Montana is one of the best places to live. Our scenery, outdoor adventure, and opportunity to foster a great work-life balance are key considerations when people are deciding where to settle down. However, in the era of information availability and low travel costs, communities are in constant competition to attract and retain the talented workforce and business required to generate economic prosperity for their citizens. Montana was dealt a fantastic hand with its natural beauty, but attracting Millennials—presently the largest demographic in the U.S. workforce—requires more than reliance on the status quo. In order for Montana to attract the talented workforce necessary for economic growth in an increasingly competitive environment, a concerted economic development effort must be made to provide the quality-of-life resources people seek. Unfortunately for Montana communities, funding placemaking and economic development projects is difficult due to a lack of funding mechanisms. Simply put: the property owner is overburdened by continuous requests for levy increases and bonding against property taxes. Without more options, cities face increased unwillingness to pay for necessary economic development and quality-of-life necessities.
ENTER, LOCAL OPTION AUTHORITY Local option authority is an enabling legislation at the state level that permits residents in cities the opportunity to enact a temporary sales tax on themselves. Although many people view the word “tax” with contempt, the local option possesses some key characteristics that mitigate these negative connotations. First, in order for a community to enact a local option tax, registered voters in the community must vote to approve the tax and the projects the money will be spent on. This ensures that tax revenue collected is spent on projects that are focused on addressing each community’s economic development needs. Why wait on Helena or DC to award grants or pass legislation unevenly appropriating economic development funds? Community empowerment derived from the local option gives cities greater autonomy to forge the pathway of their future. Second, tax revenue cannot go into a government’s general fund. Instead, the money is placed in a segregated account, overseen by a citizen advisory panel, where it stays until it is used to pay for the voter-approved project or projects. Providing cities flexible payment options allows unique solutions that address the economic development challenges they face. For instance, a community may need vital infrastructure immediately and can bond against local option proceeds, while simultaneously accruing local option revenue to pay for placemaking projects with cash when the tax ends. Utilizing local option allows innovative, communitytailored solutions to transform cities without needing to burden the property owner further. Third, local option contains a provision limiting its duration. This means that registered voters are also voting to approve the duration of the tax. In the case of local option, the duration can last no longer than 10 years, but may be shorter depending on the community’s needs. If a subsequent local option tax were to be enacted, it would have to pass another vote from the community.
WHY DO WE NEED LOCAL OPTION? As a Montanan, enjoying all our great state has to offer, it is easy to recognize our competitive advantage in natural amenities. Our mountains, rivers, and outdoors are important assets that attract people and business to Montana. However, competition from denser metropolitan areas pulls people out of our state. Thicker labor markets lead to higher salaries, and combined with quality-of-life benefits, attract talented workers and the businesses that want to hire them. In order to retain a competitive advantage, Montana and her cities must constantly improve,
SEPTEMBER - NOVEMBER 2016 | LiNK BUSINESS QUARTERLY | 17