67th Legislature SB 313.1
1 SENATE BILL NO. 313
2 INTRODUCED BY C. POPE
3
4 A BILL FOR AN ACT ENTITLED: “AN ACT AUTHORIZING A MUNICIPALITY OR CONSOLIDATED CITY-
5 COUNTY GOVERNMENT, BY VOTE OF THE ELECTORATE, TO ADOPT A LOCAL OPTION SALES TAX;
6 PROVIDING THAT THE REVENUE BE USED FOR PROPERTY TAX RELIEF, DISTRIBUTIONS TO
7 COUNTIES, INFRASTRUCTURE, AND AFFORDABLE HOUSING PROGRAMS; AMENDING SECTIONS 7-7-
8 4424 AND 7-7-4428, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE.”
9
10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
11
12 NEW SECTION. Section 1. Short title. [Sections 1 through 10] may be cited as the "Montana Tax
13 Fairness and Rural Revenue Initiative".
14
15 NEW SECTION. Section 2. Purpose. (1) Local government and local school district property tax
16 levies constitute 75% to 80% of property taxes levied on Montana property taxpayers in most jurisdictions.
17 Increasingly, property taxes are insufficient to meet the needs of the state's heavily touristed, growing
18 communities.
19 (2) In many communities, escalating property taxes are directly correlated to an alarming shortage of
20 affordable housing for working Montana families.
21 (3) It is the intent of the Montana legislature to provide Montana taxpayers within municipalities and
22 consolidated city-county governments the option to impose a limited local option sales tax on nonessential,
23 luxury goods and services to offset increasingly onerous property taxes and to fund essential community
24 improvements in actively visited or otherwise quickly growing Montana locations.
25
26 NEW SECTION. Section 3. Local option sales tax -- definitions. As used in [sections 1 through
27 10], the following definitions apply:
28 (1) "Governing body" means the governing body of a municipality or consolidated city-county
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1 government in which a local option sales tax is proposed or approved.
2 (2) "Infrastructure project" means the construction, improvement, maintenance, or operation of a local
3 capital improvement that drives continued economic growth, including streets, roads, sidewalks, bicycle trails,
4 pedestrian trails, bridges, water supply, wastewater treatment, sewer, and other locally prioritized public
5 facilities identified in a petition provided for in [section 6(3)].
6 (3) (a) "Luxury good" means a gift item, luxury item, or other item normally sold to the public or to
7 transient visitors or tourists.
8 (b) The term does not include:
9 (i) food purchased unprepared, unserved, and primarily for off-premises consumption;
10 (ii) medicine or medical supplies;
11 (iii) appliances, hardware supplies, or tools;
12 (iv) motor vehicles or the sale, lease, loan, or provision of any item, product, or service by a franchise
13 as that term is defined in 61-4-201;
14 (v) gasoline or special fuel; or
15 (vi) any necessities of life.
16 (4) (a) "Luxury service" means a service normally sold to the public or to transient visitors or tourists,
17 including:
18 (i) a rental motor vehicle;
19 (ii) services sold by hotels, motels, or other lodging or camping facilities;
20 (iii) food served prepared by a restaurant, fast food store, or other food service establishment;
21 (iv) food and drinks served by taverns, bars, nightclubs, lounges, or other public establishments that
22 serve beer, wine, liquor, or other alcoholic beverages by the drink; and
23 (v) services provided by a destination ski resort or other destination recreational services and
24 facilities.
25 (b) The term does not include:
26 (i) medical services;
27 (ii) the sale, lease, loan, or provision of any item, product, or service by a franchise as that term is
28 defined in 61-4-201; or
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1 (iii) electric, natural gas, water, or similar utility services, or telecommunications, broadband, or cable
2 television services.
3 (5) "Medical supplies" means items that are sold to be used for curative, prosthetic, or medical
4 maintenance purposes, whether or not prescribed by a physician.
5 (6) "Medicine" means substances sold for curative or remedial properties, including both physician-
6 prescribed and over-the-counter medications.
7 (7) "Motor vehicle" means a self-propelled or towed vehicle designed for personal or commercial use,
8 including but not limited to an automobile, truck, motorcycle, recreational vehicle, all-terrain vehicle,
9 snowmobile, camper, boat, or personal watercraft or a trailer used to transport a motorcycle, camper, boat, or
10 personal watercraft.
11 (8) "Rental motor vehicle" means the rental of a motor vehicle defined in subsection (7).
12
13 NEW SECTION. Section 4. Local option taxing authority -- specific delegation. (1) As required by
14 7-1-112, [sections 1 through 10] specifically delegate to the qualified electors of each respective municipality or
15 consolidated city-county government with a population of 5,000 or more the power to authorize the municipality
16 or consolidated city-county government to impose a local option sales tax within the corporate boundary of the
17 municipality or consolidated city-county government.
18 (2) The power to impose a local option sales tax does not include the power to levy a franchise fee on
19 utilities or cooperatives based on their revenue.
20
21 NEW SECTION. Section 5. Limit on local option sales tax rate -- goods and services subject to
22 tax. (1) The rate of a local option sales tax and the goods and services subject to the tax must be established
23 by the election petition or resolution provided for in [section 6], the rate of which may not exceed 4%.
24 (2) A local option sales tax is a tax on the retail value of all luxury goods and luxury services sold,
25 except for goods and services sold for resale, within a municipality or consolidated city-county government with
26 a population of 5,000 or more.
27 (3) Establishments that sell luxury goods or luxury services shall collect a tax on the luxury goods or
28 luxury services.
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1
2 NEW SECTION. Section 6. Local option sales tax -- election required -- procedure -- notice. (1)
3 A municipality or consolidated city-county government may not impose, reauthorize, amend, or repeal a local
4 option sales tax unless the local option sales tax question has been submitted to the electorate of the
5 municipality or consolidated city-county government and approved by a majority of the electors voting on the
6 question.
7 (2) The local option sales tax question may be presented to the electors of a municipality or
8 consolidated city-county government by:
9 (a) a petition of the electors as provided in 7-5-131 through 7-5-135 and 7-5-137, except that the
10 petition must be signed by at least 5% of the qualified electors of the incorporated municipality or consolidated
11 city-county government; or
12 (b) a resolution of the governing body of the municipality or consolidated city-county government.
13 (3) The petition or resolution referring the local option sales tax question must state:
14 (a) the rate of the local option sales tax, which may not exceed 4%;
15 (b) the duration of the local option sales tax, which may not exceed 10 years;
16 (c) the date when the local option sales tax becomes effective, which may not be earlier than 90 days
17 after the election;
18 (d) subject to [section 5(2)], a description of the specific types of goods and services subject to the
19 tax; and
20 (e) subject to [sections 8 and 9], the purposes that may be funded by the local option sales tax
21 revenue, including a description of the infrastructure projects and affordable housing programs.
22 (4) (a) A petition or resolution referring the local option sales tax question for repeal must state the
23 date the repeal becomes effective.
24 (b) If local option sales tax proceeds are pledged for bonding as provided in [section 9], a municipality
25 or consolidated city-county government may not submit to the electorate a petition or resolution for repeal until
26 the term of the bond expires.
27 (5) On receipt of an adequate petition or passage of a resolution, the governing body shall:
28 (a) call a special election on the local option sales tax question; or
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1 (b) place the local option sales tax question on the ballot at the next regularly scheduled election.
2 (6) Notice of the election must be accomplished as provided in 13-1-108 and must include the
3 information contained in subsection (3) of this section.
4 (7) The question of the imposition, reauthorization, or repeal of a local option sales tax may not be
5 placed before the electors more than once a year. The question of an amendment to the local option sales tax
6 may be placed before the electors more than once a year provided that each question is for a different
7 amendment.
8
9 NEW SECTION. Section 7. Local option sales tax administration. (1) Not less than 30 days prior
10 to the date that the local option sales tax becomes effective, the governing body shall enact an administrative
11 resolution governing the collection and reporting of the local option sales tax. This administrative resolution may
12 be amended at any time as needed to effectively administer the local option sales tax.
13 (2) The administrative resolution must specify:
14 (a) the times that local option sales taxes collected by businesses are to be remitted to the governing
15 body;
16 (b) the office, officer, or employee of the local government responsible for receiving and accounting
17 for the local option sales tax receipts;
18 (c) the office, officer, or employee of the local government responsible for enforcing the collection of
19 the local option sales tax and the methods and procedures to be used in enforcing the collection of local option
20 sales taxes due;
21 (d) a requirement that the governing body provide an annual written notification to each property
22 taxpayer of the actual dollar amount of property tax relief provided pursuant to [section 8(1)(a)]; and
23 (e) the penalties for failure to report local option sales taxes due, failure to remit taxes due, and
24 violations of the administrative resolution. The penalties may include:
25 (i) criminal penalties not to exceed a fine of $1,000, imprisonment for 6 months, or both;
26 (ii) if the governing body prevails in a suit for the collection of local option sales taxes, civil penalties
27 not to exceed 50% of the taxes found due plus the costs and attorney fees incurred by the governing body in
28 the action;
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1 (iii) revocation of a business license issued by the local government that is held by the offender; and
2 (iv) any other penalties that may be applicable for violation of an ordinance.
3 (3) The administrative resolution may include:
4 (a) further clarification and specificity in the categories of goods and services that are subject to the
5 local option sales tax consistent with [section 5(2)];
6 (b) authorization for business administration and prepayment discounts, including allowing each
7 vendor and commercial establishment to:
8 (i) withhold up to 5% of the local option sales taxes collected to defray the costs of administering the
9 tax collection; or
10 (ii) receive a refund of up to 5% of the local option sales tax payment received from the vendor or
11 establishment by the governing body 10 days prior to the collection due date established by the administrative
12 ordinance; and
13 (c) other administrative details necessary for the efficient and effective administration of the tax.
14
15 NEW SECTION. Section 8. Distribution of local option sales tax proceeds -- tax relief. (1) After
16 payment of the vendor allowance provided for in [section 7], the net proceeds of a local option sales tax
17 imposed by a municipality or consolidated city-county government must be used as follows:
18 (a) 25% of the proceeds to reduce the municipal or consolidated city-county government property tax
19 levy for the fiscal year;
20 (b) as provided in subsection (2) and except as provided in subsection (2)(a)(ii), 20% of the proceeds
21 to be distributed to counties to be used for any purpose allowed by law;
22 (c) 50% of the proceeds to be appropriated and used for infrastructure, affordable housing, and
23 administration approved by the voters as provided in [section 6]; and
24 (d) 5% of the proceeds to cover administrative costs of the municipality or consolidated city-county
25 government.
26 (2) (a) Except as provided in subsection (2)(b):
27 (i) a municipality imposing a local option sales tax shall annually distribute the revenue provided for in
28 subsection (1)(b) to the county in which the municipality is located; and
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1 (ii) a consolidated city-county government shall retain the 20% of proceeds designated for distribution
2 to the county.
3 (b) A municipality or consolidated city-county government may distribute a portion of the revenue
4 provided for in subsection (1)(b) to adjacent counties.
5
6 NEW SECTION. Section 9. Use of local option sales tax revenue -- bond issue -- pledge. (1)
7 Unless otherwise restricted by the voter-approved tax authorization provided for in [section 6], a municipality or
8 consolidated city-county government may appropriate and expend revenue derived from a local option sales tax
9 for any infrastructure project or affordable housing program and any costs resulting from the imposition of the
10 tax.
11 (2) A municipality or consolidated city-county government may issue bonds to provide, install, or
12 construct any of the infrastructure projects or affordable housing programs authorized under subsection (3) as
13 provided for in 7-7-4101, 7-7-4404, and 7-12-4102.
14 (3) Bonds issued under this section must be authorized by a resolution of the governing body stating
15 the purposes, amounts, terms, conditions, and covenants of the municipality or consolidated city-county
16 government that the governing body considers appropriate. The bonds may be sold at a discount at a public or
17 private sale.
18 (4) For repayment of bonds issued under this section, a municipality or consolidated city-county
19 government may pledge the revenue derived from a local option sales tax or from special assessments levied
20 for and revenue collected from the infrastructure project or affordable housing program for which the bonds are
21 issued. The bonds do not constitute debt for purposes of any statutory debt limitation provided that, in the
22 resolution authorizing the issuance of the bonds, the municipality or consolidated city-county government
23 determines that the local option sales tax revenue or the special assessments levied for and revenue from the
24 infrastructure project or affordable housing program pledged to the payment of the bonds will be sufficient in
25 each year to pay the principal and interest of the bonds when due.
26 (5) Bonds may not be issued that pledge proceeds of the local option sales tax for repayment unless
27 the municipality or consolidated city-county government in the re