HomeMy WebLinkAbout02-25-19 City Commission Packet Materials - SP3. 2018 Comparative Municipal Tax ReviewMichael P. Wallner, PhD
Greta M. Linse, MS
2018 COMPARATIVE MUNICIPAL TAX REVIEW
152
TABLE OF CONTENTS
ABOUT THE AUTHORS...........................................................................................................................3
EXECUTIVE SUMMARY......................................................................................................................4-6
REPORT EXPENSES...............................................................................................................................7
METHODOLOGY.....................................................................................................................................8
PURPOSE.........................................................................................................................................9-10
MUNICIPALITIES REVIEWED...........................................................................................................11-17
DATA ANALYSIS & DISCUSSION......................................................................................................18-25
COMPARING ANALYSIS: INDIVIDUAL MUNICIPAL TAX REVENUES.................................................26-38
DISCUSSION & POLICY IMPLICATIONS................................................................................................39
Layout Design by Kasey Chambers
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Michael P. Wallner currently works as a lead economic research specialist
at TechLink1- a United States Department of Defense partnership intermediary
in Bozeman, Montana. Wallner has both a master’s and PhD in public policy
and administration. He is a two-time economic research specialist of the year at
TechLink, and he served as a volunteer special economic advisor to former Mayor
Carson Taylor. For this project, Wallner is serving as a special economic advisor
to Deputy Mayor Chris Mehl. Besides multiple positions in higher education
and government, he also worked in a joint position as an economic research
specialist and policy advisor for Boise State University and the City of Boise.
Wallner has worked for government agencies at the local, state, and federal
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publications focusing on economics, public policy, and quantitative program
analysis. Currently, Wallner is working on his Masters of Business Administration
(MBA) at the University of Montana and additional academic publications. As
part of his MBA, Wallner is conducting a collaborative governance public policy
internship with Deputy Mayor Chris Mehl. Wallner has traveled to more than 30
countries, providing him with an international perspective of different cultures,
governmental approaches, and creative ideas for solving complex public policy
problems impacting citizens and government agencies throughout the world.
Michael can be contacted at 406-600-6420.
Greta M. Linse is the owner of Great Lines Writing and Consulting Services
(www.greatlineswriting.com) in Bozeman, Montana. Linse has a Master of
Science in Mathematics and Master of Science in Statistics. In addition to
consulting, Linse is an instructor of Statistics for the Department of Mathematical
Sciences at Montana State University. She also works as the Project Manager for
the Human Ecology Learning and Problem Solving (HELPS) Lab at Montana State
University. Linse has over ten-years’ experience with data analysis, statistical
consulting and technical writing. She has worked towards developing new
methods for genetic CNV analysis. Linse presented a novel method for family-
based mixed model genetic data analysis at the American Society for Human
Genetics annual meeting in 2014. She has edited and reformatted a textbook
on Intermediate Statistics with R by Mark Greenwood. A native of Montana and
a descendent of homesteaders, she still recognizes the value and opportunities
that come with a growing and thriving community like Bozeman. For more
information on her consulting services, visit www.greatlineswriting.com. Greta
can be contacted at gretalineswriting@outlook.com.
1The views in this document are solely based on the data obtained from local municipalities, and not of TechLink, the United States Department of Defense, or Montana State University.
ABOUT THE AUTHORS
154
EXECUTIVE SUMMARY
155
Bozeman is a rapidly growing municipality with an average tax income compared to the other 13 municipalities reviewed in this
study. The results indicate that Bozeman may be missing revenue sources that could be designed to capture more tax revenue from
tourists. Furthermore, a sales or tourist tax could be considered as a public policy change that Bozeman Commissioners and Montana
State Legislatures consider, as this might help offset a continued rise in property taxes for local citizens. To ensure equal comparison
of municipalities analyzed in this study, revenue sources were divided by the total population, as reported in 2017 by the US Census
Bureau2. While not all citizens in the population of each municipality paid taxes within their municipality, the revenue per capita
describes the distribution of the revenue when weighted by the population size.
When compared to the 13 municipalities’ total tax revenue collected in this study, Bozeman represents the average value of these
communities (see Figure 1 below). In other words, from a broad perspective, Bozeman is not failing or succeeding at collecting tax
revenues, rather of the 13 municipalities reviewed, we are the average community in this comparative municipal tax analysis when
adjusted for population size.
2United States Census Bureau Quick Facts-2017. https://www.census.gov/quickfacts
FIGURE 1: TOTAL REVENUE PER CAPITA FOR ALL MUNICIPALITIES
156
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visit: https://www.bozeman.net/government/planning/impact-fees
4New Census Bureau Population Estimates-March 22, 2018-Release number CB18-50. https://www.census.gov/newsroom/press-releases/2018/popest-metro-county.html
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of being the fastest growing micropolitan4 in the nation . When analyzing fuel tax shares from each municipalities’
respective state, Bozeman received the third lowest revenue per capita, only ahead of Fort Collins and Juneau.
Receiving such a small share is problematic for Bozeman, considering the fuel tax revenue is a distributed burden on
citizens, tourists, and businesses throughout the entire State of Montana. Additionally, based on the data analyzed,
Bozeman receives the second lowest tax revenue for special improvement districts (SIDs), compared to the seven
other municipalities that utilize SIDs in their public policy taxing structure. In addition, Bozeman has the sixth lowest
revenue per capita for “other” taxes analyzed. Some examples of these revenue types are entitlement shares, corporate
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methods.
Bozeman collects the fourth highest property taxes per capita in this study. However, Bozeman has the fourth
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from tourists visiting our community, or other taxing structures that other communities have developed. Bozeman
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collecting either a sales or tourist tax for their local municipalities. Similar to Bozeman and other communities in the
Intermountain West, these municipalities also rely on tourism and outdoor recreation as core components for the
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to allow Bozeman and other densely populated Montana municipalities the right to vote on a tourist tax, property taxes
will only continue to increase for permanent residents as infrastructure, affordable housing, and educational services
continue to require more resources from our local governments.
157
REPORT EXPENSES
The City of Bozeman reimbursed the authors $500 for this comparative municipal tax
review. Dr. Wallner spent more than 250 hours working on data collection, analysis, and
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editing, and writing. We recognize that an analysis of this magnitude, conducted by an outside
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to minimize the expenses associated with this report, based on our civic duty to the community
and citizens of Bozeman.
158
METHODOLOGY
In July of 2018, Dr. Wallner contacted 16 municipalities in Montana, Idaho, Wyoming,
Arizona, Oregon, Alaska, and Colorado. Budget administrators for each municipality were
contacted via e-mail and telephone to inform them of the comparative municipal tax review.
All municipalities were sent a detailed letter explaining the purpose of the study. Over the
course of six months, we repeatedly communicated with 14 municipalities that cooperated
extensively with our municipal tax review. However, Casper and Jackson failed to provide data
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encouraged to include additional tax categories that were not included by our research team.
Over the next six months, Bend, Billings, Bozeman, Flagstaff, Fort Collins, Great Falls, Helena,
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research team. Follow-up phone calls were scheduled with each municipality to discuss the data
provided, and extensive questions were asked by the researchers to understand the context of
each tax category. The goal was to better understand municipalities tax structures, and to make
certain data was standardized as much as possible across all municipalities.
Finally, data gathered from all municipalities were merged, and basic descriptive statistical
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sales or resort taxes, impact fees, property taxes, special improvement districts, and the fuel tax
revenue shared with municipalities from each respective state. Additionally, another category
termed “other” includes entitlement shares, corporate income, cigarette, liquor, and soda taxes.
Bed taxes were excluded from this analysis because the majority of municipalities in this study
receive the bed tax, but transfer the revenue to a non-governmental organization. Ensuing, a
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submitted to the City of Bozeman. Sending the report to all municipalities that participated
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159
PURPOSE
160
5New Census Bureau Population Estimates-March 22, 2018-Release number CB18-50. https://www.census.gov/newsroom/press-releases/2018/popest-metro-county.html
The purpose of this municipal tax review is to compare tax structures, revenues, and unique approaches
that other municipalities have designed and implemented in their local communities. Furthermore, the citizens
of Bozeman and those implementing public policy changes need to better understand the most effective
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growing micropolitan5 in the nation. As a result, public policy makers are consistently forced to utilize a reactive
approach for solving public policy problems, instead of having the taxing capabilities to employ a proactive
approach for solving complex public policy problems.
This report was also conducted to understand comparative municipal approaches for providing tax relief
to citizens, while possibly taxing tourists that visit their communities. As this report demonstrates, Bozeman
citizens have the fourth highest property taxes, but also the fourth lowest median household income of all
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property tax relief to Bozeman citizens, while obtaining revenue for infrastructure and growth upgrades within
the community. To be clear, this report is not advocating for a sales tax, we are providing comparative data
and other approaches that municipalities use to collect tax revenue on permanent citizens and tourists, while
providing the public services to their citizens.
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MUNICIPALITIES REVIEWED
162
As previously mentioned, 13 municipalities were reviewed for this study. There were a variety of factors that resulted in our team
choosing this sample of municipalities for our comparative tax review. First, a common attribute among the municipalities was 11 of the
13 had a higher education institution in their community. Universities and colleges in the United States contribute more than 20 million
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economic impacts well beyond their local communities that can result in state, regional, national, and international economic impacts.
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Lastly, these 13 municipalities were chosen as comparative municipalities due to their unique geographic locations and minimally
populated municipalities. Most of these municipalities reside within the Intermountain West. These municipalities primarily consist
of widely separated urban areas and rural municipalities that are in primarily underpopulated states. Furthermore, the most densely
populated municipality reviewed was Fort Collins with a population of 165,080. The least populated municipality reviewed was Sun Valley
with a population of 1,438. While there is a major population disparity between Sun Valley and Fort Collins, revenue was standardized per
capita. Another key factor with our sample selection was primarily selecting rural municipalities or resort towns, with high median costs
of living. One consequence of living in a rural or resort town is that citizens typically have a longer commute to work as the cost of living
is more affordable in neighboring communities or rural outposts. The shortest commute time is for Sun Valley residents (11.3 minutes),
whereas the longest commute time was in Fort Collins (19.6 minutes). While these statistics might not seem like the most important
comparative factor, shorter work commutes are associated with a higher quality of life9 and positive economic impacts on communities.
The next section of this report will discuss important contributing factors from each municipalities’ census data and unique attributes of
each community.
9Assessing the Effect of Commute Time on Poverty in the United States-2016-Quinn Majeski.
BEND, OREGON
Located in Central Oregon, Bend is on the Deschutes River with amazing views of the Cascade Mountains. In addition, Mt.
Bachelor ski resort is located just west of town, as Bend has access to world-class outdoor recreation. With a population of 94,520,
and a median owner-occupied housing value of $326,000, Bend can be an expensive real estate market for locals. Home to
multiple higher education institutions, 42.6 percent of citizens in Bend possess a bachelor’s degree, with an above average median
household income of $60,563. Located within high desert geography and surrounded by ponderosa pines, Bend was originally
incorporated as a logging town. Bend’s primary economic outputs are agriculture, outdoor recreation, healthcare, tourism, and
educational services. Furthermore, the owner-occupied housing rate is 58.2 percent, with a minimal mean travel time to work of
15.3 minutes. Few communities in the West can compete with all of the outdoor recreation,
and economic opportunities that Bend offers.
BILLINGS, MONTANA
Located in South Central Montana, Billings is the largest municipality in the state with a population of 109,642, exclusive
of the larger metropolitan area. Billings is home to two secondary education institutions, Rocky Mountain College, and Montana
State University-Billings. Billings is well known for its location on the historic Yellowstone River, with access to world-class water
recreation and beautiful hiking trails. Billings has a median owner-occupied housing value of $206,100, with an owner-occupied
housing rate of 62.9 percent. The economy is primarily comprised of oil and gas, agriculture, healthcare, secondary education, and
outdoor recreation. Billings is known for a thriving blue-collar economy with great employment opportunities in oil and gas and
healthcare, with the largest employers in the area being healthcare providers. The median household income is $55,585, with
32.6 percent of citizens possessing a bachelor’s degree. Citizens have a mean commute time of 16.7 minutes to work, with many
citizens living in Billings, but a small percent of the population commuting from nearby Laurel.
164
10Annual Estimates of Resident Population Change: April 1, 2010 to July 1, 2016. U.S. Census Bureau Population Division. www.census.gov/popest
BOULDER, COLORADO
Located in Northern Colorado, Boulder is home to some of the best outdoor recreation in the nation, and has one
of the highest concentrations of breweries in the country. Below the foothills of the Rocky Mountains, a population of 107,125
residents reside 30 minutes north of Denver, Colorado. Home to the University of Colorado at Boulder, 73.8 percent of residents
have a bachelor’s degree, which is the highest of any municipality in this study. With an owner-occupied housing rate of 48.2
percent, and a median owner-occupied housing value of $600,400, Boulder has the most expensive median homes in this study.
With a beautiful green belt of open space and parks, the City of Boulder has excelled at preserving open space. Furthermore,
Boulder has a median household income of $64,183, also the second highest in this study. Boulder’s economy is primarily driven
by educational services, aerospace, bioscience, high-tech, and outdoor recreation. While Boulder is an amazing place to reside,
citizens have a mean travel time of 19.1 minutes to work, with many citizens driving from the northern suburbs of Denver to work
in Boulder.
BOZEMAN, MONTANA
Located in Southwest Montana, Bozeman is home to Montana State University and the Bridger Mountains. Bozeman
is located within Gallatin County, which from April of 2010 to July of 2016 has had the largest population increase10
(48.5 percent) in Montana. Bozeman has a population of 46,596 with a median value of owner-occupied housing of $310,800,
and an owner-occupied housing rate of 44.1 percent. Bozeman has access to world-class outdoor recreation, public lands, and
Yellowstone National Park. Historically, Bozeman has relied heavily upon agriculture, higher education, construction, and tourism
as the main economic drivers, but Bozeman continues to diversify as high-tech industries are moving to the community. Bozeman
has a highly educated workforce, with 56.9 percent of citizens possessing a bachelor’s degree, and a median household income of
$49,217 (fourth lowest in this study). The mean travel time to work is 14.6 minutes, with many citizens traveling from Belgrade or
Four Corners as part of their daily commute.
FLAGSTAFF, ARIZONA
At an elevation of 6,909 feet, Flagstaff is surrounded by mountains, high desert, and a beautiful ponderosa forest.
Flagstaff has a population of 71,975, and is home to Northern Arizona University, with 45.1 percent of residents possessing a
bachelor’s degree, and a median household income of $51,758. Similar to Bozeman, Flagstaff struggles with low income levels,
and high median values of owner-occupied homes ($296,700). Adjacent to Snowbowl ski resort and Humphreys Peak, the
economy of Flagstaff relies primarily on outdoor recreation, tourism, educational services, and arts and entertainment. With an
owner-occupied housing rate of 45.1 percent, and a mean travel time to work of 15.7 minutes, many of the residents live within
the community and have a short commute to work. Furthermore, Flagstaff’s location near the Grand Canyon and along Route 66
makes this community a prime location for international tourists.
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FORT COLLINS, COLORADO
Located an hour North of Denver, Fort Collins is located in a beautiful mountain valley surrounded by Rocky Mountain
peaks. With a population of 165,080, Fort Collins has world-class breweries, hotels, and an abundance of green space. Home
to Colorado State University, 53.6 percent of citizens in Fort Collins have a bachelor’s degree. Education, oil and gas, outdoor
recreation, and arts and entertainment are the main economic drivers in Fort Collins. With an owner-occupied housing rate of
54.4 percent, a median owner-occupied housing value of $308,800, and a median household income of $60,100, Fort Collins
offers above average income and amazing outdoor recreation on nearby mountain lakes. Furthermore, historic old town is home
to a unique historic atmosphere and homes from the 1800’s. With a 19.6-minute mean travel time to work, select residents are
commuting from Loveland to work in such an amazing community.
GREAT FALLS, MT
Located in North Central Montana, Great Falls has a population of 58,876 residing on the historic Missouri River. Home
to Malstrom Air Force Base, the C.M. Russell Museum, and the Lewis and Clark National Historic Trail Interpretive Center, Great
Falls has a rich history for residents. With an owner-occupied housing rate of 63.8 percent, and a median owner-occupied housing
value of $165,900, Great Falls is an affordable community with thriving outdoor recreation. Home to Montana State University-
Great Falls, 27.2 percent of citizens in the community have a bachelor’s degree, with access to a renowned higher education
facility. With a median household income of $44,725, Great Falls is known as a blue-collar community with an economy driven by
agriculture, outdoor recreation, and healthcare and social assistance. Additionally, high income occupations in Great Falls consist
of oil and gas, mining, and utilities. Residents have just a 13.7-minute mean commute time, signifying that a majority of citizens
reside within the community.
HELENA, MONTANA
Established in 1864 as a gold camp during the Montana gold rush, Helena is the state capitol of Montana and is home
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median owner-occupied housing value of $220,100, Helena is an affordable community for citizens. With access to Carroll and
Helena College, 44.4 percent of residents have a bachelor’s degree, and have access to high quality education in the valley. With a
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reside in or near the city limits. Since Helena is the state capitol, the local economy relies strongly on public administration, and
economic impacts from a large government presence in the community.
166
KALISPELL, MONTANA
Located in Northwest Montana, Kalispell is known as a gateway community to Glacier National Park. With a population
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world class outdoor recreation, supreme wildlife viewing, and amazing peaks in the Northern Rocky Mountains. More than a
quarter of citizens have a bachelor’s degree, with 26.8 percent of citizens in Kalispell graduating college. Citizens have access to
nearby Flathead Community College, Montana State University-Kalispell, and the University of Great Falls. Kalispell has an owner-
occupied housing rate of 55.9 percent, a median owner-occupied housing value of $205,500, and a median household income
of $44,800. The economy in Kalispell primarily consists of healthcare, retail trade, construction, tourism, and outdoor recreation.
Kalispell has a highly educated workforce with affordable real estate prices, but the lowest median household income in this
study. Due to its location in a large mountain valley, the Kalispell workforce has a mean travel time of 15.4 minutes to work. While
Kalispell is one of the most beautiful municipalities in the State of Montana, citizens struggle with a lower-than-average median
household income.
JUNEAU, ALASKA
Located in Southeastern Alaska, Juneau is the state capitol. With a population of 32,269 citizens located on the
Gastineau Channel in the panhandle of Alaska, Juneau is larger than Rhode Island and Delaware combined. With an owner-
occupied housing rate of 65.5 percent, and a median value of owner-occupied housing of $343,100, Juneau is an expensive city
due to its unique geographic location. With no roads connecting Juneau to the rest of North America, citizens and tourists travel to
town by boat, airplane, or ferry. With a median household income of $90,749, and 40 percent of citizens possessing a bachelor’s
degree, Juneau has the highest median income for any municipality in this study. With an economy primarily driven by public
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its unique geographic location, citizens of Juneau only have a 15.6-minute mean commute to work, which is minimal considering
Juneau is the third largest municipality by square miles in the United States.
MISSOULA, MONTANA
Also located in Northwest Montana, 73,340 Missoula residents reside near the Clark Fork River, that runs directly
through downtown. Home to the University of Montana, Missoula offers world-class access to outdoor recreation and beautiful
views of the Bitterroot Valley. The main economic drivers in Missoula are agriculture, tourism, and educational services, although
the area is attracting more high-tech companies. With an owner-occupied housing rate of 47.2 percent, and a median owner-
occupied housing value of $253,000, Missoula is an affordable community for residents. Missoula also has a highly educated
workforce, with 47.4 percent of residents possessing a bachelor’s degree. Similar to Bozeman, Missoula has a lower-than-average
median household income of $43,602, with a mean travel time to work of 15.8 minutes. Since Missoula resides in a large
mountain valley, many residents commute daily from nearby Lolo or the Bitterroot Valley.
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SUN VALLEY, IDAHO
Located in central Idaho, Sun Valley is home to only 1,438 citizens. Though it is the smallest municipality under review,
Sun Valley is a true resort town. Sun Valley has some of the best outdoor recreation in the lower 48 states. With 34.2 percent of the
population possessing a bachelor’s degree, and outdoor recreation, tourism, construction, and hospitality as the main economic
drivers, Sun Valley is one of the most livable communities in the Intermountain West. With a median household income of
$59,783, and only a 11.3-minute mean commute to work, the majority of the workforce lives in the community, or they commute
from nearby Ketchum. With a median owner-occupied housing value near $900,000, and an owner-occupied housing rate of
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near Sun Valley offers adults unique outdoor opportunities found in very few municipalities.
WHITEFISH, MONTANA
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DFFHVVWRVRPHRIWKHPRVWEHDXWLIXOKLNLQJWUDLOVLQ0RQWDQD:KLWHƓVKKDVDPHGLDQRZQHURFFXSLHGKRXVLQJYDOXHRI
and an owner-occupied housing rate of 57.9 percent. Over half of the citizens possess a bachelor’s degree at 53.2 percent, but
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minutes, with a small percentage of the population traveling from nearby Columbia Falls or Kalispell.
168
DATA ANALYSIS
& DISCUSSION
169
Tax revenue and structures vary greatly depending upon various state and municipal laws, as well as authority granted to local
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2017, the three most recent years for which data was available at the time of this study. To standardize the results, and to account for total
population of the municipalities, revenue sources were divided by the total population, as reported in 2017 by the US Census Bureau11.
While not all citizens in the population of each municipality paid taxes within their municipality, the revenue per capita describes the
distribution of the revenue when weighted by the total population size.
The total tax revenue for Bozeman when adjusted on a per capita basis is below the average of the municipalities studied. For context,
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The municipalities examined in this study have a variety of tax revenues and unique tax structures. As displayed in Figure 4 below,
when examining the total revenue structure on a per capita basis, we focused on the major sources, based on if the source was a major
contributor to the total revenue (impact fees, property taxes, special improvement districts, sales/resort taxes, and fuel taxes). All other
sources were combined to capture the variable nature of taxing structures across the Intermountain West.
Figure 4 shows that Sun Valley’s per capita revenue is the highest among the municipalities while it is the lowest for Billings. To
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proportion of the total revenue for most of the municipalities that do not also have a sales or resort tax, except for Sun Valley and
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FIGURE 4: REVENUE PER CAPITA FOR SALES AND RESORT TAXES, IMPACT FEES,
PROPERTY TAXES, ALL OTHER REVENUE SOURCES, & TOTALS
171
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including Helena, Juneau, Flagstaff, and Sun Valley. Of the municipalities with impact fees, Bozeman was the second highest per capita,
only exceeded by Bend. For a more detailed explanation, see Figure 6 below.
FIGURE 5: PROPORTION OF REVENUE FROM MAJOR SOURCES
FIGURE 6: IMPACT FEES PER CAPITA
172
Juneau had the highest revenue per capita from sales taxes at over 5 times the revenue per capita of Flagstaff. For a more detailed
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primary economic driver in their communities. Furthermore, as demonstrated below, other municipalities in this study are not utilizing a
sales or resort tax that would result in tourists contributing tax revenues in local communities.
FIGURE 7: SALES AND RESORT TAXES PER CAPITA
173
All 13 municipalities had revenue from property taxes (see Figure 8 below). When adjusted on a per capita basis, Bozeman collects the
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had the lowest tax revenue per capita from property taxes. The second largest municipality in this study, Billings, had the median value of
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revenue per capita from property taxes, respectively.
FIGURE 8: PROPERTY TAXES PER CAPITA
174
As displayed in Figure 9 below, all municipalities except Juneau had fuel tax revenue shared by the state. Bozeman, had the second
lowest revenue per capita from fuel taxes among the municipalities that received revenue from fuel taxes. The majority of municipalities
received similar amounts of revenue from their respective states.
Four municipalities did not collect revenue from special improvement districts. All of the municipalities that collected more revenue
from special improvement districts per capita than Bozeman are in Montana, except for Boulder.
FIGURE 9: STATE FUEL TAXES (SHARED) PER CAPITA
175
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municipality in Montana ranked lower than Bozeman. For a more detailed understanding, see Figure 11 below. Examples of other sources
of revenue include entitlement shares, corporate income taxes, cigarette, liquor and soda taxes.
FIGURE 10: SPECIAL IMPROVEMENT DISTRICTS PER CAPITA
FIGURE 11: OTHER REVENUE PER CAPITA
176
COMPARATIVE ANALYSIS:
INDIVIDUAL MUNICIPAL TAX REVENUES
177
FIGURE 12: BEND VS. BOZEMAN, PER CAPITA
BEND VS. BOZEMAN
Bend has more than twice the population of Bozeman,
with a median income of over ten thousand dollars higher
than Bozeman. However, these two municipalities share many
commonalities including similar revenue sources on a per capita
basis (see Figure 12). Bend only exceeds Bozeman for per capita
revenue in impact fees and fuel taxes, but in all the other major
revenue sources, Bozeman exceeds that of Bend. This indicates
the tax burden of the average Bozeman citizen is slightly higher
than that of citizens in Bend.
178
FIGURE 13: BILLINGS VS. BOZEMAN, PER CAPITA
BILLINGS VS. BOZEMAN
The largest city in Montana is Billings, which is more
than 2.3 times more populated than Bozeman. The median
income of Billings is more than six thousand dollars higher
than the median income of Bozeman. The per capita revenue
of Bozeman is much higher than that of Billings, and revenue
per capita from all sources exceeds that of Billings, except for
special improvement districts and miscellaneous taxes including
entitlement shares which are captured in the “other” category in
Figure 13 below.
179
FIGURE 14: BOULDER VS. BOZEMAN, PER CAPITA
BOULDER VS. BOZEMAN
With a population that is nearly 2.3 times larger than
Bozeman, Boulder is similar in size to Billings. In Boulder, the
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median income of Bozeman. As displayed in Figure 14, Boulder
has two sources of revenue that are not shared by Bozeman,
including a sales tax and a soda tax. Tax on marijuana, which
is legal in Colorado, is included in the entitlement share for
Boulder, captured in the “other” category displayed above.
Without the sales tax, Boulder would, on a per capita basis, have
less revenue than Bozeman. With the sales tax, the per capita
revenue of Boulder is more than 2.4 times that of Bozeman’s.
180
FLAGSTAFF VS. BOZEMAN
The population of Flagstaff is roughly 1.3 times more than
Bozeman, with a similar median income. The median income of
citizens in Flagstaff is only two thousand dollars more than the
median income of Bozeman citizens. As displayed in Figure 15
below, the sources of revenue differ greatly between these two
municipalities. Flagstaff has a sales tax, no impact fees, much
lower property taxes per capita, a higher fuel tax, an income tax,
shared county auto tax, franchise tax, and a transportation tax.
With these additional tax sources, Flagstaff’s revenue per capita is
nearly 50 percent greater than that of Bozeman.
FIGURE 15: FLAGSTAFF VS. BOZEMAN, PER CAPITA
181
FORT COLLINS VS. BOZEMAN
The largest city of the municipalities considered, Fort
Collins has a population more than 3.5 times the population
of Bozeman. In Fort Collins, the median income is eleven
thousand dollars greater than the median income for Bozeman.
The majority of the per capita tax revenue for Fort Collins is
from a sales tax (see Figure 16 below), while all other per capita
revenue sources are less than half of the revenue sources in
Bozeman. The share of the state marijuana tax is captured in
the “other” category. In particular, property taxes per capita are
nearly 3.5 times larger in Bozeman than in Fort Collins, and
Bozeman impact fees are 2.4 times larger than Fort Collins.
However, the total per capita revenue is nearly 50 percent
greater in Fort Collins when compared to Bozeman.
FIGURE 16: FORT COLLINS VS. BOZEMAN, PER CAPITA
182
FIGURE 17: GREAT FALLS VS. BOZEMAN, PER CAPITA
GREAT FALLS VS. BOZEMAN
The population of Great Falls is only slightly larger than
the population of Bozeman, with an additional eight thousand
citizens. However, the median income in Great Falls is the smallest
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less than Bozeman. Similar to all of the Montana municipalities
considered in this analysis, Great Falls does not have a sales
tax (see Figure 17). Great Falls also does not utilize impact fees.
Instead, Great Falls has a greater amount of per capita revenue
from special improvement districts and entitlement shares and
various other taxes, which are captured in the “other” category.
183
HELENA VS. BOZEMAN
Bozeman’s population is nearly 1.5 times greater than
Helena. The median household income in Helena is more than
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of Bozeman. As displayed in Figure 18 below, Helena does not
have per capita revenue from impact fees. However, Helena does
have a larger source of revenue from special improvement districts
compared to Bozeman. Bozeman’s revenue in all categories except
for the “other” category (which includes entitlement shares),
exceeds Helena, and the total per capita revenue for Bozeman is
slightly greater than Helena.
FIGURE 18: HELENA VS. BOZEMAN, PER CAPITA
184
JUNEAU VS. BOZEMAN
The population of Bozeman is more than 1.4 times
larger than the population of Juneau. The median household
income of Juneau is roughly forty thousand dollars more than
the median household income of Bozeman. As displayed in
Figure 19 below, Juneau does not have per capita revenue from
impact fees or fuel taxes, but Juneau does obtain revenue from
sales tax, as well as property taxes that are more than three times
larger per capita than Bozeman. This results in Juneau having a
total per capita revenue that is more than four times as large as
the total per capita revenue for Bozeman.
FIGURE 19: JUNEAU VS. BOZEMAN, PER CAPITA
185
KALISPELL VS. BOZEMAN
The population of Bozeman is two times larger than
Kalispell. The median household income of Kalispell is almost
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Bozeman. As displayed in Figure 20 below, the total per capita
revenue for Kalispell is nearly the same as Bozeman. Property
taxes and impact fees per capita are slightly higher in Bozeman.
Special improvement districts in Kalispell result in more revenue
per capita than in Bozeman. However, the total tax revenues per
capita are nearly equal in Bozeman and Kalispell.
FIGURE 20: KALISPELL VS. BOZEMAN, PER CAPITA
186
MISSOULA VS. BOZEMAN
The population of Missoula is almost 1.6 times larger
than Bozeman. The median household income for Missoula is
only two hundred dollars greater than the median household
income of Bozeman. For all practical purposes, the median
household incomes are identical. As displayed in Figure 21,
impact fees in Bozeman are almost eight times higher than
impact fees in Missoula. However, the per capita property taxes
are nearly identical for Missoula and Bozeman. Missoula does
have more revenue from special improvement districts than
Bozeman. The total tax revenue per capita remains higher for
Bozeman than for Missoula.
FIGURE 21: MISSOULA VS. BOZEMAN, PER CAPITA
187
SUN VALLEY VS. BOZEMAN
The smallest municipality studied, Sun Valley, has a
population of 1,438, which means the population of Bozeman is
32 times larger than Sun Valley. The median household income
of Sun Valley, though, is ten thousand dollars greater than that of
Bozeman. As displayed in Figure 22, Sun Valley has the largest per
capita revenue of all municipalities studied, and it is more than 5
times the per capita revenue of Bozeman. The biggest drivers of
this increased per capita revenue are the high property values as
well as the sales or resort tax in Sun Valley. Furthermore, property
taxes per capita are four times greater than that of Bozeman.
FIGURE 22: SUN VALLEY VS. BOZEMAN, PER CAPITA
188
FIGURE 23: WHITEFISH VS. BOZEMAN, PER CAPITA
WHITEFISH VS. BOZEMAN
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of 7,608 people compared to the population of Bozeman, which
was estimated at 46,596. The median household income in
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household income in Bozeman. As displayed in Figure 23 above,
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more than twice that of Bozeman, as well as increased special
improvement district fees per capita. This results in total per
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larger than the total per capita revenue for Bozeman.
189
DISCUSSION & POLICY
IMPLICATIONS
The results of this comparative municipal tax review indicate that Bozeman has the average
tax revenue of all 13 municipalities analyzed. Bozeman has the second lowest tax revenue from
SIDs, and is receiving the least revenue of all Montana municipalities studied. Furthermore,
Bozeman has the fourth highest property taxes of all 13 municipalities analyzed, with the fourth
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method for providing property tax relief to Bozeman citizens, while increasing the tax revenue
obtained from tourism. Bozeman citizens pay more per capita for property taxes than all Montana
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encounter infrastructure, education, and affordable housing needs that Bozeman citizens cannot
continue to support, without the taxing assistance from one of our main economic drivers, tourism.
While we recognize that select citizens within Bozeman, and members of the Montana legislature
are reluctant to approve a sales tax for Bozeman, we should also consider the tax revenue
support that Juneau, Boulder, Fort Collins, Sun Valley, and Flagstaff have obtained and used for
infrastructure upgrades, affordable housing, and educational needs.
The results of this comparative municipal tax review matter because we have additional insight
into how other municipalities and states are effectively utilizing tax revenue. Furthermore, we
can improve our understanding of how municipalities are creating new tax structures to help
their communities throughout the Intermountain West, Northwest, and Alaska solve their budget
shortfalls and public policy problems. Without changes and advancements in Bozeman's current
tax structure and revenue, citizens will continue to face increased taxes that are unsustainable
given our current median income levels. We must develop new innovative public policy taxing
methods that will help offset rising property taxes for Bozeman citizens.
190
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11United States Census Bureau Quick Facts-2017. https://www.census.gov/quickfacts
FIGURE 3: TOTAL REVENUE PER CAPITA FOR ALL MUNICIPALITIES
170
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known as resort towns that rely heavily upon tourism and the outdoor industry as economic drivers. While municipalities such as Bozeman
continue to diversify their economy, Bozeman still has an economy that thrives from tourism and outdoor recreation. A recent Montana
Department of Labor and Industry report found that over 12 million7WRXULVWVWUDYHOHGWR0RQWDQDIRUWKHƓUVWWLPHLQZLWKWKHLU
main incentive being the outdoor attractions Montana offers. Furthermore, of the top ten counties studied in Montana, Gallatin County8
had the highest share of outdoor industry jobs, further supporting the perspective that Bozeman is reliant upon the outdoor industry and
tourism for our local economy.
As displayed in Figure 2 above, 43 percent of Montana’s total outdoor industry employment occurred in Southwest Montana. Much of
this economic activity can be attributed to Yellowstone National Park, public land access, outdoor recreation, and resort attractions such as
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and Juneau all rely heavily upon outdoor recreation and tourism for economic prosperity.
7 Montana Economy at a Glance-March 2018-The Montana Department of Labor and Industry. http://lmi.mt.gov/Portals/193/Publications/LMI-Pubs/Labor%20Market%20Publications/EAG-0318.pdf
6What’s the Value of Higher Ed? For Communities, an Important Economic Impact-June 2018-Association of Governing Boards. https://www.agb.org/blog/2018/06/04/whats-the-value-of-higher-ed-for-com-
munities-an-important-economic-impact
FIGURE 2: OUTDOOR ECONOMIC EMPLOYMENT IN MONTANA
8Montana Economy at a Glance-March 2018-The Montana Department of Labor and Industry. http://lmi.mt.gov/Portals/193/Publications/LMI-Pubs/Labor%20Market%20Publications/EAG-0318.pdf
163