What’s more, the plan by Sen. Jim Elliott, D-Trout Creek, might contain some ingredients to help the Legislature reach the bipartisan agreements needed to wrap up its work by the scheduled April 27 adjournment.
“I don’t want a compromise,” Elliott told reporters. “I want some property tax relief that everyone can stomach.”
“I don’t want to say I’ve gotten approval from anybody,” he told reporters. “Discussion led me to believe the elements of the amendments would prove acceptable to everyone I’ve talked to.”
His plan contains some one-time tax relief such as Gov. Brian Schweitzer’s $400-per-household property tax rebate and Republican House Majority Leader Michael Lange’s two-year tax credits for renters. Both are funded with parts of the state’s projected $1 billion general fund surplus.
Elliott’s plan also would offer permanent property tax relief, on a sliding scale of up to $400 a year, for families with annual adjusted household incomes of $45,000 and less.
It also includes some permanent tax relief for businesses by exempting the first $80,000 of business equipment from property taxes. However, it’s funded by some of the stiffer enforcement provisions from a controversial Elliott bill, which Montana businesses groups have vigorously opposed, to empower the Revenue Department to collect money its director believes is owed Montana by out-of-state tax evaders.
Elliott’s plan provides about half of the $300 million property tax relief goal that Republicans are shooting for. However, some Republicans said it could be combined with separate proposals to pump more state money into K-12 schools and thereby reduce local property taxes.
Details of Elliott’s plan, however, were fluid.
Elliott told the Senate Taxation Committee he intends to stuff a hundred or so pages of amendments with his plan into House Bill 833, by Rep. Wayne Stahl, R-Saco.
Although incorporating aspects of both political parties’ property tax relief bills, Elliott’s plan relies far heavier on ideas by Schweitzer and Democratic lawmakers. That could make it a tough sell in the House, where Republicans outnumber, than the Democrat-controlled Senate.
The issue of property-tax relief dominated legislative campaigns across Montana last year, with Democrats advocating Schweitzer’s one-time $400-per-household rebate, while Republicans insisting on permanent property tax relief.
Lange, the House majority leader, called it “too premature” to speculate on how Elliott’s package would play with Republicans.
“We’re going to put it in the mix with everything else,” Lange said.
First, however, Lange said legislative leaders must agree on how much money to spend on school funding and property tax relief and then come up with the tax bills.
Hal Harper, Schweitzer’s chief policy adviser and a former long-time legislator, sounded favorable, saying, “It looks like this is the vehicle that could carry the tax concepts that the House, Senate and governor agree on.”
Elliott clearly caught some Taxation Committee members by surprise at the 7 a.m. meeting. He apologized for “the suddenness of this,” citing pending deadlines.
“You’re probably farther up the knowledge tree than anyone else,” said Sen Bob Story, R-Park City.
Story asked the Revenue Department to show how the plan would work, particularly the permanent property tax relief for homeowners. It’s based on the current elderly homeowner-renter credit that 23,461 Montana households used in 2005, receiving an average tax credit of nearly $500.
At the very least, legislators said, Elliott’s proposal provides a starting point for negotiations. Stahl gave his blessing.
“We worked very hard to make this bill palatable so this can be used as a vehicle to get us home,” Stahl told the Senate Taxation Committee.
“I think the big thing is everybody’s talking,” Stahl said later. “Everybody has their own idea what they want. In the end, it will all get melded together. Everyone will have to give and take.”
Details of property tax plan
Here are key elements of a tax package floated Saturday by Senate Taxation Chairman Jim Elliott, D-Trout Creek, with the estimated tax relief:
- A one-time-only, $400-per-household property tax rebate issued to resident Montana homeowners on their primary home. This is Gov. Brian Schweitzer’s key proposal that’s in Senate Bill 139 by Sen. Dan Harrington, D-Butte. Tax relief: $95.7 million.
- A permanent residential property tax relief program of up to $400 a year given through income tax credits. Homeowners and renters with gross -household incomes of less than $45,000 annually would be eligible. It would be based on a sliding scale, with the people with the lowest incomes getting the most money back as refundable tax credits, which are a dollar-for-dollar reduction of tax liability or refund checks if they owe no taxes. Tax relief: $20 million a year starting in the second year.
- A state income-tax rebate for renters equal to $120 a year per rental unit. Renters could get a tax credit of 3 percent of the gross rent they paid if their adjusted gross income is less than $45,000 a year. If multiple people rented housing together, they could divided the tax credit proportionally to their share of the rent. Under HB345, by House Majority Leader Michael Lange, R-Billings, this rebate would go off the books in two years. Tax relief: $12 million for the two-year period.
- Permanent property tax relief on business equipment. It would exempt from property taxes the first $80,000 of market value of business equipment every year. It would be funded by the provisions of SB220, by Elliott, which would empower the Revenue Department to crack down on suspected out-of-state tax evaders. Tax relief and cost: $15 million a year.
- SB439, Elliott, would help fund tax relief by providing for nonresident withholding for natural resource royalty payments. It raises $4 million over two years.
- The package would also include provisions to reimburse local governments and schools for lost revenue because of the tax cuts.
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