Originally published in the print edition of the Yellowstone County News.
BILLINGS — One of the most significant differences in positions between the two candidates running for mayor of Billings is their support for a proposed local option tax. A local option tax is essentially a limited sales tax, restricted to a specific city or county and assessed on some goods and services, for the purpose of increasing revenue for local government.
Candidate Bill Cole is an enthusiastic supporter, and in fact, in his previous role as president of the Billings Chamber of Commerce, he helped lead the charge in support of a bill in the last state Legislature that would have permitted a community to ask voters if they want to adopt a local option tax.“
Reasonable minds can differ whether a local option tax is good, but I think it is a pretty clear case that communities should be able to decide for themselves,” he said in an interview with the Yellowstone County News.
The concept of a local option tax has been introduced in several past legislative sessions, led primarily by the Billings Chamber of Commerce.
Supporters, like Cole, see the tax as a means to help finance projects that they believe would improve the quality of life in Billings and attract young people to work here.
Candidate Jeff Essmann, who has dealt with the issue many times as a state legislator, concedes to having mixed views about a local option tax. Essmann said, “I know that I have constituents – especially senior citizens – who are interested in reducing property taxes and supported the concept of a local option tax to spread that burden to others.” Because of that, Essmann said he “took a number of runs at it,” beginning in 2006. “But the purpose was to reduce the property tax burden.”
“I have a real problem with the local option sales tax that the chamber and my opponent pushed because the purpose is different,” he continued. “Their purpose is generating new revenue for the government… that’s where I draw a line.”
Cole is supportive of a local option tax as a means to replace revenue that communities used to get from the federal government. “Those days are over,” said Cole. “If we want to solve local problems, we are going to have to look more and more to local solutions.”
A reoccurring thought for many is that other than levying more property taxes, there is a group of people who use the amenities of the community but do not pay for them – tourists. They spend $400 million in Billings every year, according to Cole.
Those local projects that Cole sees as necessary have to do with building “a community that can compete, not just regionally, but nationally with other cities, to attract young people to grow Billings in the future,” he explained.
Cole cites projections that estimate that Billings is going to need to fill 32,500 job openings in the next 10 years.
“Most will be filled with people 25 to 40 years old,” he said, and they will be hard to draw when most areas of the country have 3 to 4 percent unemployment.
“It is a workers’ market,” Cole said. “In order to attract those — the most skilled and most educated — they need to have the most options, and we need to have a community on the radar screen. We need a community with jobs, but also with low crime and essentials that contribute to a very high quality of life.”
The last version of the legislation, SB 331, required a local ballot measure to identify a specific purpose or project and a specific amount. It imposed a cap at 4 percent.
In past legislatures, the bill failed to get traction, in part, because of strong opposition from more rural communities resistant to having to pay the tax when shopping in the retail hubs of larger cities. A coalition of political and Chamber of Commerce leaders of the larger cities focused effort, prior to the last legislative session, attempting to persuade satellite communities to drop their opposition, pointing out how they, too, could implement the taxing option.
Essmann said the new support was not all that persuasive for state legislators because legislators are representative of the people in their districts, not just a community’s government leaders.
The proposed legislation mirrors a sales tax that was specially designed for Montana resort communities, which had no other means to tax for infrastructure. West Yellowstone was the first to implement the tax. Other communities have since adopted it.
Cole pointed out that in some of those communities, business people were opposed to the tax, but the majority of voters prevailed and it was implemented. They must find it is working, he said, because later elections to approve its continuance have been successful, often with a wider margin of approval. (Most proposals include a sunset provision, which require voter approval for the tax to continue.)
About SB 331, Essman said, “There are a lot of issues I don’t think the public is aware of – I don’t think they understand.”
For example, while the tax is commonly touted as a way to tax tourists or visitors to the area, “In the resort-style tax in SB 331, only about 29 percent would be generated from out of state visitors… the other 71 percent comes from Billings residents or other Montana residents.”
Also, how the tax could be used was ambiguous, said Essman. While its proponents say they want to use it for community amenities like parks and trails, language allowed for use in capital projects, which was an ambiguous purpose that no one was able to clarify for state legislators. There is concern that it would be used to help fund private developments like the proposed Big Sky One, he said.
Essmann is very much troubled if the revenue is to be spent in support of subsidizing private businesses.
“I don’t think the fixed-income seniors or middle-income families scraping by to save to buy a home will be interested in crony capitalism,” he said.
Cole concedes that “The majority of funds would still come from people like you and me… but something is better than nothing.” In addition, the last piece of proposed legislation would have provided some property tax relief – about 20 percent of revenue collected would be funneled back to taxpayers, said Cole.
But, that amounts to only about $40 per taxpayer, said Essmann, saying he thought most taxpayers would rather forgo that and not have to pay a sales tax at every turn.
Cole recognizes the imposition of the tax on fixed and low-income consumers, but said that it is somewhat discretionary – they don’t have to purchase those things upon which the sales tax is imposed.
Essmann said that his vision about the growth of Billings is different from Cole’s. There are projects that he would support ... Read 2nd half of article in print edition or by subscribing here only.