Montana committee hears proposal to let counties tax tourist transactions to offset property taxes

Representative Greg Oblander, sponsor of House Bill 489, told the Local Government Committee that the measure — which he called the Local Option Property Tax Relief Act — would allow counties to place an optional tax on select tourist transactions and use most of the proceeds to offset property taxes for primary residences and long-term rentals.

Oblander described the bill as voluntary for counties and the result of bipartisan stakeholder work. "This is totally on the counties and their local voters," he said, emphasizing local choice and guardrails that exclude SNAP-eligible groceries, medicine and basic hygiene items from the tax base.

Proponents said the tax targets tourist spending on items such as lodging, rental cars and restaurant meals and would return roughly 90% of collections to the county where the revenue was raised as a property-tax credit. Jennifer Hensley, representing Missoula County, pointed to polling released with testimony showing "70% of Montanans support this idea" after education about the proposal and said the bill includes administrative routes to ensure renters can receive benefits.

Supporters argued the approach would bring new payers into the system — tourists — rather than simply shifting the existing tax burden among in-state property owners. County officials described why tourist-driven spikes in service demand (911 responses, road wear, policing) make local options attractive to some jurisdictions.

Opponents included business and sector groups that raised operational and policy concerns. Brad Griffin of the Montana Retail Association warned a patchwork of local-option taxes could impede any later effort to adopt a statewide sales tax and stressed that local options cannot capture online sales in the same way. The Tavern Association raised Wayfair and collection-compliance concerns, arguing the bill as drafted lacks a single point-of-collection and could leave large online merchants untaxed relative to local retailers.

Outfitter organizations said the bill could single out small tourism-related businesses and leave them responsible for collection when services are sold as packaged offerings with lodging, guiding and meals. "When outfitting and guiding services are performed as a package... I don't know how that applies," said Mike Bias of the Fishing Outfitters Association, asking for clearer rules about point of sale and taxable incidence.

Department of Revenue staff said the agency could track lodging and rental-car collections but would need to adjust forms and reporting if multiple counties adopt different local-option rules. DOR suggested more prescriptive coordination language in the bill and recommended uniform reporting procedures to reduce administrative friction.

Sponsors acknowledged drafting and administrative questions remain and pointed to an Alaska-style central collection model discussed in testimony as one possible way to address Wayfair concerns for out-of-state sellers. Representatives also described illustrative county-level savings included in sponsor materials; the sponsor said examples show reductions of several hundred dollars in property-tax bills for homeowners in larger counties if their county enacted the option.

The committee ended the hearing without a vote. The bill's proponents asked the committee to advance further consideration; opponents urged more work on ballot language, administrative processes, and protections for small rural businesses before any do-pass recommendation.