One possible solution to our infrastructure blues
Montana, we have a problem.
If you’ve followed the local online discussions about the Glendive school bond election, read the Billings Gazette’s recent series about the overall sorry state of most of Montana’s school buildings or remember the debacles over infrastructure funding during the last two legislative sessions, that fact should be painfully obvious by now.
All across our state, roads, bridges, schools, jails, water plants, sewer plants and all manner of public infrastructure necessary to sustain modern society are crumbling under the attack of Father Time and one too many brutal Montana winters.
With the state government consistently failing to reach a consensus on how to help counties and cities with extremely limited resources fund improvements to local infrastructure— a shameful dereliction of duty, by the way — the burden for paying for those projects has fallen squarely on local residents.
Glendive residents, for example, have seen their sewer rates soar to pay for construction of the new $20 million wastewater treatment plant. Yes, the state did kick in grant funding from the Treasure State Endowment Program, but not nearly enough to make much of a difference to locals’ sewer rates.
Looming next is the Glendive water plant, which is in increasingly desperate need of repair and will cost an estimated $8-10 million to bring up to snuff. That will mean more rate increases in the near future.
As for all the rest of the local infrastructure, the burden for paying for that falls almost solely on property owners, and with the higher public utility rates they’re paying to fund sewer and water improvements and the sharp increase in property taxes following the most recent reassessment, it’s easy to understand why many revolt at the idea of ponying up even more.
It all looks pretty bleak when you think about it. The Legislature and the governor’s office can’t get their act together. Local infrastructure is falling apart across Montana and, left out in the cold by their state government, property owners are becoming less and less willing to fork over more of their hard-earned money when asked to by their school districts, cities and counties, even though the needs are glaring, and in many cases, dire.
There are options out there to more equitably spread the tax burden while actually increasing the amount of tax revenue coming in, one in particular it is long past time Montana seriously consider — a sales tax.
Now, don’t get me wrong, I know Montanans love the fact that, a few exceptions aside, there are no sales taxes in Montana. Frankly, I love it too. But, as the saying goes, desperate times call for desperate measures, and we’re long past that point. One fact in particular makes it somewhat absurd that Montana has little in the way of local (or state) sales taxes — tourism is a major cog in the state economy.
According to data from the Montana Office of Tourism, 11.7 million out-of-state tourists dropped $3.6 billion in the state in 2015. Of that total, $457,500,000 was spent on retail sales alone. With a 5 percent state sales tax in place (which would match neighboring North Dakota’s), those retail sales could have generated nearly $23,000,000 in additional revenue for the state in a single year. Further consider that tourism is a growing industry. Between 2011-2015, out-of-state visitation has increased by 10.9 percent while their spending increased by 29.7 percent.
However, with few exceptions, Montana communities aren’t getting much out of all those tourists in terms of tax revenue.
Montana has a “resort tax,” which gives a precious few communities the ability to institute a 3 percent local sales tax (5 percent of the revenue from which must be used to offset local property taxes). However, outside a few locales like Gardiner or Big Sky, hardly any communities meet the criteria for the program — there are only eight in the entire state.
It’s time to change that.
We could definitely use a state sales tax. That’s especially true given the certain decrease in revenue from oil and gas production and the fact that the writing increasingly appears to be on the wall as far as the future of coal production, which together present a potentially painful pair of hammer blows to the state treasury. But, given the political climate of the state, that seems unlikely to gain much traction, even if it did mean a reduction in property taxes and bringing tens of millions more dollars into the state coffers every year sucked directly out of the pockets of tourists flocking to Yellowstone, Glacier, or Makoshika, for that matter.
What seems more doable is an expansion upon the resort tax idea to empower every municipality in Montana to implement a local option sales tax by a vote of the local people. Just like it is now, a percentage of the sales tax collected should go to offset and lower local property taxes. That will more evenly distribute the local tax burden, shifting it from just the property owners to include renters, transient or seasonal workers, tourists and passersby.
Furthermore, there’s a way to do this that isn’t so “regressive.” A few years back I lived in Virginia, and there the “necessities of life” — groceries, medicine, infantcare supplies and the like — were exempt from all state and local sales tax. All other retail, restaurant, vehicle and other sales transactions were subject to sales taxes.
That’s a great model, in my opinion, and one Montana would be wise to implement. We desperately need to raise more tax revenue to fix our failing infrastructure and we desperately need to more evenly distribute the tax burden. There aren’t a lot of options out there for doing that, but with optional local sales taxes we can kill both birds with one stone.
Jason Stuart is a staff writer for the Glendive Ranger-Review. He can be reached at email@example.com.