The Whitefish City Council on Tuesday will advance a proposal to renew the city's resort tax and adjust how that money is spent on streets, parks, bike and pedestrian paths, and other infrastructure.

The council is expected to send the proposal to voters, who would decide the fate of the resort tax in November 2021. If approved, the changes would take effect in early 2025 and last for 20 years.

The resort tax, a sort of limited sales tax, is a 3% levy on restaurant food, drinks, hotel stays and other lodging, and certain luxury items defined by city code. It also applies to "destination ski resorts and other destination recreational facilities," though Whitefish Mountain Resort is not within the city limits and thus not subject to the tax.

While the tax applies to all consumers, it's a main way the city capitalizes on its tourist base.

The city collected nearly $4.3 million in resort taxes during the 2020-21 fiscal year. The city currently remits 25% of resort tax revenue to landowners in the form of property tax credits, and businesses keep 5% to cover the costs of administering the tax, such as credit card fees.

Of the remaining 70%, the city uses one-third to pay off debt on a conservation easement for the Haskill Basin, which provides the city's drinking water, and two-thirds on various street and park projects, such as the planned reconstruction of Edgewood Place and Texas Avenue.

Whitefish voters first approved a 2% resort tax in 1995, with 56% voting in favor. In 2004, 76% voted to extend the tax through January 2025. And in 2015, nearly 84% voted to increase the tax to 3%, with most of that 1% increase going to the Haskill Basin easement. As of last year, a 3% resort tax is the maximum Whitefish can levy under state law.

The city expects to finish paying for the easement in early 2025, just as the resort tax is set to expire. Rather than return to a 2% levy, city officials want to reallocate the 3% tax to increase funding for streets, parks, and bike and pedestrian paths, including the Whitefish Trail.

In other business, the council is scheduled to consider a proposal to raise admission and rental fees at the city's ice-skating rink, as well as a request from Wyoming-based Wolf Auto Group for a conditional-use permit to open a car dealership in the former DePratu Ford VW building at 6331 U.S. 93 S.

The council meeting will begin at 7:10 p.m. Tuesday at City Hall. Instructions for tuning in via Webex, as well as the council's meeting agenda, can be found on the city's website.

This story has been updated to clarify that the resort tax does not apply to food and drinks purchased at grocery stores, and that it does not apply to Whitefish Mountain Resort.

Assistant editor Chad Sokol may be reached at 406-758-4439 or csokol@dailyinterlake.com.