When the Montana Legislature meets in January, I hope it wisely opts to provide our cities with more flexibility to make fiscal decisions, such as empowering residents with a greater say over how they are taxed locally.
Giving cities more latitude to respond to their specific conditions should add to the state’s overall economic health, while reducing taxes paid by Montanans.
In terms of efficient, responsive and effective government, local authority is a crucial ingredient. These elected officials — and the tax, spending and policy decisions they make — are close and accountable to the people.
A similar theme often is sounded by state legislators; asking for more freedom from the federal government to experiment and pursue alternative policies while saving money and better delivering services.
Today, Montana cities and the state are growing and relatively healthy. The unemployment rate of our urban areas is lower than the state’s, which is lower than the nation’s.
The growth of the cities in the past 20 years has had a number of impacts. Today, the seven Montana counties with larger cities (Cascade, Flathead, Gallatin, Lewis and Clark, Missoula, Silver Bow and Yellowstone) produce more than two-thirds of all jobs and total personal income.
My town, Bozeman, would be the eighth-largest county if measured alone; Missoula would be the sixth-largest (with Billings higher and Great Falls close by).
But this growth brings challenges. Whether it’s an influx of retirees, the Bakken boom or job seekers attracted by our low unemployment, many cities are swamped. The demand on public safety services and infrastructure now outstrips the local taxpayer's ability to pay for improvements.
While the state legislature rightly focuses on Montana-wide issues, locally we need more tools to meet these mounting demands. Two of the most discussed fiscal options include:
- Local gasoline tax: counties now are allowed to ask voters for this tool, and it’s time for cities to be able to do the same;
- Local sales tax: while small towns have a resort sales tax option, medium and larger Montana cities do not.
All of these proposals should have adequate safeguards for taxpayers:
- Require any change be approved by voters;
- Dedicate any improved increase to a specific purpose (such as intersection or sewer improvements);
- Require property tax relief of 10-25 percent of the amount raised (or more), just as the resort sales tax must now for smaller cities.
As a result, having either a gas or sales tax (say two cents or 2 percent) would mean that non-Montanans, who now use our services, would help pay for the costs — and Montanans would pay less.
Every year, more than 10 million people visit Montana. A small tax would not discourage visits, but would help tremendously as we try to meet our infrastructure demands.
Other changes also should be considered to provide more flexibility to help local governments meet public safety and economic development goals.
These include stronger building standards and rental inspections to ensure public safety; municipal broadband to allow greater leeway for public-private infrastructure partnerships; and improving cash in lieu parks calculations to reflect the true value of these lands.
These changes would help local governments shape and make their own future. Call it “Montana federalism” — an opportunity to find creative ways to make ends meet.