Provide property tax relief funded with lodging tax revenue
HB 887 would redirect a portion of Montana lodging tax revenue to create property tax assistance for primary residences, while also revising the existing statutory distribution of lodging tax proceeds. The bill amends the allocation formula in 15-65-121, MCA, and the tourism spending statute in 90-1-122, MCA, so that most lodging tax revenue continues to support tourism promotion, grants, regional tourism corporations, state parks, historical preservation, invasive species work, and other existing uses, but a capped share of revenue tied to the department of commerce’s tourism/economic development account would be transferred into a new state property tax assistance account beginning in fiscal year 2027.
The bill also includes a one-time appropriation of $50,000 to the Department of Revenue to implement Senate Bill No. 90, and it is expressly coordinated with that measure: if SB 90 does not pass and be approved, HB 887 becomes void. The bill’s structure indicates that the property tax relief component is intended to be funded from lodging tax receipts rather than from a broad general fund tax increase, and it sets an inflation-based cap on the amount of revenue that can remain in the tourism/economic development account before excess funds are transferred to the property tax assistance account.
In terms of state law impact, HB 887 would alter the statutory distribution of lodging tax proceeds and create a new dedicated funding stream for property tax assistance. It would also modify how certain tourism-related revenues are handled, including the Department of Commerce’s use of funds under 90-1-122, MCA, and the timing of when the new property tax transfer begins. Because it amends multiple sections of the Montana Code Annotated and creates a new account, the bill would have direct effects on state agencies, tourism entities, historical and parks programs, and any future property tax relief program established under SB 90.
The general sentiment reflected in the available voting history appears favorable at the committee stage, with a 17-0 vote to table the bill in the House Local Government Committee. However, the bill ultimately died in process, suggesting that while it may have had some support, it did not advance through the full legislative process. No committee transcript excerpts are available, so the record does not show detailed floor or committee debate.
The main point of contention is the tradeoff between preserving lodging tax revenue for tourism and related programs versus diverting some of that revenue to property tax relief for homeowners. Stakeholders likely to care most include the Department of Commerce, tourism regions and convention and visitors bureaus, parks and historical programs, and taxpayers seeking property tax assistance. The bill’s dependence on SB 90 and its capped transfer formula also suggest concern about fiscal predictability and whether lodging tax revenue should be used for a new property tax purpose at all.
HB 887 would amend Montana’s lodging tax revenue allocation statutes to create a new property tax assistance funding mechanism for primary residences, while preserving most existing tourism, parks, historical preservation, and related distributions. It would establish a state property tax assistance account funded by excess revenue from the Department of Commerce’s lodging-tax-supported account, beginning July 1, 2027, and would appropriate $50,000 to the Department of Revenue to implement the related provisions of Senate Bill No. 90. The bill would also alter the statutory percentages and caps governing lodging tax distributions and would affect state agencies, tourism organizations, and other recipients of lodging tax revenue.
The available vote history suggests the bill was not controversial enough to generate recorded opposition in committee, as the House Local Government Committee voted 17-0 to table it. At the same time, the bill ultimately died in process, indicating it did not secure enough momentum to advance. With no committee transcripts provided, the broader sentiment can only be characterized as procedurally neutral to mildly supportive, but not strong enough to carry the bill forward.
The central contention is how to balance lodging tax revenue between tourism-related uses and property tax relief. Supporters of property tax assistance would likely favor redirecting some tourism revenue to homeowners, while tourism stakeholders, regional nonprofit tourism corporations, convention and visitors bureaus, and the Department of Commerce may object to losing or capping funds for marketing, grants, and tourism development. Another point of concern is the bill’s dependence on Senate Bill No. 90; if that measure fails, HB 887 becomes void, making the proposal contingent on separate legislation and potentially limiting its appeal.