responded to more than 300 calls last year — an all-time high.
The tax is notable in what it does and doesn’t tax. The tax does not apply to groceries, with the exception of candy and soda. It does not tax medicine, hardware supplies, auto parts, motor oil, gasoline, newspapers, furniture, dishes and similar necessities.
It really centers on the service industry, alcohol, vacation rentals and the like, known as luxuries, under the proposed law.
For example, if a person eats at a restaurant, the meal is taxed, or rents a car or ATV, the rental is taxed.
“We really tried to focus [the tax] on people driving through town,” council member Jenny Lovering said.
Luxuries also include supermarket “non-food” items (though there are some exceptions such as diapers), cigarettes and other tobacco products, including vaping products.
A public hearing on the measure is set for 7 p.m. Jan. 21 at Columbia Falls City Hall.
After the hearing, the council likely will approve the final language for the tax, much of which is already dictated by state law. Only city residents will have a vote on the proposed tax.