Tourism industry debates woes of tax changes
HELENA - Tourists coming to Montana this year will feel the aftershocks of the 2003 Legislature, paying more to snowmobile, stay at a motel or private campground, and rent a car or boat.
They also may find one of the state's top attractions, the Montana Historical Society, locked up because of budget cuts.
But legislators also lent a hand to out-of-state visitors by making it easier to obtain hunting and fishing licenses, get onto state-owned land and fish for more than two days.
Those in the tourism industry have mixed feelings about the effect of the increased accommodations tax or the new car rental tax. Some say it won't be felt much, others aren't so sure. And they're definitely not happy that lawmakers singled out such a small piece of the tourism pie for higher taxes.
''We wanted a broader-based tax that truly captured all the money that tourists spent,'' said Amy Sullivan, spokeswoman for the Montana Tourism Coalition. ''If times are tight, let's all share the burden.''
The Legislature's most noticeable effects on tourists probably are an increase in the accommodations tax from 4 percent to 7 percent, and imposing a new 4 percent tax on car rentals.
The latter also applies to rentals of such things as motorcycles, four-wheelers, motorboats, sailboats, canoes, kayaks and jet skies.
Money from the two tax changes - about $23 million by mid-2005 - will help balance the state budget. The so-called bed tax increase takes effect June 1 and the vehicle rental tax starts a month later.
Revenue Department officials estimate that 77 percent of the bed tax and 70 percent of the rental tax is paid by out-of-state visitors.
But Fred Sterhan, co-owner of the Marina Cay Resort at Bigfork, disputes those numbers and said about 60 percent of his business comes from Montanans.
He objects to the bed tax increase, saying, ''One industry got hit with an 80 percent increase in taxes and that's not fair. Now is not the time to be increasing taxes on the industry.''
The higher tax will boost room rates on top of a standard increase that he and many other motel owners need each year to keep up with rising costs. That means an 8 percent jump for Sterhan's prices. Some owners will have to forego their own rate increase for fear of scaring off customers, he said.
Bill Howell, co-owner of the Holiday Inn Sunspree Resort in West Yellowstone, doesn't expect the bed tax increase to scare off customers. What he's worried about is the new mandate that all out-of-state snowmobiles have a $15 temporary Montana permit.
With neighboring states and the National Park Service requiring their own permits, the cost of snowmobiling is getting worse even before the engine is started, he said.
''Everything comes on top of everything else,'' Howell said. ''Where is the straw that breaks the camel's back?''
Steve Costley, manager of the Hertz rental car outlet at the Billings airport, said the new tax on his industry - combined with the higher motel tax - might discourage some convention business.
''It's certainly going to have an impact,'' he said.
Betsy Baumgart, who heads Montana's tourism promotion office, questions whether the car rental tax will cause much of a ripple because most travelers are used to paying such a tax in other states.
But the increase in the bed tax could make a difference in the six Montana communities that already have local resort sales taxes of 3 percent. The additional tax ordered by the Legislature will push the overall tax rate in those towns to 10 percent, she said.
''There's some concern that if you get to the level of 10 percent or greater, that might have an influence,'' Baumgart said.
Meanwhile, the Historical Society plans to close Sundays and Mondays beginning Memorial Day Weekend to deal with budget cuts from the Legislature. It also will scrap guided tours of the Capitol and the old governor's mansion.
Baumgart said it was discouraging, because legislators dedicated nearly $400,000 to the agency in hopes of heading off such cuts.
''It could have an effect on the Helena area,'' she said. ''To adopt the cuts at this time of year is devastating. It's when a majority of our visitors are traveling.''
Aside from the tax or fee increases and the Historical Society cuts, some visitors to Montana will benefit from legislative actions.
Out-of-staters will have an easier time getting a hunting or fishing license. A new law permits the Department of Fish, Wildlife and Parks to issue those and the prerequisite conservation license over the Internet. The program began operating in mid-April for nonresidents.
Residents still must appear in person to prove residency for getting a conservation license, but can get a hunting or fishing license via the Internet.
Ron Aasheim, department spokesman, said the service is convenient for those planning their hunting or fishing trips to Montana because they don't have to include a stop at the local licensing agent.
Nonresident anglers also have a new alternative to the familiar two-day, $15 fishing license and the $60 annual permit. The Legislature authorized sale of a 10-day license for $43.50, with a portion of the fee dedicated to maintenance of fishing access sites.
Nonresidents and Montanans alike will see a change in paying for recreational use of state lands in March 2004. Lawmakers abolished the $10 use permit and replaced it with a $2 increase in the $7 fee for a conservation license that automatically grants access to state holdings.
But those buying a conservation license - the prerequisite for a hunting or fishing license - will see another increase as well. The Legislature added an additional 25 cents to help pay for search and rescue of hunters, anglers and trappers.
Montanans traveling in their state will have the chance to avoid paying for day use of state parks by paying an optional $4 fee on the vehicle registration beginning next year. Out-of-state residents will see no change in their park-use fees.