Montana’s governor wants tax breaks, cuts with budget surpluses

Gov. Greg Gianforte reiterated his administration’s priorities for improving Montana’s economy in his State of the State address delivered Wednesday to the Legislature, whose task over the next few months will be to determine how an unprecedented 2.6 budget surplus billion US dollars to be allocated.

“The fact is, Montanans are overpaid,” Gianforte said of tax payments. “We have to give it back.”

Montana is among many states that have built up large budget surpluses from an increase in state tax revenues following coronavirus shutdowns and an inflow of federal funds for pandemic relief and higher wages.

Gianforte, a Republican, has proposed $500 million in real estate tax breaks for primary residences, a cut in the top income tax rate, a child tax credit for families with young children, and the state’s $118 million debt repayment.

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He also called on lawmakers to pass legislation to further reduce corporate taxes and state bureaucracy, encourage more innovation in education, and make it easier for qualified health professionals to move to Montana and work immediately without license restrictions.

“Montaners want more opportunities, good-paying jobs, tax breaks, the best possible education for their children, affordable, accessible, quality health care, safe communities, accessible housing, stronger families, and accountable, effective government,” he said.

But his tax proposal isn’t the only one lawmakers will consider.

Earlier this week, just over a third of the 102 Republicans in the Legislature introduced an alternative bill that would allow $100 million in federal debt repayments, $275 million in property tax refunds and a $1 billion income tax refund which would include up to $3,500 per person, depending on their state income tax liability in 2021.

Democrats, who are in the political minority, want tax breaks more targeted to low- and middle-income residents and renters, an expanded child tax credit, and more money for child care and affordable housing.

Montana’s population has grown by nearly 39,000 people, or 3.5%, since 2020, according to US Census estimates. However, the housing stock has not kept pace, leading to rising housing and rental costs and forcing some people out of the market.

The governor’s proposed budget will allocate $200 million to help developers fund sanitation and water utilities to reduce the cost of building new housing projects.

The governor “hasn’t come up with any real solutions to the housing crisis,” Rep. Shannon O’Brien said in the Democrats’ response to his speech.

“The governor says Montana’s businesses have grown and created new jobs, but businesses cannot thrive unless they can find staff. What’s the use of new jobs if people can’t afford to live where they work?” she asked.

Democrats want to put $500 million into a workers’ housing trust fund to help developers and nonprofits build affordable housing and incentivize landlords to accept reduced rents.

Montana’s unemployment rate has been at 3% or below as of October 2021 while the number of working Montanans is at an all-time high, the governor’s office said.

Gianforte asked lawmakers to help him incentivize work by increasing the state’s earned income tax credit.

The proposed tax credits don’t even come close to meeting the needs of Montana families who pay up to $1,000 per child a month for child care — if they can find it, O’Brien said.

Democrats want to create more childcare grants that give current stay-at-home parents the freedom to choose whether to work, O’Brien said.

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