defeated for the third time in 2021

	The purpose of this web site is to expose to the public many official documents and facts that the City is unwilling to share. I will also offer my personal opinions and arguments, next to them, in a slide show format with two panes.

	Right panes contain images of document pages, some with my annotations. Left panes contain my revised comments.

	To scroll both panes up or down, use the rightmost scroll bar or the mouse wheel. If a document in the right pane contains multiple pages, you can scroll up or down within the document using the document's own scroll bar or the mouse wheel while pointing at that document (or touch gestures).

	I converted all documents to JPG images for easier viewing in all browsers (optimum display area 960x745 or more), on all devices. You can click (tap) on them to view them in larger format or right click (long tap) to save them to your computer.

	Text links in my comments and some image links will open external documents or web sites in a new browser tab.

	Let's start with the letter at right from DOC (Department of Commerce) to City (City of Polson), way back in March 2008.

	Even though it mentions comparing travel employment to other basic (export) industries (sectors), it states that travel employment needs to be not just the "primary export sector employment" but THE "primary employment" for "the area".

	The first DOC designation report done for Polson eliminates any suspense by announcing that Polson does "NOT" qualify as a resort community right in the very first paragraph.

	It then defines and explains in detail how the analysis will be done. Notice that the quoted language of the legislation refers to “current employment”, (underlined by the DOC’s analyst for being important), and doesn’t limit it to “export sector” only.

	Thus, the third criterion can not be “if Non-business Travel is the most important Export sector employment” and it should leave out the words “Export sector”. Perhaps it may be better worded as “if Export employment by the Non-business Travel Export sector is the most important employment”. 

	However, the same misphrasing that is also used in the last paragraph does not affect the conclusion of this report, since Non-business Travel is not even the primary Export sector employment by either basis of analysis (Place of Residence or Place of Work).

  The report ends by reiterating in its final sentence that “the City of Polson does not qualify as a resort community”.



	(Click this link if you want to read the definitions section of MCA (Montana Code Annotated) 7-6-1501).

	This letter that accompanied the first report also gets right to the point in the first paragraph by announcing that “the city of Polson does not qualify as a resort community”.

	It summarizes the report explaining again how the analysis was done and the conclusion was reached.

	It also gives a better definition of what the report called the third criteria, as “Non-business Travel must have the largest employment of all export sector industries”.

	If we apply the same criterion to the other export industries like agriculture, mining, lumber, etc. and refer to them using more common words, we may call them “farming towns”, “mining towns”, “logging towns”, etc.

	Similarly, using “tourist town” instead of “resort community” may help us better understand “location quotient”, as well as both the spirit and the language of MCA 7-6-1501

	In a few simple words, Polson is not a “tourist town”.





	(Handwritten notes must have been added after the second designation letter, on 10/7/09 as indicated.)

	This letter composed in badly ornate legalese, signed by then Mayor and now Commissioner Lou Marchello, is City’s reaction to the first DOC report.

	It illustrates City’s complete misunderstanding of a “resort community” as an area with “million-dollar condos”.

	What’s harder to understand is what City means by saying that the “Legislature never limited the analysis to gift shops, restaurants, and motels” in relation to that. Does City mean that resort tax should be collected from condo sales also?

	City says it “takes exception and appeals” the facts and the algorithm used in DOC’s report, without offering any specifics as to what was wrong with those facts and the algorithm.

	And then, City ends by asking DOC to “please advise what procedure City must follow to formally appeal DOC’s finding”.

	With that, City admits that this letter does not constitute a formal appeal. In fact, there never was and there still is no procedure to formally appeal DOC’s findings.

	Hence, DOC should have ended City’s resort tax venture at this point by giving an appropriate response.

	Instead, DOC has illegally reevaluated Polson and crafted a second report in order to qualify Polson as a resort community based of manipulated data and faultily applied methodology.
	

	The first three pages of the second report look copied from the first one verbatim, except for report date and capitalized “NOT” taken out of the last sentence of the first paragraph.

	Critical changes start with the last paragraph of third page. Place of Residence analysis is omitted with the argument that data from Census 2000 is outdated. As it was deemed most current data available in the first report just five months prior, it should have been used as such in the second report also.

	However, since DOC couldn’t alter the census data as easily, if it was used again, Place of Residence analysis would have again disqualified Polson. Then, even if DOC could manipulate Place of Work analysis to qualify Polson, it would end up with two contradicting results tied in a tangle. Therefore, Place of Residence analysis was simply eliminated with a false excuse.

	Unfortunately for City, even the numbers manipulated by questionable practices don’t add up to qualify Polson. In the last two paragraphs, DOC first says that “non-business Travel is the largest employer in the city”, (which is patently false), then it says that “non-business Travel is the primary export employer in the city”, (which is also false regardless of the confounding language, whether knowingly worded so or not).


	(I suggested that City puts both DOC reports on its website for public to know and to compare but they declined. Yet City constantly claims/pretends that they want to educate public.)

	If it wasn’t for the phrase “after further analysis”, I would have never discovered that there was a previous analysis.

	Firstly, the last sentence is so obviously false that it makes one wonder how could it be coming from a DOC Director.

	After reading this statement, any person with an average intelligence who goes and looks at the data provided in the report, can see that the primary portion of the area’s TOTAL employment does NOT come from non-business travel.

	Secondly, since there was no procedure to formally appeal DOC’s findings and for DOC to reevaluate, how did it happen that DOC crafted a second report for Polson, (the only time ever done for any community), especially without any logical, factual or legal arguments presented by City?

	Unless there is a recorded and public explanation for it, all we are left with is to wonder if City had bribed, blackmailed, threatened, cajoled, duped DOC, etc. or if DOC had done a voluntary favor, exchange of favors for City, etc.

	As taxpaying citizens who pay the salaries of elected, hired and appointed public servants, we have the right to know, to ask questions and to expect answers in order to get informed.


	(Interestingly, City didn’t repeat its objection to the same “algorithm” used in the second analysis also.)

	This is the letter I had written to, then City Manager, Todd Crossett, in an effort to urge the City Commission to not put the resort tax question on the 2009 elections.

  In the first three paragraphs, I mention my efforts in trying to have DOC correct the errors in its second report.

	Then until the middle of the third page, I explain why the report’s conclusion was erroneous.

	After that, I argue why not including dollar amounts along with employment head counts in the analysis, (as had been done in previous reports for other communities), was a flaw. And I offer my suggestions on other factors that could have been considered for a more accurate analysis.

	Most of the arguments in my letter are still valid today and have been included in my comments in the above six slides.

	My last sentence urges City to not try to take advantage of DOC’s errors and proceed with the resort tax proposal.

	Instead, City pretended “willful ignorance”, even though it was made aware of the issues, and continued to do so until today, in trying to keep pushing for the resort tax.

	2009 proposal was defeated by 84% of the electorate, even when it was to be during 6 months and for only 10 years (vs. current proposal to be during 12 months and for 20 years).

	In early 2015, City created EDC (Economic Development Council), as a new advisory board, apparently in preparation for proposing the resort tax again.

	In May 2015, EDC members were appointed and it started meeting to discuss the resort tax. At its first meeting, I raised the question whether City needed a new “current” analysis as required by the language of MCA 7-6-1501.

	Then City Manager Mark Shrives thought that it was a valid question and asked DOC by email and received this response from Mary Craigle of DOC.

	As its purpose was, her email not only reaffirmed Polson’s resort community designation but also affirmed my argument that the second report for Polson was done illegally and thus should be considered null and void.

	It states in writing that “There is no process for reevaluation of the designation of a resort community under the Resort Tax Act”. Therefore, the first report should stand as the only valid one, which declared that Polson was not a resort community.

	Perhaps the first report can be discredited and discarded if DOC is willing to claim total incompetency in preparing it.

	But then it would have to somehow prove its competency in preparing not only the second report for Polson but all other reports prepared for all other resort areas and communities.

	A year later, in 2016, EDC finally made its recommendation to City Commission to put the resort tax on the ballot again.

	After serious discussion, with real public participation, City Commission acted responsibly and decided against it. One of the main negatives was that the tax would create resentment towards the exempt tribal members and tribal businesses.

	Another major concern was that City had not been specific about what kinds of street projects would be funded. This is a serious unknown and concern about the current proposal also.

	What if City spends large chunks of the tax money to widen and improve certain streets to benefit big land developers and investors by providing access for subdivisions and commercial buildings instead of fixing potholes in existing neighborhoods? What if streets serving “resort zoned” properties are favored over residential ones in order to create a more “resorty” city?

	Interestingly, at that same meeting, City Commission was also asked to pass but decided against putting a property tax increase on the ballot, to raise $500,000 for reconstruction of streets, which would cost a $100,000 home owner about $75.

	The clique pushing for the resort tax was trying to create a false obligation for the City Commission and voters to choose between two taxes, and promoting the resort tax as the one less costly, just like they are doing with the current proposal.

	In 2020, EDC and City started out by promising to give an estimate on Polson’s annual tourism revenue and derive from it resort tax collection estimates for 6 and 12 month periods.

	They never did. Initially they guessed annual tax revenues may be similar to Columbia Fall’s estimate of $400,000. Then the DOR (Department of Revenue) came up with $1,400,000 based on all sales, which City adjusted down to $700,000 by pulling out of the air a $700,000 reduction (50% adjustment) for exempt items (without clarifying if that includes “exempt sales of non-exempt items").

	As to Polson’s annual tourism revenues, all they provided was this estimate of $30,302,000 for the entire Lake County from ITRR (Institute for Tourism & Recreation Research).

	Do they believe that it must be people’s responsibility to figure out Polson’s share of that total for themselves? How?

	Let’s be generous and say it’s 50% = $15,151,000. After subtracting non-taxable 12.5% gas/diesel, Kwatuknuk’s 25% share of 10.6% all lodging, other exempt entities who won't collect the tax, exempt people who won't pay the tax, exempt items, etc. Polson would be lucky if it could collect 3% from about $10,000,000 which will be about $300,000.

	That means $400,000 of City’s $700,000 estimate may be collected from local people. In fact, considering DOR’s higher $1,400,000 estimate, local people may end up paying up to three quarters of what City will collect as "resort tax”.

	This page is from an ITRR report, with a graph ranking the 25 (out of 56) Montana counties with more than $20,000,000 annual tourism revenues.

	Notice that Lake County ranks 20th, which might not be so bad in itself in a close contest but that’s not the case here.

	Gallatin County has 27 times, Flathead County has 24 times annual tourism revenues as Lake County’s puny $30,000,000.

	The total for 25 counties is $3,426,490,000. Their average being $137,060,000, Lake County’s $30,000,000 is only 22% of the average and doesn’t even merit being mentioned when speaking about tourism communities.

	I created this spreadsheet to rank the same 25 counties by population and tourism revenues per capita also.

	As you can see, with Lake County ranking 9th in population, its annual tourism revenues is disproportionately low at only $1,000 per capita, which ranks it 24th, just one above last.

	Even if one assumes that tourism in Lake County may be concentrated in Polson, (as we did when allocating 50% of Lake County’s total revenues to Polson), $15,000,000 divided by the 5,000 population of Polson is still merely $3,000.

	The per capita figure is very useful in checking the veracity of the revised numbers used by DOC in its second report and its conclusion that Polson was a resort community.

	By definition, a resort community must rely on, must be dependent on tourism revenues for its well being.

	In 2019, general per capita income in Polson was $21,255.

	Compared to that, $3,000 tourism income per capita surely isn’t anywhere enough for Polson’s well being to rely on.

	No matter how you slice it, Polson is simply not a resort community.

	I created this spreadsheet also. The first two columns come from data in City’s slide show. I calculated the other three and came up with my own three categories as color coded.

	To put things in proper perspective, let me clarify that these numbers are based on only taxable tourism revenues. There is no or very little “collateral damage” (resort sales taxes paid by the local people) in legitimately tourist areas and towns, while in orange coded ones, more sales taxes are collected from the local people than from the visitors.

	In truly resort areas and towns with small populations and “small economies” (words used in DOC report), there are only a few types of employment, primarily related to tourism. Also, their resort tax revenues are significant parts of their budgets.

	Areas and towns abusing the spirit of the resort tax concept, have relatively large populations and economies, with all kinds of industries. As tourism may be “first in rank” (but not major) portion of their economies, their resort tax revenues are just fringe incomes and insignificant parts of their budgets.

	For example, Polson’s current expenditure budget is about $13,000,000. Resort tax income of $700,000 will merely be 5.4% of it. Insignificant to make or break Polson’s “well being” especially since locals will be paying over half of those taxes.

	(Montana and Polson have $31,151 and $21,255 per capita income, 12.6% and 19.3% poverty. Polson must be a resort community where poor people live in million-dollar condos.)

  After trying, again recently, to get some answers from DOC legal team to my long-standing questions, upon advice from Jessica Blumberg and as a last resort attempt, I sent an email to Greg Hertz, (Montana State Senator for District 6), hoping that he may be able to get some answers for me.

	Notice that I was pursuing two different questions at once that some people confuse but are independent of each other.

	1. Can Polson’s 12+ years old resort community designation be deemed outdated and be reevaluated per the language of MCA 7-6-1501 specifically referring to “current” employment?

	2. Can DOC’s second report for Polson be reviewed (audited) for errors of fact and of logic in medhodology?

	Over the years, as I discovered that there was “no process for reevaluation of the designation of a resort community under the Resort Tax Act”, I came up with a third question:

	3. Does the second report for Polson have any legal validity?

	Apparently Greg Hertz had talked with DOC’s legal team in trying to get answers. At City’s 12/15/2020 resort tax forum, he went as far to say "DOC has violated the spirit of the law”.
 
	I go a step further to argue that DOC violated the letter of the law also by ignoring the language “current employment” and that City is illegally putting the resort tax question to the electorate, knowing the violations and errors made by DOC.

	For a long time, I had the impression that a small clique of people had been pushing for the resort tax and had convinced others that the right thing would be to let the voters decide.

	However, it couldn’t be right to put an illegal question to the electorate. As I thought that more citizens were realizing that Polson is not a resort community but was designated as such erroneously, illegally by DOC; I decided to do a presentation for the City Commission, which could give them a reasonable way out of this bungle.

	My email at right was the cover letter for my agenda item request, summarizing the problem and my suggested action.

	I was allowed to make a presentation that included most of the documents and my arguments in the above slides but the Commission voted against the motion that I proposed.

	The agenda packet and the audio recording of the meeting are available at City’s web site for public to read and listen to.

	The audio file is 124Mb and 2:15:00 minutes but includes a long silent part during the executive session. My presentation of 50 minutes spans from 21:15 to 1:12:45 time markers.



	(You can also download from my web site a smaller 47Mb and shorter 51:40 minutes audio file, of slightly lesser sound quality, containing only the extract of my presentation.)

	Let me finalize my slide show section of this presentation by summarizing the pros and cons as I see them.


Little property tax relief, mostly for big property owning corporations, none for renters (46% of City residents).

Most money will go to streets and other infrastructure improvements, probably only near the business district.

Locals will end up paying half to three quarters of this so called "tourist tax", on luxury items like a cup of coffee.

An unjust, regressive tax that will be collected on a $5 ready to eat hamburger but not on a $50 frozen lobster.

Similarly, a $5 hamburger eaten in town will be but a $50 live lobster dinner eaten just out of town will not be taxed.

It will create divisive feelings among the local population and resentment of exempt tribal people and businesses.

Local businesses will find themselves in unfair competition against out-of-town and local but exempt businesses.

Non-tribal businesses will be burdened with documenting sales to exempt people for even the smallest purchases.

Similarly, tribal citizens will be burdened with asking for exemptions and proving their status to avoid being taxed.

People who live out of but who work and shop in Polson will pay the tax without being able to vote on the issue.

Exempt tribal member residents will get to vote on the issue without themselves being subject to the resort tax.

A whole new bureaucracy will be created to enforce the rules, audit the books, catch and punish the cheaters.

Besides complicating our lives, about 6% of resort tax revenues will be wasted on administrative costs alone.

	The actual ballot language will be similar to the one below approved by City Commission. I suggest you vote against it.

	This slide is of no particular significance to comment on.