House committee hears bill to shift lodging taxes toward $400 property-tax rebate; panel tables measure 19-2

Representative Falk introduced House Bill 946 to the House Taxation Committee as a mechanism to provide property-tax relief by revising lodging and rental-car taxes and tapping the state's "debt and liability free" account for an initial rebate.

Falk told the committee the bill is modeled in part after Senate Bill 90 and would allow an initial $400 rebate per principal residence, paid from the debt-and-liability-free account in fiscal 2025, and might be followed by ongoing receipts from an adjusted lodging tax. "This is a workable tax shift," Falk said, and offered an example: "Estimating an approximate room rate of $250, then 1% of that is $2.50. If you stay in a room 10 times a year, it's $25," while the proposed rebate would be about $345 to an eligible homeowner.

Proponents argued the proposal would link tourism-related revenue to local impacts and increase property-tax relief. Danny Hess, representing Montanans United for Sustainable Taxes Coalition, said HB 946 would "boost that amount of relief provided by SB 90" and urged the committee to advance the bill.

Opponents from the lodging and hospitality industry said the proposal would divert funds intended for tourism promotion and local tourism-related grants. Shelly Mann, general manager of the Boothill Inn speaking for the Montana Lodging and Hospitality Association, said, "HB 9 4 6 would set a precedent that it is okay to divert tourism dollars." Tom Koontz, owner of the Pollard Hotel, said of the existing lodging facility-use tax, "It is our money to help build our business," and urged lawmakers to keep those dollars focused on tourism and economic development. Sean Tell McDuffie, a Native American-owned hotel operator from Missoula, testified that occupancy is "flat across much of the state" and that recent bed-tax increases reflect added short-term rental collections and rising room rates rather than booming business for all operators.

Witnesses from the Department of Revenue—Bryce Kautz (property assessment division) and Jason Lay (business taxes and fees bureau)—were present to answer technical questions on administration. Representative Thain asked if the $100 million figure the sponsor cited is excess or reserved to cover callable bonds; Falk responded that after transfers and appropriations the debt-and-liability-free account balance is roughly $225 million and that, in his view, no other liabilities remain to be paid off.

Committee members raised questions about who would bear the lodging-tax increase. Falk acknowledged that Montanans also pay the lodging tax and reiterated the sponsor's calculation showing a modest per-stay increase ("1% of that is $2.50"). Opponents said the change could undermine the longstanding arrangement by which lodging taxes fund tourism marketing, grants and local infrastructure.

After testimony and questions, the committee recessed briefly for executive action. A member moved that HB 946 "do pass," and Representative Dain offered a substitute motion to table. The substitute motion, which allowed proxy votes, passed on a roll-call tally of 19 in favor and 2 opposed, tabling the bill and ending further action in the committee at that time. The transcript names two members as voting "no": Representative Zollnikov (by proxy) and Representative Durham.

The committee closed the hearing and discussed scheduling for future brief meetings before adjourning.