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To relieve cities burdened by inflation and endangered reserves, the Montana League of Cities and Towns plans to finally push a local option sales tax bill through the 2009 Montana Legislature.

"I think it's now or never," League executive director Alec Hansen said Thursday.

Hansen said the bill must be crafted both so it gains votes in Helena and also so it's something voters in cities and towns will adopt. Such a bill would give cities authority to ask residents for permission to tax items that tourists often purchase, such as alcoholic beverages at restaurants.

Cities are not yet in a crisis, Hansen said. Across Montana, cities large and small have done a better job than any state agencies at managing their budgets, he said. But Hansen also said they will have to draw from reserves just to keep up with operating costs because of an unrealistic cap on cities' ability to tax.

Hansen shared the League's legislative agenda with a group of representatives from Missoula, Thompson Falls and Hot Springs who gathered Thursday in the Jack Reidy Conference Room downtown. He also collected more ideas to pursue in the upcoming session.

"If somebody has a better idea than a local option resort tax, please let me know," Hansen said.

Jackie Corday, with the Missoula Parks and Recreation Department, said a local option sales tax has been floated in Helena time and time again, and without success.

"It always fails. What do you see different in this legislative session?" Corday said.

Hansen said this time, many legislators will want to relieve the burden on residential property taxpayers.

"They've carried the government for a long, long time," Hansen said.

The bill can be designed so some profits go toward relieving those taxpayers. Also, revenues will be shared with rural areas. In one scenario, rural areas would get 20 percent of the take, and the rest would be split. Half would go to relieve property taxes and the other half would go to cities.

Hansen also said the bill must specify the items to be taxed. Some smaller communities that are considered resorts already can levy these taxes, and in Whitefish, books are taxed. And Hansen said that didn't go over well, with people asking, "Is it a luxury to read?"

The tax is not a regressive tax, like one on groceries, he said. Rather, it hits discretionary items, such as restaurant meals.

In 2004, Missoula County would have collected $2.5 million from a 1 percent local option tourist tax, according to a memo from the Montana Department of Revenue.

Hansen said a study shows that 47 percent of the money collected comes from nonresidents. In Missoula, he estimated locals would pay one-third, the surrounding area would pay another third, and out-of-staters would pay a third.

The idea has hit numerous roadblocks in the past, including those who say they're reserving support for a general sales tax. Hansen said that's a fantasy in Montana. However, he said he expects to win in Helena because he learned to be tenacious when he worked the Legislature with former Missoula Mayor Mike Kadas.

"We're going to fight fair, and we'll fight hard, and we'll fight to win - and we usually do," Hansen said.

Among other items, the group also discussed the following:

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n Missoula Ward 3 Councilwoman Stacy Rye said she would like to see a bill that kills the 12 percent to

14 percent of funds the Montana Department of Transportation takes from cities on road projects.

- Ward 3 Councilman Bob Jaffe said he would like the calculated inflation rate to be tied to items that are seeing real increases.

- A local gas tax also came up. Ward 5 Councilman Dick Haines said he could not get behind anything that put more pressure on property taxpayers. However, he said a 2-cent gas tax would bring in money from tourists, too, and also could go specifically toward roads. "We've got a lot of streets that need some things done and we haven't got a nickel to do it," Haines said. The law allows counties to ask voters to support a gas tax, but Jaffe said maybe it should allow cities to ask as well.

- Missoula Public Works director Steve King said he would like to see a loophole closed that lets condominiums get around subdivision rules.

- Hansen also said the League will work on a bill to protect clean water.

- He warned the group to watch for a bill that requires cities to provide sewer service without annexation.

Reporter Keila Szpaller can be reached at 523-5262 or at

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