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Home My WebLink AboutMT League Legislative BulletinMONTANA LEAGUE OF CITIES AND TOWNS D P. O. Box 1704, Helena, Montana 59624 n (406) 442-8768 (406) 442-9231 FAX U website: mlct.org Al 66 2001 LEGISLATIVE BULLETIN #2001-1 For Openers CITY OF LAUREL The 2001 Legislature convened last week and is rambling along at a relaxed pace. Members have introduced almost 500 bills, but have requested an additional 1,400 measures that will be coming along in the next several weeks. Local option tax authority and revisions in state reimbursements and transfer payments to cities and towns are at the top of the list of measures favored by the League. There are two narratives in the bulletin to explain these measures and the likely benefits for municipal governments. In past sessions, cities have spent too much time on defense, working against bills that would have imposed mandates or restricted local authority. We expect members to introduce numerous bills of this variety in 2001, but it seems the "damn the government" attitude that was behind many of these measures in the past is less prevalent this year. There are 50 new members in the House and Senate. These first term Legislators seem to be generally well qualified, reasonably moderate and sincerely interested in the position of cities and towns on the issues. It is early in the session. Most members appear to be favorable to municipal interests, and we hope that it is not necessary to revise this assessment when all hell breaks loose sometime around the end of the month. The League will be contacting cities and towns across the state to request letters, phone calls and fax messages on important bills as they go to committees and then on to the floor of the House or Senate for debate. The contacts from back home are the real leverage in our lobbying program, and the most effective way to deliver the message that cities and towns are working for a new and better deal. New Twist on an Old Theme The Local Government Funding and Structure Committee took an honest look at all of the arguments arrayed against local option tax bills in past sessions of the Legislature, and came up with fair and practical answers to the most troubling questions. For years, many members of the Legislature thought of local option bills as nothing more than a way for large cities and trade centers to collect tax money from rural areas. The committee considered these arguments, and came up with a way to balance the benefits of local taxing authority among all areas of the state. Under a bill the committee will recommend to the 2001 Legislature, cities and counties that enact option taxes will deposit 25% of the receipts in a special account. The state will then make population based distributions from this account to small cities and towns and rural counties that would not otherwise benefit from option tax authority. The bill designates Billings, Bozeman, Butte, Great Falls, Helena, Kalispell, Missoula, and the counties in which they are located as regional trade centers. These cities and counties will not receive distributions from the state account. This exception will provide a wider and deeper allocation of money to the small towns and rural counties that do not enact an option tax. The Committee based the new local option measure on Senate Bill 370 from the 1999 Legislature. The 2001 version will allow local voters to approve a 4% tax on lodging facilities, bars, restaurants, rental cars, admissions, recreation and other goods and services that are the foundation of the tourist economy. The Department of Revenue estimates that a 4% tourist tax imposed by every city and county in the state would raise almost $75 million per year. The following table shows the revenue potential of the proposed bill: Revenue Potential from Local Option Sales Tax on Tourist Goods and Services Tax Base Item Forecast Sales ($millions) Revenue at 4% ($millions) Restaurant meals $ 798.1 $31.9 Accommodations 316.6 12.7 Drinks sold in Bars 182.4 7.3 Other Food & Drinks 105.4 4.2 Car Rentals 34.7 1.4 Event Tickets 165.8 6.6 Sightseeing Fares 8.3 0.3 Souvenirs 105.4 4.2 Recreation Services 153.5 6.1 Total 1,870.2 74.5 Population based estimates on revenue collection and distribution show how this bill could work to benefit all cities, towns and counties across the state. The tourist tax would raise about $85 per capita at a rate of four percent. If the seven trade area counties with a population of 520,000 imposed the tax, total collections would be $44 million. Under the benefit sharing provision, the bill would allocate 25% or $11 million to other cities, towns and counties outside the designated trade areas. The distribution to these local governments would be about $30 per- capita. Cities and towns can then estimate the benefits of the proposed law by multiplying the per-capita distribution by local population numbers. Local governments could use this money to reduce property taxes, build safe and healthy communities and establish the foundation of public services, programs and facilities that are essential to the future of the Montana economy. The Department of Revenue also estimates 47% of the proceeds of a local option tourist tax would be collected from tourists and other travelers who live beyond the borders of Montana. This is telling statistical evidence in support of option authority, because the Legislature has considered few bills in recent years that bring new, non- resident tax dollars into Montana. If the Legislature approves this bill, visitors will pay as they go. Local property owners will no longer be required to subsidize higher levels of police and fire protection, street and road maintenance and other services essential to the tourist economy. The Local Government Funding and Structure Committee worked for over a year to write this bill. It listened to comments from cities, counties, members of the Legislature, business leaders and the general public. The committee included many of the changes suggested at these hearings in the bill it will recommend to the Legislature. The local option measure, as it now stands, is a new twist on an old theme that offers important advantages to local governments and Montana taxpayers. 1. The proposed law will generate new revenues for cities and counties which will make it possible to maintain existing services with significantly lower mill levies. 2. The public vote requirement will allow local governments to engage their citizens in decisions on services, facilities, tax rates and all the other elements of public finance. 3. The bill will connect the tax system to what is happening in the economy, and it will require tourists to pay a fair share of the cost of the services they use in Montana. 4. It will require large cities, urban counties and trade centers to share revenues with rural areas and provide the broadest possible distribution of the benefits of local taxing authority. 5. It will leave Montana travel businesses in a competitive position and encourage the community investment that could be the catalyst for an economic revival across Montana. At the annual conference, League members voted unanimously to support the option tax bill proposed by the Funding and Structure Committee. There was a general understanding among the delegates that this bill will work effectively for the largest cities and smallest towns all across the state. Passage of this bill is vitally important to cities and towns, and we ask all members to discuss this issue with their representatives in the Legislature. HOUSE BILLS OR 11 W- Fund Treasure state endowment projects- (Kasten) Hearing 1/18/01 (H) Joint Appropriations Subcommittee on Long Range Planning HE 16 W- Coal Tax- Coal Tax loan for heritage tourism (Somerville) HE 18 W- Temporary Speed Limit- Allow temporary speed lime pending permanent speed limit. (Somerville) Hearing 1117/01 (H) Transportation HB 23 S- Debt Limits- Generally revise local government debt limits and certain bonding provisions. (Erickson) Hearing 1/9/01 (H) Taxation HB 37 W- Mill Lev- Revise mill levy certification. (Witt) Hearing 1/10/01 (H) Taxation KS 40 W- Regional Water System Funding- Coal tax for treasure state endowment regional water system funding. (Witt) Hearing 1/8/01 (H) Natural Resources HB 43 W- Emerqency Grants- Treasure state endowment program emergency grants. (Holden) Hearing 1/10101 (H) Appropriations H656 S-Ambulance Service- Ambulance Service exception to insurance code. (Lawson) HE 61 W- Equipment Tax- Eliminate phase out of business equipment tax. (Erickson) Hearing 1/12101 (H) Taxation HE 73 W- Accounting Pilot Program- Full cost accounting pilot program. (Brown) Hearing 119/01 (11) Business and Labor HE 68 W- Telecommunications Infrastructure- Include advanced telecommunications infrastructure in treasure state endowment. (Lindeen) Hearing 1/9/01 (H) Federal Relations, Energy, and Telecommunications HE 92 S- Land use grants- Appropriate funds for land use planning grants. (Gillan) Hearing 1/12/01 (H) Natural Resources HE 124 S- Revise local government funding. (Story) H8168 W- Video Gaming- Transfer portion of video gaming revenue to horse racing counties. (Clark) HO 231 W- Monthly Pension- Revise monthly pension for volunteer firefighters. (Lawson) Hearing 1116/01 (H) State Administration OR 266 W- Revise governmental accountability act. (Clancy) SENATE BILLS S619 W- Electricity Supply- Delay the implementation of full customer choice in electricity supply. (Halingan) S822 W- Electric Utility Restructuring Act- An act repealing the Electric Utility Industry Restructuring Act. (Bishop) 5B 32 A- Safety Culture Act- Citations for safety culture act violations. (Shea) Hearing I/10/01 (S) Business and Labor SB 37 W- Retiree Hours- Increase retiree hours of public employment limit. (Mahlum) Hearing 1/8/01 (S) State Administration 58 41 W- Public Safety Officers- Require certification of public safety communications officers. (Roush) Hearing 1/8/01 (S) Public Health, Welfare and Safety SO 56 W- Modify Universal System benefits credits. (McNutt) Hearing 1/9/01 (S) Energy and Telecommunications SB 57 W- Extend universal system benefits charge (Johnson) Hearing 1116101 (S) Energy and Telecommunications SERI S- Revise volume cap bond law. (Johnson) Hearing 1/8101 (S) State Administration S862 W- Mill Creek Highway- Designate Mill Creek highway as secondary highway. (McCarthy) Hearing 1/16/01 (S) Highways and Transportation S873 W- Motor Vehicle Revenue- Generally revise distribution of motor vehicle revenue. (Glaser) SB 98 W- Disability Benefits- Revise permanent partial disability benefits. (Mahlum) SB 127 S- Lodging Facility Tax- Increase lodging facility tax by 2 cents to fund local government. (Bollinger) Hearing 1/25/01 (S) Taxation SB137 S- State-local relationships- Establish state-local relationships interim committee. (Nelson) Hearing 1/16/01(S) Local Government S8138 S- Accounting Laws- Revise local government accounting law. (Nelson) Hearing 1/16101 Local Government S0151 A- Sale of Fitness Services- Prohibit government sale of fitness services. (Mahlum) Hearing 1/19/01 (S) Business and Labor SB 154 S- Local Vendor preference- Local vendor preference for municipal contracts. (Cocchiarel/a) Hearing 1/11/01 (S) Local Government S8155 S- Local Option Sales Tax- Allow all cities and counties to adopt local option sales tax. (Halligan) S8162 W- Local Government Revenue- Review of local government revenue dedication laws. (Grodfiels) Hearing 1/11/01 (S) Taxation S8174 W- Vehicle Revenue- Vehicle revenue distributed based on local mill levies. (Glaser) S8175 W- Motor Vehicle Laws- Revise light vehicle registration fees and other motor vehicle laws. (Glaser) Hearing 1/9/01 (S) Local Government SB 187 S- Local Government Notice- Revise and standardize local government notice provisions. (Cobb) S0 19B W- Treasure State Endowment- Treasure state endowment set aside for business infrastructure. (Taylor) Hearing 1/18/01 (S) Local Government S8206 W- Law Enforcement- Authorize law enforcement service areas. (Keenan) S0213 S- Sales Tax- Local option sales taxes and fees. (Glaser) S8216 0- Full cost accounting- Full cost accounting for municipal solid waste programs. (Berpy) W=Watch A=Amend O=Oppose S=Support