Kalispell City Attorney Charlie Harball says the 9 cent retail transaction fee under consideration by the City Council isn't really a fee or a tax.

"Forget you heard the term transaction fee. That's not what we're talking about."

Nor is it a sales tax, he said. "It's an assessment."

The Montana Legislature has said that people who benefit from a service should share in its cost. "If you benefit more, you should pay more," Harball said.

Kalispell has so far chosen to use a formula of determining the total amount of assessable property in the city and dividing it by the number of properties.

The city could charge property owners based on their linear street frontage, could assess the same flat fee to every parcel in the city, could assess the fee based on the value of individual properties compared to the total value of property in the city or could implement a transaction fee, Harball said.

Or the city could use any combination of those options "so long as there's internal equity."

Individual businesses would be able to decide how to pass the transaction fee on to customers, Harball said. Some might not add it to the cost of every item, but instead might absorb the cost.

The city can't mandate to businesses how they do that, City Manager Jane Howington said, only that that the businesses pay the city 9 cents for every transaction they make.

"The idea is not to create something that is burdensome, but to create a revenue stream so people using the roads pay an equitable part of taxes," Harball said.

A transaction fee allows the city to collect revenue from visitors and tourists who don't pay property taxes, he said.

Howington explained that the city originally suggested the fee would be 5 cents per retail transaction.

But officials had misunderstood the algorithm that applies to trip generations and then realized the fee would have to be 9 cents in order to raise the $4.5 million they want to collect each year.