House Taxation Committee tables bill to raise lodging, rental-car taxes for property-tax relief

The House Taxation Committee tabled House Bill 946, a proposal to raise state lodging and rental-vehicle taxes by one percentage point and use those revenues, plus a one-time transfer from the state’s debt and liability free account, to fund immediate property-tax relief.

Representative Falk, the bill sponsor, told the committee the measure would provide an immediate $400 rebate to qualifying primary-residence owners in the first year by drawing on the debt and liability free account and then use the added lodging and rental-car tax revenue for ongoing relief. "This tax year, it allows for an effective immediate tax relief in 02/2025," Falk said during opening remarks. He described the measure as a way to “bring tax relief, but minimize the tax shift.”

The bill drew both support and strong opposition at the hearing. Danny Hess, representing Montanans United for Sustainable Taxes Coalition, said his coalition backs HB 946 as a way to extend the relief envisioned in Senate Bill 90 and to better align tourism-related revenue with local infrastructure impacts. "We support this as a mechanism to to boost that amount of relief provided by SB 90," Hess said.

Opponents included the Montana Lodging and Hospitality Association and individual hotel owners. Shelly Mann, general manager of the Boothill Inn in Billings, said the lodging industry voluntarily agreed to the bed tax decades ago with the understanding the revenue would be reinvested in tourism and community promotion. "HB 946 would set a precedent that it is okay to divert tourism dollars," Mann said, urging the committee to "vote no on HB 946." Chantel McDuffie, an owner who operates Days Inn and other properties in western Montana, said occupancy is flat across much of the state and that recent increases in bed-tax collections reflect newly taxed short-term rentals rather than surging tourist demand.

Hotel owner Tom Koontz, who owns the Pollard Hotel in Red Lodge, opposed the bill as well and asked lawmakers to trust existing mechanisms for distributing lodging tax revenue. "Our tourism industry ... does not cause cancer. And by raising taxes, we would significantly impact the use of tourism," Koontz said, calling for simpler approaches to move existing tax receipts where they are needed.

Under text discussed by the sponsor, the bill would: increase the lodging sales tax and the rental-car tax by 1 percentage point; authorize a roughly $400 per-property primary-residence rebate in the first year financed from the debt and liability free account (the sponsor estimated that $400 per property would amount to about $100 million in cash outlay); and limit eligibility by value, excluding properties above 4.5 times the median residential value (the sponsor noted the median residential value is presently about $340,000, which would render properties roughly $1.5 million or higher ineligible). Falk said the debt and liability free account balance was roughly $150 million to $200 million, and later in the hearing estimated a balance of about $225 million after prior appropriations.

Bryce Kautz, bureau chief of the Property Assessment Division at the Department of Revenue, and Jason Lay of the department’s Business Taxes and Fees Bureau were present as informational witnesses and said they were available for questions about administration of the rebate and the lodging and rental-vehicle taxes.

Committee members asked whether Montanans, not just out-of-state visitors, would pay the proposed tax increase; Falk acknowledged Montanans would pay some of it but noted the sponsor’s projection that the typical Montanan would pay only a few dollars per year while potentially receiving a larger rebate. Representative Thain asked whether the funds in the debt and liability free account were already committed to paying off outstanding bonds; Falk replied the account balance had been reduced by prior appropriations but, as he understood it, no remaining liabilities were left that would prevent a transfer for this purpose.

After public testimony and committee questions, Representative (not specified) moved to pass the bill. Representative (not specified) then offered a substitute motion to table the bill. The substitute motion to table carried on a roll-call vote of 19 in favor and 2 opposed; Representatives Zollnikov and Durham voted no. The committee clerk announced, "The house bill 946 is tabled in the house taxation committee by a vote of 19 to 2."

The committee closed executive action on HB 946 and recessed. The committee’s posted schedule noted no meeting Monday and additional hearings planned later in the week.

Notes: The bill was discussed in the context of Senate Bill 90 and other lodging-tax legislation referenced by testifiers, including previous changes to bed taxes in 1987, 2003 and 2019 and a more recent 2023 law (SB 540) discussed by industry witnesses; those referenced bills were cited by testimony but no formal cross-references or enactments were made as part of the committee’s action on HB 946.