Republican legislators are on the verge of asking voters next year if they
want some state budget surplus money returned to them as income tax credits
and passing a separate major property tax cut on business equipment.
The House Tuesday gave preliminary approval, 67-33, to Senate Bill 426, by Sen. Joe Balyeat, R-Bozeman, to put what he calls the Treasure State Taxpayer Dividend on the 2012 ballot. It faces a final House vote before going back to the Senate to vote on amendments.
As a referendum, it will go directly on the ballot if passed without going to Gov. Brian Schweitzer to sign or veto.
If approved, Balyeat's bill would provide income-tax credits -- dollar-for-dollar reductions of tax liabilities -- to Montanans if a certain trigger is met.
If the state's ending fund balance, or surplus, is 125 percent more than what was estimated the previous fall, then half the money would be returned to taxpayers, with the state retaining the other half. Money would go back to individual income and property taxpayers the next year by a formula through income tax credits.
House Minority Leader Tom McGillvray, R-Billings, called SB426 a good policy.
"Taxpayers are going to want to see us grow our economy," he said. "Taxpayers are going to be watchdogs on how we spend our money."
House Minority Leader Jon Sesso, D-Butte, said the ballot language doesn't reflect the complexity of the formula. Governors and legislatures already can return money to taxpayers with a large surplus, as some have done in the past, he said.
"You might as well ask them, 'Do you want a tax break, because we've got extra money,' " he said of the ballot language. "The answer will be yes."
Rep. Bill Harris, R-Mosby, disagreed with Sesso about its complexity.
"I don't think it's that hard to explain to people that if we have an excess of their money, we're going to give some of it back to them," he said.
The House also voted along party lines, 70-30, Tuesday for Senate Bill 372, by Sen. Bruce Tutvedt, R-Kalispell, to cut business equipment taxes, which has been a top Republican goal this session. It faces one more House vote before returning to the Senate to consider its amendments.
SB372 would reduce the property tax rate on business equipment from 3 percent to 2 percent for the first $2 million of equipment owned by an individual or a business. If a certain trigger is met, the tax rate would be cut to 1.5 percent on the first $3 million of equipment.
The latest estimate shows this would cut business equipment taxes statewide by $37 million.
The tax cut would be paid for by a controversial plan in SB253, by Sen. Bob Lake, R-Hamilton, to repeal a dozen tax credits, including those that encourage energy conservation and alternative fuels. Lake's bill squeaked by 51-47.
Tutvedt's bill may face problems getting Schweitzer's signature since the governor had a rival bill that reduced or eliminated business equipment taxes on smaller businesses while keeping it on large corporations.
Lake's bill to fund the business equipment tax by repealing certain tax credits drew bipartisan fire.
"We should not be shifting the responsibility for the business equipment tax from large corporations to small homeowners," said Rep. Kathleen Williams, D-Bozeman.
Several Republicans and Democrats opposed the attempt to remove the energy conservation tax credits for homeowners who install more energy efficient windows and doors or hire someone to do it.
"I believe that the elimination of this tax credit is a real job killer and something we don't want to do," said Rep. Brian Hoven, R-Great Falls. "As much as I want to get rid of that business equipment tax, this is not the way to do it."
Rep. Margie MacDonald, D-Billings, said the energy conservation tax credit is "absolutely critical to independent businesses" that create jobs in every Montana community.
Rep. Mark Blasdel, R-Somers, said the bill doesn't end with solar energy credits.
"Vote green on this bill," he said. "The sun's still going to come out tomorrow."
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