HELENA — Both Republican Gov. Greg Gianforte and the Republican majority in the Montana Legislature have identified tax breaks as one of their top priorities for the 68th Meeting. But as lawmakers hear the first major tax bills, some differences have emerged in the exact way they intend to return money to taxpayers.
One of Gianforte’s top priorities was a property tax cut, using a portion of the state’s more than $2 billion surplus. He has supported House Bill 222, sponsored by Rep. Tom Welch, R-Dillon, which initially proposed a rebate of up to $1,000 for the next two years on a Montana real estate owner’s primary residence within the state. A tax analysis estimated that the bill would have returned about $534 million to about 292,200 eligible households each year.
Last Wednesday, the House Tax Committee filed HB 222. The following morning, Gianforte – who has repeatedly called for swift action on tax laws – criticized the decision at his weekly press conference, saying it would delay the necessary relief. Later that day, the committee revived and expanded HB 222, but not before amending it to lower the discount to $500 each year.
House Majority Leader Sue Vinton, R-Billings, made the first motion to pass the bill.
“The submission of a bill during the legislative process is used for a variety of reasons,” she said. “In this case we just needed a little more time to discuss this complex bill and we took 24 hours and brought the bill back, had a great discussion and distributed it.”
Vinton said Republican lawmakers cut the rebate with the intention of diverting some of the funding into an income tax rebate. Many in the Republican faction had called for this last year.
“Our caucus is acutely aware of the need for property tax relief and income tax refunds in this situation,” Vinton said.
Vinton and the other top GOP leaders in the House and Senate have signed on as co-sponsors of House Bill 192 introduced by Rep. Bill Mercer, R-Billings. This bill proposes $250 million for property tax refunds and $650 million for income tax refunds.
Proponents of returning income taxes have said it makes the most sense because leaders believe most of the state’s surplus will come from higher-than-expected income tax revenues. It would also apply to a different group of Montanans than a property tax reduction. HB 192’s tax analysis estimated that 460,000 people would receive an income tax refund.
HB 222 and HB 192 are now among several major bills that will be brought before the Appropriations Committee, the main budgetary body of the House of Representatives. Others include House Bill 212, by Rep. Josh Kassmier, R-Fort Benton, which would increase the tax exemption for business equipment; and House Bill 251 by Rep. Llew Jones, R-Conrad, which would allocate $150 million to pay down federal debt.
It is expected that Appropriations will soon start coordinating the competing proposals – particularly those dealing with one-off tax cuts – and will present a series of bills to Parliament in the coming days.
Also in the budget is House Bill 258, sponsored by Rep. Jonathan Karlen, D-Missoula, which Democrats have touted as their main proposal for a one-time wealth tax break. It would also offer a property tax break, but contrary to Republican proposals, it would target those earning less than 130% of their county’s median income, and it would also make payments for renters.
Though Democrats are in the minority, House Minority Leader Kim Abbott, D-Helena, said she hopes her ideas will be part of the conversation as the tax proposals move forward.
“Our approach to tax policy is to give relief to the people who need it,” she said. “Every proposal that comes out of the grants committee, we will evaluate against those values – who benefits from it and does it help the people who need help the most.”
Abbott said it would be more responsible for the Legislature to wait for sales updates in March before taking tax policy action.
Vinton acknowledged there could be additional excess revenue by the end of the session and said she anticipates those bills would not be the final word on the matter.
“This is just a start and we will certainly look for legislation to continue our efforts in the future,” she said.
During his press conference last week, Gianforte said he understood that the legislature would put its stamp on tax laws, but again urged them to act quickly.
“My message is very simple: it’s about reconsidering the plan, changing it if necessary, bringing it to my desk – because we have to relieve the Montaner,” he said.