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1 _____________ BILL NO. _____________
2 INTRODUCED BY _________________________________________________
(Primary Sponsor)
3
4 A BILL FOR AN ACT ENTITLED: “AN ACT PROVIDING FOR LOCAL AUTHORITY TO REDUCE
5 RESIDENTIAL PROPERTY TAXES; AUTHORIZING A LOCAL OPTION TAX BY VOTE OF THE QUALIFIED
6 ELECTORS; PROVIDING THAT THE TAX MAY BE LEVIED IN A MUNICIPALITY, A CONSOLIDATED CITY-
7 COUNTY, A COUNTY, OR A LOCAL OPTION TAX DISTRICT; PROVIDING THAT THE LOCAL OPTION TAX
8 QUESTION DEFINE THE RATE OF THE TAX AND HOW THE REVENUE WILL BE SPENT; PROVIDING THE
9 GOODS AND SERVICES SUBJECT TO THE TAX; PROVIDING FOR LOCAL OPTION TAX DISTRICTS AND
10 THEIR GOVERNANCE; PROVIDING DEFINITIONS; AMENDING SECTIONS 7-7-4424 AND 7-7-4428, MCA;
11 AND PROVIDING AN IMMEDIATE EFFECTIVE DATE.”
12
13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
14
15 NEW SECTION. Section 1. Local option tax -- definitions. As used in [sections 1 through 23], the
16 following definitions apply:
17 (1) "Board of directors" means the board of directors of the local option tax district.
18 (2) "Governing body" means:
19 (a) the governing body of a municipality, consolidated city-county, or county in which a local option tax
20 is proposed or approved; or
21 (b) if the qualified electors establish a local option tax district, the district board of directors.
22 (3) "Local option tax district" means a district created under [sections 11 through 23] that consists of:
23 (a) a contiguous unincorporated area within a county; or
24 (b) a contiguous area that includes one or more municipalities and may include unincorporated areas
25 contiguous to the municipality or municipalities.
26 (4) "Luxury" means any gift item, luxury item, or other item normally sold to the public or transient
27 visitors or tourists. The term does not include food purchased unprepared or unserved, medicine, medical
28 supplies and services, appliances, hardware supplies and tools, or any necessities of life.
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1 (5) "Medical supplies" means items that are sold to be used for curative, prosthetic, or medical
2 maintenance purposes, whether or not prescribed by a physician.
3 (6) "Medicine" means substances sold for curative or remedial properties, including both physician-
4 prescribed and over-the-counter medications.
5 (7) "Outdoor gear" means gear for camping, hunting, hiking, skiing, biking, fishing, rafting, and other
6 outdoor activities.
7
8 NEW SECTION. Section 2. Local option taxing authority -- specific delegation. As required by 7-
9 1-112, [sections 1 through 23] specifically delegate to the qualified electors each respective municipality,
10 consolidated city-county, county, or local option tax district the power to authorize their municipality,
11 consolidated city-county, county, or local option tax district to impose a local option tax within the corporate
12 boundary of the municipality, within the boundary of the consolidated city-county or county, or within the local
13 option tax district.
14
15 NEW SECTION. Section 3. Limit on local option tax rate -- goods and services subject to tax.
16 (1) The rate of a local option tax must be established by the election petition or resolution provided for in
17 [section 4], but the rate may not exceed 4%.
18 (2) (a) A local option tax is a tax on the retail value of all goods and services sold, except for goods
19 and services sold for resale, within a municipality, consolidated city-county, county, or local option tax district by
20 the following establishments:
21 (i) hotels, motels, and other lodging or camping facilities, including vacation rentals;
22 (ii) restaurants, fast food stores, caterers, and other food service establishments;
23 (iii) taverns, bars, nightclubs, lounges, and other public establishments that serve beer, wine, liquor, or
24 other alcoholic beverages by the drink;
25 (iv) destination ski resorts and other destination recreational facilities;
26 (v) outfitters, hunting guides, fishing guides, and rafting companies;
27 (vi) tour companies, including but not limited to those that provide bus, car, or walking tours; and
28 (vii) art galleries.
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1 (b) Establishments that sell luxuries shall collect a tax on the luxuries.
2 (c) Establishments that sell outdoor gear shall collect a tax on the outdoor gear.
3
4 NEW SECTION. Section 4. Local option tax -- election required -- procedure -- notice. (1) A local
5 option tax may not be imposed or, except as provided in [section 5], amended or repealed unless the local
6 option tax question has been submitted to the qualified electors of the municipality, consolidated city-county,
7 county, or proposed local option tax district and approved by a majority of the qualified electors voting on the
8 question.
9 (2) The local option tax question may be presented to the qualified electors of:
10 (a) a municipality by a petition of the electors, as provided in 7-1-4130, 7-5-131 through 7-5-135, and
11 7-5-137, or by a resolution of the governing body of the municipality;
12 (b) a county by a petition of electors, as provided in 7-5-131 through 7-5-135 and 7-5-137, or by a
13 resolution of the board of county commissioners;
14 (c) a consolidated city-county by a petition of electors, as provided in 7-5-131 through 7-5-135 and 7-
15 15-137, or by resolution of the governing body of the consolidated city-county; or
16 (d) a proposed local option tax district by a petition of electors, as provided in [section 11].
17 (3) The petition or resolution referring the local option tax question must state:
18 (a) the rate of the local option tax;
19 (b) the duration of the local option tax;
20 (c) the dates the local option tax will be collected;
21 (d) the date the local option tax becomes effective, which may not be earlier than 35 days after the
22 election; and
23 (e) subject to [section 6], the purposes that may be funded by the local option tax revenue.
24 (4) On passage of a resolution or on receipt of an adequate petition, the governing body shall hold an
25 election in accordance with Title 13, chapter 1, part 5.
26 (5) (a) Before the local option tax question is submitted to the qualified electors, the governing body
27 shall provide notice of the goods and services subject to the local option tax by a method described in 13-1-
28 108.
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1 (b) The notice must be given two times, with at least 6 days separating the notices. The first notice
2 must be no more than 45 days prior to the election, and the last notice must be no less than 30 days prior to the
3 election.
4 (6) Notice of the election must be given as provided in 13-1-108 and must include the information
5 contained in subsection (3) of this section.
6 (7) The question of the imposition of a local option tax may not be placed before the qualified electors
7 more than once in any fiscal year.
8
9 NEW SECTION. Section 5. Local option tax administration. (1) Not less than 30 days prior to the
10 date the local option tax becomes effective, the governing body shall enact an administrative ordinance
11 governing the collection and reporting of the local option tax. The administrative ordinance may be amended at
12 any time as needed to effectively administer the local option tax.
13 (2) The administrative ordinance must specify:
14 (a) the times that local option taxes collected by businesses are to be remitted to the governing body;
15 (b) the office responsible for receiving and accounting for the local option tax receipts;
16 (c) the office responsible for enforcing the collection of the local option taxes and the methods and
17 procedures to be used in enforcing the collection of local option taxes due; and
18 (d) the penalties for failure to report local option taxes due, failure to remit taxes due, and violations of
19 the administrative ordinance. The penalties may include:
20 (i) criminal penalties not to exceed a fine of $1,000 or 6 months' imprisonment, or both;
21 (ii) if the governing body prevails in a suit for the collection of local option taxes, civil penalties not to
22 exceed 50% of the local option taxes found due plus the costs and attorney fees incurred by the governing
23 body in the action;
24 (iii) revocation of a county or municipal business license held by the offender; and
25 (iv) any other penalties that may apply for violation of an ordinance.
26 (3) The administrative ordinance may include:
27 (a) further clarification and specificity in the categories of goods and services that are subject to the
28 local option tax consistent with [section 3];
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1 (b) authorization for business administration and prepayment discounts. The discount authorization
2 may allow each vendor and commercial establishment to:
3 (i) withhold up to 5% of the local option taxes collected to defray their costs of administering the tax
4 collection; or
5 (ii) receive a refund of up to 5% of the local option tax payment received from the vendor or
6 establishment by the governing body 10 days prior to the collection due date established by the administrative
7 ordinance; or
8 (c) other administrative details needed to efficiently and effectively administer the tax.
9
10 NEW SECTION. Section 6. Distribution of local option tax proceeds -- property tax relief. (1)
11 After payment of the vendor allowance provided for in [section 5], the proceeds of a local option tax must be
12 used as follows:
13 (a) 85% for residential property tax relief;
14 (b) 10% for affordable housing programs, including rental assistance programs; and
15 (c) 5% for administrative costs of the municipality, consolidated city-county, county, or local option tax
16 district.
17 (2) The residential property tax relief may be calculated and distributed in any manner approved by
18 the governing body.
19 (3) Unless otherwise restricted by the voter-approved authorization provided for in [section 4], the
20 local option tax designated for affordable housing programs may be appropriated and expended for any
21 affordable housing program.
22
23 NEW SECTION. Section 7. Use of local option tax revenue -- bond issues -- pledge. (1) A
24 municipality, consolidated city-county, county, or local option tax district may issue bonds to provide, install, or
25 construct any of the public facilities, improvements, or undertakings authorized under 7-7-4101, 7-7-4404, and
26 7-12-4102.
27 (2) Bonds issued under this section must be authorized by a resolution of the municipality,
28 consolidated city-county, county, or local option tax district stating the terms, conditions, and covenants that the
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1 municipality, consolidated city-county, county, or local option tax district considers appropriate. The bonds may
2 be sold at a discount at a public or private sale.
3 (3) A municipality, consolidated city-county, county, or local option tax district may pledge for
4 repayment of bonds issued under this section the revenue derived from a local option tax, special assessments
5 levied for and revenue collected from the facilities, improvements, or undertakings for which the bonds are
6 issued, and any other source of revenue authorized by the legislature to be imposed or collected by the
7 municipality, consolidated city-county, county, or local option tax district. The bonds do not constitute debt for
8 the purposes of any statutory debt limitation provided that, in the resolution authorizing the issuance of the
9 bonds, the municipality, consolidated city-county, county, or local option tax district determines that the local
10 option tax revenue, special assessments levied for and revenue from the facilities, improvements, or
11 undertakings, or other sources of revenue, if any, pledged to the payment of the bonds will be sufficient in each
12 year to pay the principal and interest of the bonds when due.
13 (4) Bonds may not be issued that pledge proceeds of the local option tax for repayment unless the
14 municipality, consolidated city-county, county, or local option tax district in the resolution authorizing issuance of
15 the bonds determines that in any fiscal year the annual revenue expected to be derived from the local option
16 tax less the amount required to reduce property taxes pursuant to [section 6] equals at least 125% of the
17 average amount of the principal and interest payable from the local option tax on the bonds and any other
18 outstanding bonds payable from the local option tax, except any bonds to be refunded on the issuance of the
19 proposed bonds.
20
21 NEW SECTION. Section 8. Local option tax district authorized. The qualified electors of a
22 proposed local option tax district may create a local option tax district by proceeding under the provisions of
23 [sections 8 through 23].
24
25 NEW SECTION. Section 9. Petition to create local option tax district. (1) The qualified electors of
26 a proposed local option tax district may present, at a regular meeting, a petition requesting the establishment of
27 a local option tax district to the board of county commissioners of the county in which the proposed local option
28 tax district is located. The petition must meet the requirements of 7-5-131 through 7-5-135 and 7-5-137.
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1 (2) The petition must include a description or map of the proposed local option tax district boundaries.
2
3 NEW SECTION. Section 10. Local option tax district -- notice of petition -- hearing required. (1)
4 The board of county commissioners shall publish the text of the petition described in [section 9], as provided in
5 7-1-2121, in the county in which the proposed local option tax district lies and shall publish the date, time, and
6 place that a public hearing on the petition will be held.
7 (2) In addition to the requirements of subsection (1), the board of county commissioners shall publish
8 the text of the petition described in [section 9] in a newspaper of general circulation in the county within which
9 the proposed local option tax district lies.
10 (3) A person wishing to comment on the creation of the proposed local option tax district may file, by
11 first-class mail or otherwise, comments with the clerk and recorder of the county in which the proposed local
12 option tax district lies.
13
14 NEW SECTION. Section 11. Local option tax district -- hearing on petition. (1) At the hearing for
15 which notification has occurred under [section 10], the board of county commissioners shall accept comments
16 supporting and opposing the petition. The board of county commissioners may adjourn the hearing from time to
17 time, but the hearing must be completed within 4 weeks of its commencement.
18 (2) On concluding the hearing on the petition, the board of county commissioners shall determine
19 whether the petition complies with the requirements of [sections 8 through 23] and enter its determination into
20 the minutes of a regularly s