Rep. Greg Hertz, R-Polson

HELENA – A $30 million charge on the state workers’ compensation fund – which accounts for nearly half of Gov. Steve Bullock’s proposed taxes to help fill the state’s budget hole – ran into opposition from business groups and owners Monday.

“Let’s just call it what it is – a three percent tax,” said Rep. Greg Hertz, R-Polson. “It’s not a management fee. … If (the fund) has too much money, that money should come back to the business owner, to adjust (work-comp) rates and provide dividends.”

Yet the bill’s sponsor, Republican state Sen. Ed Buttrey of Great Falls, said the Montana State Fund has a huge reserve and can afford to pay a small fee on its investment portfolio to help firm up the state’s balance sheet, in a time of need.

“This is not a new tax on Montana businesses,” he told a joint hearing of the House and Senate business and labor committees. “This is a short-term solution to help us resolve our current budget crisis.

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“Montana businesses have funded the surplus at the State Fund; Montana businesses will be part of the solution that we generate in the special session.”

Buttrey presented the bill on the day before the opening of a special legislative session to balance the state budget. The state faces a $227 million shortfall, because of firefighting cost overruns and less-then-projected tax revenue.

The Senate Business and Labor Committee will vote first on the measure, but took no action Monday.

Buttrey’s Senate Bill 4 is part of the budget-balancing package submitted by Gov. Bullock, a Democrat.

SB4 would levy a 3 percent charge on the interest paid by the investment portfolio held by the Montana State Fund, a quasi-governmental agency that insures about 23,000 business against on-the-job injuries. The charge would generate nearly $30 million.

Buttrey said the State Fund has plenty of reserves, and that the charge won’t take any money from the fund – it will just lower the amount of increased revenue from its $526 million portfolio. That money is on top of another $1 billion in reserves, he said.

“So the question really arises, when we look at that equity fund: How much is enough?” he said.

But lobbyists for business groups said money generated by the State Fund ultimately comes from the pockets of business owners, and should not be used to bail out the state. They said any transfer couldn’t help but affect work-comp rates paid by businesses.

“We are the little guys who are insured by the Montana State Fund,” said Abigail St. Lawrence for the Montana Building Industry Association. “The trickle-down effect will be to the small guys, the small businesses that are the backbone of Montana.”

Hertz, a business owner, said his company had worked hard to reduce on-the-job accidents and thereby reduce costs to the State Fund, and that it should be the one reaping any rewards from a buildup of reserves.

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