Legislators have shot down several proposals to create local sales taxes. That's good. As if a sales tax weren't problematic enough, these proposals raised the possibility of a crazy quilt of taxation across the state. But while rejecting these bills was good, it would be even better if lawmakers found a way to address the underlying motivation behind the so-called local option taxes.
The problem to solve is simple. Local and state taxes are out of sync. While the state finds itself awash in revenues, many local governments find themselves shouldering greater responsibilities with only limited ways to pay for them.
Local taxpayers also are state taxpayers, and most state taxpayers also rely heavily on local services. State and local governments treat tax dollars differently, but it's all just money to people on the paying end.
As we've suggested before, the obvious solution here is some kind of revenue-sharing system. The state's broader taxing authority generates ample revenue, at least in good economic times. Surely there are equitable ways to return some of those dollars - especially those in excess of what's needed to fulfill the functions of state government - to local governments. Doing so could reduce the demand for higher local taxes, resulting in lower overall tax burden for Montanans.
What we're suggesting needs to be carefully thought out. It would be the perfect topic for an interim legislative committee to study over the next couple of years. Rather than fight over another series of local-option sales tax proposals in 2009, perhaps Montanans could rally around legislation that rationally shares their tax dollars among various levels of government.
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