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HomeMy WebLinkAbout02-25-19 City Commission Packet Materials - SP3. 2018 Comparative Municipal Tax Review - SUPPLEMENTAL MATERIALS (UPDATED 02-26-19)Michael P. Wallner, PhD Greta M. Linse, MS 2018 COMPARATIVE MUNICIPAL TAX REVIEW 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 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 level of government. Wallner is also a co-author on five academic research 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 EXECUTIVE SUMMARY 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 $500 $0 $$1,1,000 500 $$2,2,000 500 $$3,3,000 500 $4,000 Sun Valley Juneau White7ish Boulder Ft. Collins Flagstaff Bozeman Kalispell Helena Missoula Great Falls Bend Billings 3Data for this study was gathered for FY 2015, 2016, and 2017. The City of Bozeman updated its impact fee structures as the result of four separate studies in 2012. For more details of the findings, please 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 The findings indicate Bozeman collects the second highest tax revenue for impact fees3 per capita, likely a result 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 income, cigarette, liquor, and soda taxes. This finding indicates Bozeman could increase revenues of less common taxing methods. Bozeman collects the fourth highest property taxes per capita in this study. However, Bozeman has the fourth lowest median household income in this study. This finding further supports the argument that citizens in Bozeman cannot sustain rising property taxes. In other words, we need to find more effective methods for obtaining tax revenues from tourists visiting our community, or other taxing structures that other communities have developed. Bozeman cannot currently collect a sales or tourist tax. Juneau, Boulder, Fort Collins, Sun Valley, Flagstaff, and Whitefish are all 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 success of their local economies. While certain citizens in Bozeman and officials in the Montana Legislature are hesitant 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. 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 writing the final report. Greta Linse spent more than 75 hours working on data analysis, editing, and writing. We recognize that an analysis of this magnitude, conducted by an outside consulting firm, would have likely cost the citizens of Bozeman more than $20,000. We tried to minimize the expenses associated with this report, based on our civic duty to the community and citizens of Bozeman. 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 for our analysis. Public finance records were obtained for these municipalities, but deciphering accurate data from these reports without the expertise of budget officials in each municipality was difficult. Due to the unique tax structure of Laramie even though data was collected, Laramie was eliminated from the review. Next, public finance reports were obtained and analyzed for the purposes of accurately understanding each municipalities’ tax structure. This identified commonly utilized taxes, and municipalities were sent a file with the predefined tax categories. They were asked to provide data for fiscal years 2015, 2016, and 2017. Municipalities were also 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, Juneau, Kalispell, Missoula, Sun Valley, and Whitefish returned the completed files to our 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 outputs were analyzed and discussed. After further analysis, we determined that five tax categories were standard for a majority of the municipalities surveyed. The five categories were 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 final report was completed and sent to municipalities for review before a draft document was submitted to the City of Bozeman. Sending the report to all municipalities that participated allowed budget officials to make certain the data and outcomes in the final report were accurate. PURPOSE 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 and efficient taxing structure for the City of Bozeman and Gallatin County as our community is the fastest 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 comparative municipalities analyzed. In other words, we need to find a more effective method for providing 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. MUNICIPALITIES REVIEWED 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 students, nearly five million employees, and over $1 trillion6 in economic impacts. In addition, secondary education institutions have economic impacts well beyond their local communities that can result in state, regional, national, and international economic impacts. Second, most of the municipalities reviewed (Bozeman, Bend, Sun Valley, Kalispell, Whitefish, Juneau, Boulder, and Flagstaff) are 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 visitations surpassed 12 million7 tourists in Montana for the first time in 2016, with their 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 Bridger Bowl and Big Sky. While this figure only represents the outdoor economy in Montana, municipalities like Bend, Boulder, Flagstaff, 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 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. 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. 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 to 31,429 citizens. Located near Canyon Ferry and the historic Missouri River, Helena has a diverse economic profile consisting of tourism, public administration, oil and gas, finance, and insurance. With an owner-occupied housing rate of 54.4 percent, and a 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 median household income of $53,892, Helena residents enjoy above average incomes and world-class opportunities including fly fishing, mountain biking, and hunting. Furthermore, with only a 12.3-minute mean travel time to work, Helena residents primarily 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. KALISPELL, MONTANA Located in Northwest Montana, Kalispell is known as a gateway community to Glacier National Park. With a population of 23,212 citizens, Kalispell is a five-minute drive from internationally recognized Flathead Lake. Kalispell is also recognized for 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 administration, mining, commercial fishing, outdoor recreation, and tourism, Juneau is a thriving municipality for citizens. Due to 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. 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 nearly 90 percent, finding affordable real estate in Sun Valley can be challenging. Even though real estate is expensive, living in or near Sun Valley offers adults unique outdoor opportunities found in very few municipalities. WHITEFISH, MONTANA Located in Northwest Montana, Whitefish is known as a resort town in the Rocky Mountains. With only 7,608 citizens near Glacier National Park, and on Whitefish lake, this community offers tremendous outdoor recreation, a vibrant downtown, and access to some of the most beautiful hiking trails in Montana. Whitefish has a median owner-occupied housing value of $326,100, 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 similar to Bozeman, Whitefish only has a median household income of $49,870. The primary economic drivers for Whitefish are tourism, construction, and agriculture. Since Whitefish is a resort community, citizens have a higher mean commute time of 16.4 minutes, with a small percentage of the population traveling from nearby Columbia Falls or Kalispell. DATA & DISCUSSION ANALYSIS Tax revenue and structures vary greatly depending upon various state and municipal laws, as well as authority granted to local municipalities by their respective states. To account for changes over time, revenue values were averaged over fiscal years 2015, 2016, and 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, Bozeman revenue is greater than all other Montana municipalities examined (except Whitefish), and less than all other municipalities outside of Montana (again, except for Whitefish). 11United States Census Bureau Quick Facts-2017. https://www.census.gov/quickfacts FIGURE 3: TOTAL REVENUE PER CAPITA FOR ALL MUNICIPALITIES $500 $0 $$1,1,000 500 $$2,2,000 500 $$3,3,000 500 $4,000 Sun Valley Juneau White7ish Boulder Ft. Collins Flagstaff Bozeman Kalispell Helena Missoula Great Falls Bend Billings 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 examine the proportion of revenue from the various sources we considered, see Figure 5 below. Property taxes make up a significant 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 Whitefish. FIGURE 4: REVENUE PER CAPITA FOR SALES AND RESORT TAXES, IMPACT FEES, PROPERTY TAXES, ALL OTHER REVENUE SOURCES, & TOTALS $500 $0 $$1,1,000 500 $$2,2,000 500 $$3,3,000 500 $4,000 Sun Valley Juneau White7ish Boulder Ft. Collins Flagstaff Bozeman Kalispell Helena Missoula Great Falls Bend Billings Property Special improvement taxes districts Sales/Fuel taxes Resort (State) taxes Impact Other fees TOTAL Examining these taxing sources individually, we first reviewed impact fees. Four of the municipalities did not have impact fees, including Helena, Juneau, Flagstaff, and Sun Valley. Of the municipalities with impact fees, Bozeman was the second highest per capita, only exceeded by Bend. For a more detailed explanation, see Figure 6 below. FIGURE 5: PROPORTION OF REVENUE FROM MAJOR SOURCES FIGURE 6: IMPACT FEES PER CAPITA 10% 0% 20% 30% 40% 50% 60% 70% 80% 90% 100% Bend Billings Bozeman Fort Collins Great Falls Boulder Flagstaff Kalispell Missoula Helena Juneau Sun Valley WhiteJish Property taxes Sales/Resort taxes Impact fees Special improvement districts Fuel taxes (State) Other $20 $0 $$40 60 $100 $80 $$120 140 $$160 180 Bend Bozeman White5ish Kalispell Ft. Collins Boulder Missoula Billings Flagstaff Great Falls Helena Juneau Sun Valley Sun Valley had the highest revenue per capita from sales taxes at over 5 times the revenue per capita of Flagstaff. For a more detailed understanding, please see Figure 7 below. Juneau, Boulder, Fort Collins, Sun Valley, Flagstaff, and Whitefish all rely on tourism as a 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 $200 $0 $$400 600 $1,$800 000 $$1,1,200 400 $$1,1,600 800 Sun Valley Juneau Boulder Ft. Collins White?ish Flagstaff Bend Billings Bozeman Great Falls Helena Kalispell Missoula All 13 municipalities had revenue from property taxes (see Figure 8 below). When adjusted on a per capita basis, Bozeman collects the fourth highest tax revenue from property taxes, only exceeded by Sun Valley, Juneau, and Whitefish. The largest municipality, Fort Collins, had the lowest tax revenue per capita from property taxes. The second largest municipality in this study, Billings, had the median value of revenue per capita from property taxes. The two least populated municipalities, Sun Valley and Whitefish, had the largest and third largest revenue per capita from property taxes, respectively. FIGURE 8: PROPERTY TAXES PER CAPITA $200 $0 $$400 600 $1,$800 000 $$1,1,200 400 $$1,1,600 800 Sun Valley Juneau White7ish Bozeman Missoula Kalispell Billings Boulder Bend Helena Great Falls Flagstaff Ft. Collins 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 $20 $0 $$40 60 $100 $80 $$120 140 $$160 180 $200 Sun Valley Flagstaff Bend Boulder White=ish Helena Great Falls Billings Kalispell Missoula Bozeman Ft. Collins Juneau Of the remaining contributing tax revenue sources per capita, Bozeman ranked in the middle, with Whitefish as the only other municipality in Montana ranked lower than Bozeman. For a more detailed understanding, see Figure 11 below. Examples of other sources of revenue include entitlement shares, corporate income taxes, cigarette, liquor and soda taxes. FIGURE 10: SPECIAL IMPROVEMENT DISTRICTS PER CAPITA FIGURE 11: OTHER REVENUE PER CAPITA $0 $50 $100 $150 $200 $250 White,ish Helena Great Falls Missoula Kalispell Billings Boulder Bozeman Ft. Collins Bend Flagstaff Juneau Sun Valley $100 $0 $$200 300 $$400 500 $600 Flagstaff Kalispell Great Falls Billings Helena Missoula Bozeman WhiteAish Juneau Boulder Bend Ft. Collins Sun Valley COMPARATIVE ANALYSIS: INDIVIDUAL MUNICIPAL TAX REVENUES FIGURE 12: BEND VS. BOZEMAN, PER CAPITA BEND VS. BOZEMAN Bend has more than twice the population of Bozeman, with a median income of over ten thousand dollars higher than Bozeman. However, these two municipalities share many commonalities including similar revenue sources on a per capita basis (see Figure 12). Bend only exceeds Bozeman for per capita revenue in impact fees and fuel taxes, but in all the other major revenue sources, Bozeman exceeds that of Bend. This indicates the tax burden of the average Bozeman citizen is slightly higher than that of citizens in Bend. $100 $0 $$200 300 $$400 500 $$600 700 $800 Sales Tax Impact Fees SID Bend Property Bozeman Taxes Fuel Tax Other Total 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. $100 $0 $$200 300 $$400 500 $$600 700 $800 Sales Tax Impact Fees SID Billings Property Bozeman Taxes Fuel Tax Other Total FIGURE 14: BOULDER VS. BOZEMAN, PER CAPITA BOULDER VS. BOZEMAN With a population that is nearly 2.3 times larger than Bozeman, Boulder is similar in size to Billings. In Boulder, the median income is fifteen thousand dollars greater than the median income of Bozeman. As displayed in Figure 14, Boulder has two sources of revenue that are not shared by Bozeman, including a sales tax and a soda tax. Tax on marijuana, which is legal in Colorado, is included in the entitlement share for Boulder, captured in the “other” category displayed above. Without the sales tax, Boulder would, on a per capita basis, have less revenue than Bozeman. With the sales tax, the per capita revenue of Boulder is more than 2.4 times that of Bozeman’s. $200 $0 $$400 600 $1,$800 000 $$1,1,200 400 $$1,1,600 800 Sales Tax Impact Fees SID Boulder Property Bozeman Taxes Fuel Tax Other Total 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 $0 $200 $400 $600 $800 $1,000 $1,200 Sales Tax Impact Fees SID Flagstaff Property Bozeman Taxes Fuel Tax Other Total FIGURE 16: FORT COLLINS VS. BOZEMAN, PER CAPITA 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. $200 $0 $$400 600 $1,$800 000 $1,200 Sales Tax Impact Fees SID Fort Collins Property Bozeman Taxes Fuel Tax Other Total FIGURE 17: GREAT FALLS VS. BOZEMAN, PER CAPITA GREAT FALLS VS. BOZEMAN The population of Great Falls is only slightly larger than the population of Bozeman, with an additional eight thousand citizens. Similar to all of the Montana municipalities considered in this analysis, Great Falls does not have a sales tax (see Figure 17). Great Falls also does not utilize impact fees. Instead, Great Falls has a greater amount of per capita revenue from special improvement districts and entitlement shares and various other taxes, which are captured in the “other” category. $100 $0 $$200 300 $$400 500 $$600 700 $800 Sales Tax Impact Fees SID Great Property Falls Bozeman Taxes Fuel Tax Other Total HELENA VS. BOZEMAN Bozeman’s population is nearly 1.5 times greater than Helena. The median household income in Helena is more than five thousand dollars greater than the median household income 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 $100 $0 $$200 300 $$400 500 $$600 700 $800 Sales Tax Impact Fees SID Helena Property Bozeman Taxes Fuel Tax Other Total JUNEAU VS. BOZEMAN The population of Bozeman is more than 1.4 times larger than the population of Juneau. The median household income of Juneau is roughly forty thousand dollars more than the median household income of Bozeman. As displayed in Figure 19 below, Juneau does not have per capita revenue from impact fees or fuel taxes, but Juneau does obtain revenue from sales tax, as well as property taxes that are more than three times larger per capita than Bozeman. This results in Juneau having a total per capita revenue that is more than four times as large as the total per capita revenue for Bozeman. FIGURE 19: JUNEAU VS. BOZEMAN, PER CAPITA $500 $0 $$1,1,000 500 $$2,2,000 500 $$3,3,000 500 Sales Tax Impact Fees SID Juneau Property Bozeman Taxes Fuel Tax Other Total FIGURE 20: KALISPELL VS. BOZEMAN, PER CAPITA KALISPELL VS. BOZEMAN The population of Bozeman is two times larger than Kalispell. The median household income of Kalispell is almost five thousand dollars less than the median household income of 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. $100 $0 $$200 300 $$400 500 $$600 700 $800 Sales Tax Impact Fees SID Kalispell Property Bozeman Taxes Fuel Tax Other Total MISSOULA VS. BOZEMAN The population of Missoula is almost 1.6 times larger than Bozeman. As displayed in Figure 21, impact fees in Bozeman are almost eight times higher than impact fees in Missoula. However, the per capita property taxes are nearly identical for Missoula and Bozeman. Missoula does have more revenue from special improvement districts than Bozeman. The total tax revenue per capita remains higher for Bozeman than for Missoula. FIGURE 21: MISSOULA VS. BOZEMAN, PER CAPITA $100 $0 $$200 300 $$400 500 $$600 700 $800 Sales Tax Impact Fees SID Missoula Property Bozeman Taxes Fuel Tax Other Total 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 $500 $0 $$1,1,000 500 $$2,2,000 500 $$3,3,000 500 $4,000 Sales/Resort Tax Impact Fees SID Sun Valley Property Bozeman Taxes Fuel Tax Other Total FIGURE 23: WHITEFISH VS. BOZEMAN, PER CAPITA WHITEFISH VS. BOZEMAN Another small resort town, Whitefish has a population of 7,608 people compared to the population of Bozeman, which was estimated at 46,596. The median household income in Whitefish is only four hundred dollars more than the median household income in Bozeman. As displayed in Figure 23 above, Whitefish had a sales tax and per capita property taxes that are more than twice that of Bozeman, as well as increased special improvement district fees per capita. This results in total per capita revenue for Whitefish, that is nearly two and a half times larger than the total per capita revenue for Bozeman. $200 $0 $$400 600 $1,$800 000 $$1,1,200 400 $$1,1,600 800 $2,000 Sales/Resort Tax Impact Fees SID WhiteCish Property Bozeman Taxes Fuel Tax Other Total 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 lowest median household income. In other words, Bozeman needs to find a more effective 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 municipalities studied, except for Whitefish. As our municipality continues to grow, we will 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.