Proposed resort tax boundary for Wolf Creek to be sent to state [Independent Record, Helena, Mont.]

Oct. 27--WOLF CREEK -- The proposed boundary for what could become the community's resort area designation will be forwarded to the state Department of Commerce early next week.

If the Wolf Creek is successful through all of the steps that must be taken to obtain the designation and the taxing power that comes with it, an up to 3 percent sales tax on goods and services that tourists use could be in effect possibly as soon as May, said Mona Jamison, a consultant hired by Lewis and Clark County to assist the town.

The nearly dozen people who attended a Thursday night meeting at the town's elementary school for the presentation on the resort area were given two choices on a boundary by Jamison.

The choice that she favored will be sent to the state.

Jamison said after the meeting that she anticipates the Commerce Department will take between one and two months to make its determination whether Wolf Creek has sufficient tourist revenue to quality for the resort area designation.

If the Commerce Department determines there is not sufficient tourist revenue to grant the designation, the project dies -- at least for the time being, Jamison said.

The community could later ask the Commerce Department to reevaluate tourist income should there be changes to warrant another look, she noted.

Obtaining the designation is important to people who live in town, as the community is being required to install a sewer system and will have to borrow to pay for it.

People who live here now have septic systems and wells. There is not always room on the small residential and commercial lots for replacement drainfields when septic systems fail. Keeping the required separation between drainfields and wells that supply drinking water can also be a concern.

The tax from a resort area is seen as a way to help residents pay for the new wastewater system. Monthly bills for the system are projected at between $80 and $85 a month per hookup. A business or the town's school, for example, could be required to purchase more than a single hookup, which would inflate the monthly charge for them.

Jamison has said all of the money from the tax must be spent within the community. She reaffirmed that during the Thursday night meeting.

The tax could be structured so that 90 percent goes toward the sewer system, unlike Craig, where 85 percent is dedicated toward infrastructure.

The resort area law allows business owners to retain 5 percent as reimbursement for collection costs.

That remaining 5 percent of the Wolf Creek resort area tax could be used for other communitywide needs, Jamison said.

Those at the meeting noted the need to improve local fire protection through the purchase of a new fire truck. That would result in a reduction in what town residents pay for fire insurance.

Lewis and Clark County would not receive any of the tax for administering it, Jamison noted.

If the Commerce Department allows the town to proceed with seeking a designation, Jamison said, several issues would have to be resolved such as the duration of the tax and what percent it will be.

Jamison is looking at fashioning the resort area designation to mirror that of the town of Craig with a 20-year duration.

The 20-year duration reflects the repayment schedule typically attached to bonds used by communities to fund infrastructure improvements.

Taxing tourists

The 3 percent tax in Craig runs during the tourist season and from April 1 through Nov. 15.

"I don't see any reason it wouldn't be seasonal here," Jamison said.

The array of items that would be taxed would be those that tourists would need, such as lodging and meals.

Luxuries would be taxed, as they are in Craig, as would goods and services sold by motels, hotels and other lodging establishments; restaurants and fast-food vendors as well as other food service establishments; bars and similar places where alcohol is served by the drink; and destination recreation facilities.

Exempt from the tax are what's seen as "necessities of life" and include unprepared food that's purchased, utilities, medicines, vehicle fuel, alcohol by the bottle, propane, vehicles, lumber and hardware, office supplies and garage sales.

The process advances to the Lewis and Clark County commissioners if 15 percent of the "qualified electors" who live in the propose resort area sign a petition calling for its creation, Jamison said.

Public meetings would likely precede a vote by those who live inside the resort area's boundary.

The tax can be spent on construction as well as operation and maintenance, Jamison said in response to questions on whether the tax could be used to purchase chemicals for a sewer treatment system.

And once the infrastructure improvement is paid for, the tax can be spent on other projects that serve the community's safety and welfare, she added.

A citizens advisory panel would be able to guide future spending through recommendations to the county commissioners on the possible 5 percent that may be withheld from funding the sewer plant.

"I have never seen elected commissioners reject what's coming from the community," Jamison said of the voice the advisory panel has in other communities.

Other resort tax areas in Montana

Since the law allowing communities to seek the designation was created, eight communities have obtained the designation.

Online sources say that West Yellowstone was the first to seek the designation, which in 1986 allowed it to enact a 3 percent tax. Virginia City obtained its 3 percent tax in 1991 and was followed by Big Sky the next year, which enacted a 3 percent tax, and St. Regis, which put in place its 3 percent tax, the following year.

Whitefish enacted its resort area tax of 2 percent in 1995 and Red Lodge put in place its 3 percent tax in 1998. Cooke City began collecting its 3 percent tax in 2006 and Craig began its 3 percent tax collections in 2011.

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