HELENA — The Montana Legislature is fast approaching another deadline, and there’s been a lot of movement this week on the huge number of bills seeking to offer property or income tax relief.
Any bill that affects state revenue needs to pass through either the House or Senate by the end of the day Saturday. That includes tax bills – and it means the number of active tax cut proposals could soon be narrowed down.
“We’re down to a matter of choices now,” said Sen. Greg Hertz, R-Polson, during a Senate debate Thursday. “That’s where we are in the session.”
(Watch the video for a closer look at the tax bills.)
On Wednesday, the Senate Taxation Committee voted down two of Gov. Greg Gianforte’s priority tax proposals:
· House Bill 231, the “homestead” property tax bill that would give lower tax rates to most Montanans’ primary residences, long-term rentals and smaller commercial properties, but raise rates on properties that don’t qualify for those homestead rates.
· Senate Bill 323, which would drop Montana’s top income tax rate – which individual taxpayers pay on income above $20,500 a year – from 5.9% to 4.9% by 2027, and increase the earned income tax credit.
Gianforte said at a news conference Thursday that he was disappointed in the vote. He said he was willing to look at other ideas coming from the Legislature, but that he remained convinced these bills were the best tax relief options for the state.
“Montanans expect us to pass permanent property tax relief, and because we already have the highest income tax rate in the region, we can't lower property taxes by further burdening income taxpayers,” he said. “So those are the boundaries on the box that I'm willing to negotiate with the Legislature.”
Later the same day, the full Senate voted on four motions to revive tax bills that committees had tabled. They rejected a motion to bring SB 323 to the floor for a vote, as well as one seeking to bring back Senate Bill 32, which had proposed significant changes to the tax rates for various classes of property. However, they did revive Senate Bills 203 and 546.
SB 203 would raise the transition from the lower tax bracket to the higher bracket from $20,500 to $100,000 for an individual income tax filer. The Senate endorsed the bill on a preliminary vote Monday, then it was tabled in the Senate Finance and Claims Committee two days later. After the Senate voted to bring it back, it passed a final vote Thursday, 31-19, and will now go over to the House.
The Senate also gave initial approval to SB 546 Thursday. It would create a new tax credit, based on a person’s income. It would be 4.7% of taxable income – equal to the tax rate – for a single filer with $1,000 or less in taxable income. The size of the credit would be reduced for each additional $1,000 in taxable income, reaching zero around $50,000. Supporters of the bill said it would target income tax relief to lower-income Montanans, while opponents said it added too much complexity to the system and that they preferred the distribution of SB 203.
Sen. Dave Fern, D-Whitefish, sponsored SB 546 and said he saw a reason to keep both it and SB 203 moving forward.
“I think, if you move both forward, we can do some sort of hybrid, we can kind of massage these numbers, see what some of the weaknesses are,” he said.
On Thursday, the House Taxation Committee voted down Senate Bill 90, a proposal touted by Senate Republican leadership that would use taxes on hotels and rental vehicles to pay for property tax rebates.
One property tax bill that is still moving forward is House Bill 528, which passed the full House last week and cleared the House Appropriations Committee on Tuesday. It currently calls for lowering the tax rates on residential, commercial and agricultural property – reducing the share of the property tax burden that those properties bear. However, sponsor Rep. Ed Byrne, R-Creston, said he knows that could change before the end of the session. He said he sees HB 528 as a piece of whatever final arrangement the Legislature reaches on taxes.
“They can do anything they want – it'll be their bill, so they could use mine as the base, or they can just take pieces and put it in others,” he said. “What we want is – without care who gets the credit for it – we want the maximum property tax relief.”
Another bill that’s guaranteed to stay alive past the Saturday deadline is House Bill 337, which passed a final vote in the House on Wednesday. It combines elements of two income tax bills: SB 323 and SB 203. It would both lower the top tax rate and expand the bottom bracket – though not as much as each individual bill.
It’s likely there will be a lot more back and forth before we get the final picture of what tax relief the Legislature is going to put forward.
