Protecting Montana’s Visitor Economy

The 2025 Montana Legislative Session is officially underway, bringing significant challenges and opportunities that will shape the future of our state and its vital visitor economy. Tourism Matters to Montana, a coalition dedicated to advocating for tourism's critical role, is working closely with the Montana Travel Association, Voices of Montana Tourism, Montana Lodging and Hospitality Association, and other key partners to educate, inform, and present a unified voice on the pressing issues and legislation impacting Montana’s travel industry.

A key priority of this session is protecting the Lodging Facility Use Tax funds, which are the foundation of Montana’s thriving visitor economy. These funds support essential programs such as destination marketing, heritage preservation, and tourism research, all of which drive visitation, spending, and tax revenue across the state. Alarmingly, no fewer than 10 bills currently under consideration propose changes to this critical funding, with SB90 leading the charge as the first bill introduced this session to divert funding.

To help industry leaders stay informed and ready to address these challenges, Tourism Matters to Montana offers valuable resources, including our Legislative Priorities and Bill Watch List. These tools empower Montana’s destination organizations to monitor legislation, understand its implications, and take action to safeguard the visitor economy—Montana’s second-largest industry and a vital driver of jobs, tax revenue, and community development.

Why Bills Like SB90 Puts Our Industry at Risk

SB90, introduced by Carl Grimm (R) from the Flathead in this year’s legislative session, proposes significant diversions from two critical lodging taxes:

1. Lodging Facility Use Tax:

• 60.4% of Lodging Use Tax revenue would be redirected from its current allocation to property tax relief.
• These funds currently support programs essential to Montana’s visitor economy, including marketing, heritage preservation, and tourism research.

2. Lodging Sales Tax:

• 75% of Lodging Sales Tax revenue, currently directed to the General Fund, would go directly to property tax relief.

While we support redirecting Lodging Sales Tax revenue to address property tax burdens, we strongly oppose the diversion of Lodging Sales Tax revenue. This tax underpins Montana’s tourism industry, which generated over $5.45 billion in nonresident spending last year, benefiting businesses and residents alike.

Why the Lodging Facility Use Tax Is Critical to Montana

The Lodging Facility Use Tax funds programs that ensure Montana’s tourism industry remains competitive and sustainable:

1. Visitor Marketing (Montana Department of Commerce):

• Promotes the entire state of Montana as a year-round destination.
• Enhances initiatives like Made in Montana products, Main Street programs, wayfinding signage, rural tourism development, and agritourism development.
• Drives visitation that directly supports rural and under-visited economies.
• Drives visitation during less busy times, allowing businesses to remain open year-round.

2. Heritage Preservation (Montana Historical Society):

• Protects and promotes cultural, historical, and natural assets.

3. Tourism Research (Institute for Tourism and Recreation Research):

• Provides critical data to inform sustainable growth in tourism and guide business and policy decisions.

Without these investments, Montana risks losing its market share in the competitive global tourism industry, with cascading effects on jobs, tax revenue, and community development.

Economic and Social Impacts of SB90

Montana’s visitor economy is a vital driver of economic activity, directly benefiting local businesses and communities. Here’s what’s at stake:

• Lost Revenue: The two taxes are intrinsically linked: reducing Lodging Facility Use Tax funds would reduce visitors and decrease revenue from both taxes, resulting in diminished revenue for the General Fund and local economies.
• Job Losses: Tens of thousands of Montanans rely on tourism-supported jobs, from hospitality to recreation. Fewer visitors would destabilize these industries and household incomes.
• Higher Taxes for Residents: Visitor spending offsets property taxes by funding local projects and generating significant tax revenue. Reduced visitation would shift more financial burden onto residents.

Historical Precedents

Other states’ experiences highlight the risks of cutting tourism funding:

• Colorado (1993): Eliminating its $12 million tourism promotion budget caused a 30% drop in market share and a $1.4 billion annual revenue loss, taking nearly a decade to recover.
• Washington State (2011): Closing its tourism office resulted in a steep decline in visitation and required costly rebuilding efforts.

Why We Must Oppose Diverting Lodging Facility Use Tax Funds

Montana’s two lodging taxes play distinct roles:

• Lodging Sales Tax: Funds the General Fund and supports public services statewide. Redirecting these funds to property tax relief aligns with their original intent.
• Lodging Facility Use Tax: Specifically designed to sustain and grow Montana’s visitor economy. Diverting these funds undermines critical programs that generate visitor spending and, ultimately, tax revenue for the state.

By shifting 60.4% of Lodging Facility Use Tax revenue away from its intended purpose, SB90 jeopardizes the future of Montana’s $5.4 billion visitor economy.

Our Position and Next Steps

We support using Lodging Sales Tax funds for property tax relief but urge lawmakers and industry partners to oppose the diversion of Lodging Facility Use Tax. Protecting the Lodging Facility Use Tax ensures Montana remains a competitive, sustainable destination while continuing to benefit residents and communities statewide.

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How You Can Help:
• SHARE this information with your network of industry stakeholders.
• CONTACT your local legislators to express OPPOSITION to SB90’s proposed Lodging Facility Use Tax diversions.
• To help craft a COMPELLING testimony, visit Tourism Matter to Montana.
• Keep your eyes open for more information as the session progresses.

Together, we can protect Montana’s tourism economy and its critical role in supporting residents, businesses, and communities across the state.