HAMILTON, Mont. -

Taxes are going up in Ravalli County. They will go to pay Big Sky Development Group $675,000 in an agreement settlement with the county earlier this month.

The increase stems from a road dispute with a prior board over a subdivision planned east of Florence.

Citing safety and costs of increasing growth from subdivisions, the board said 8 Mile Road near Florence needed widening and upgrading to accommodate excess traffic from planned subdivisions. That was in 2008.

Developers offered to do some of the road repairs in a compromise, which didn't suit the majority of the board. Developers asked for a  variance, but the majority of the then commission, rejected it. The developer sued and won.

A judge ruled the denial was "arbitrary and capricious."

On Tuesday, the current board passed a motion on a 3-2 vote to levy Ravalli County citizens for 3 years to pay for the judgment.

The hike will leave a $200,000 homeowner with a $7.27 bill every year for the next 3 years. A $100,000 homeowner will pay $3.64.

It puts the Republican commission, never comfortable with the idea of raising taxes, in an uncomfortable position. An alternative was to pay the settlement out of reserve funds.

The majority said yes to the tax, saying it keeps the reserve fund healthy, and avoids possible cuts in services.

Commissioner Suzy Foss said she would have liked to have said 'no' to the tax. But dipping into the reserve fund that has taken years to build, said Foss, would put the county and citizens at risk.

"Our job is to run this as a business," she said.

The county has $834,000 in reserves. The board said if it were to pay the settlement out of that, the reserve fund would sink to $159,000.

"We would reduce days we could operate Ravalli County without revenue from 59 days to 11 days," said Commissioner Greg Chilcott.

The county owes $250,000 to Big Sky in June, and another $250,000 in August, with lesser payments later.

Tax revenue comes into the county twice a year.

Chilcott said every year the county has a cash flow shortage. He said one option would be to cut services.

80 percent of the county budget is in wages, salaries and benefits. Without the tax, he said, employees could bear the brunt.

"This would just further contribute to them not receiving any compensatory raise," said Chilcott.

Commissioner Ron Stoltz said 'no' to the tax increase.

Commissioner Jeff Burrows said dipping into reserves would be a "bitter pill." But he still said no to the tax.

"In this economic climate," he said, citizens have been "nickeled and dimed by taxes."

Commissioners Suzy Foss, J.R. Iman and Greg Chilcott said they inherited the bill from past commissioners who ignored the law. Chilcott was in office at the time, and supported the variance.

Former Commissioner Kathleen Driscoll voted against it when she was on the board.

She said this tax increase is "the ripple effect" of state laws that don't protect citizens from the impacts of development because the state legislature is pro-development."