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Montana Legislature continues work on tax relief bills

Montana State Capitol
Posted at 7:19 PM, Jan 24, 2023

HELENA — Both Republican Gov. Greg Gianforte and the Republican majority in the Montana Legislature have identified tax relief as one of their top priorities for the 68th Session. But as lawmakers begin hearing the first set of major tax bills, some differences have appeared in exactly how they want to return money to taxpayers.

One of Gianforte’s main priorities has been a property tax rebate, using some of the state’s more than $2 billion surplus. He’s backed House Bill 222, sponsored by Rep. Tom Welch, R-Dillon, which initially proposed a rebate of up to $1,000 each of the next two years on a Montana property owner’s primary residence within the state. A fiscal analysis estimates the bill would have returned about $534 million to about 292,200 eligible households each year.

Last Wednesday, the House Taxation Committee tabled HB 222. On the following morning, Gianforte – who has repeatedly called for quick action on tax bills – criticized the decision at his weekly news conference, saying it would delay needed relief. Later that day, the committee revived HB 222 and advanced it, but not before amending it to cut the rebate to $500 each year.

House Majority Leader Rep. Sue Vinton, R-Billings, made the initial motion to table the bill.

“Tabling a bill during the legislative process is something that is utilized for a number 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 passed it out.”

Vinton said Republican lawmakers cut the rebate with the intention of redirecting some of the funding to an income tax rebate. Many in the Republican caucus had called for that as early as last year.

“Our caucus is very cognizant of the need for property tax relief and income tax rebates in this situation,” said Vinton.

Vinton and the other top GOP leaders in the House and Senate have signed on as co-sponsors to House Bill 192, introduced by Rep. Bill Mercer, R-Billings. That bill proposes $250 million for property tax rebates and $650 million for income tax rebates.

Supporters of returning income taxes have said it makes the most sense because leaders believe the state surplus came largely from higher-than-expected income tax collections. It would also apply to a different set of Montanans than a property tax rebate. HB 192’s fiscal analysis estimated 460,000 people would receive an income tax rebate.

HB 222 and HB 192 are now among several major bills that are in front of the Appropriations Committee, the House’s main budget panel. Others include House Bill 212, from Rep. Josh Kassmier, R-Fort Benton, which would raise the exemption for the business equipment tax; and House Bill 251, from Rep. Llew Jones, R-Conrad, which would dedicate $150 million to paying off state debts.

It’s expected Appropriations will soon start coordinating the competing proposals – particularly those dealing with one-time-only tax reductions – and advance a set of bills to the House floor in the coming days.

Also in Appropriations is House Bill 258, sponsored by Rep. Jonathan Karlen, D-Missoula, which Democrats have touted as their main proposal for one-time property tax relief. It would also offer a property tax rebate, but unlike the Republican proposals, it would be targeted to those making less than 130% of their county’s median income, and it would also provide payments for renters.

Though Democrats are in the minority, House Minority Leader Rep. Kim Abbott, D-Helena, said she hopes their ideas will be part of the conversation as tax proposals start moving forward.

“Our approach on tax policy is to get relief to the folks who need it,” she said. “Any proposal that comes out of the Appropriations Committee, we’re going to assess with those values in mind – who’s benefiting, and is it helping the folks that need help the most.”

Abbott said it would be more responsible for the Legislature to wait for updated revenue numbers in March before taking action on tax policy.

Vinton acknowledged there could be additional surplus revenue coming in by the end of the session, and said she expects these bills won’t be the last word on this issue.

“This is just a start, and we certainly will look for legislation to continue our efforts going forward,” she said.

During his news conference last week, Gianforte said he understood the Legislature would put its stamp on the tax bills, but he again urged them to act quickly.

“My message is very simple: It’s consider the plan, modify it if you must, get it to my desk – because we need to get the relief to Montanans,” he said.