It was believed to be the first time in this campaign that Democratic Gov. Brian Schweitzer has committed to proposing some kind of property tax relief in 2009 as he did in 2007.
Schweitzer didn't provide a specific number, but said he would follow his 2007 budget example by setting aside one-third of any budget surplus for tax relief and a “rainy day” savings account the state could use during tough economic times.
$300 million for ongoing property tax reductions for Montanans by lowering mills, probably by 75 mills, that are part of the calculation.
He also would ask the Legislature to eliminate the 3 percent property tax on business equipment and set aside $63.6 million to reimburse local governments for the lost tax revenue.
Libertarian Stan Jones said his first priority would be to pay off any state debts, followed by local government debts. He said he'd leave the remainder of the surplus in the state treasury for future state spending. He would reduce state property and income tax rates rather than issue rebates or refunds.
The Missoulian State Bureau asked the three candidates what ideas they have for using the projected $957.1 million budget surplus, as of mid-2011, forecast by the Legislative Fiscal Division.
The agency recommended setting aside a total of
$178.5 million in reserves such as the ending fund balance in mid-2011 and firefighting and emergency funds. It also suggested subtracting
$275.5 million from the total as a preliminary guess, subject to adjustment, of the impact of the national and global financial crises. That would leave $503 million as a starting point for the proposed surplus, said legislative fiscal analyst Clayton Schenck.
As the incumbent governor, Schweitzer is required by law to present on Nov. 15 his formal budget proposal for the next two years. If he is re-elected next month, this is the budget that will go to the 2009 Legislature, which convenes in January.
If Brown or Jones wins, the incoming governor has a chance to make some changes to the Schweitzer budget.
Here's a look at the candidates' respective responses to the Lee Newspapers query:
- Schweitzer. The governor offered the least specific details of the three candidates as to what he would recommend doing with the surplus, but did commit, apparently for the first time, to propose additional tax relief in 2009. A statement from his campaign manager, Harper Lawson, noted that Schweitzer will unveil his budget Nov. 15, as scheduled.
“Governor Schweitzer has been very clear about his budget priorities during the past four years, and future budgets will reflect that record,” Lawson said. “The focus of the next budget will resemble the priorities he laid out in his last budget: sustainability; fiscal stewardship; tax relief for Montanans, not out-of-state interests; and making sure state government lives within its means.”
As he proposed in 2007, Schweitzer believes one-third of the budget surplus should go as tax relief to Montanans and a rainy day savings account. Another third of the surplus should be targeted toward one-time investment needs such as state building and infrastructure projects. The final third should go to adequately cover the state's ongoing expenditures in such areas as corrections, education and public health and human services.
In 2005, Schweitzer proposed and was able to get legislative passage of a
$95 million property tax rebate for Montanans. The money was distributed in the form of $400-per-household rebates to eligible people.
Lawson said Schweitzer signed into law more tax relief in 2007 than at any time in state history and vetoed 19 bills that didn't meet his budget standard.
“Governor Schweitzer's record on the budget is clear, and he will apply the same fiscal standards to his next budget and the next legislative session,” Lawson said.
- Brown. The Republican candidate provided a detailed list of what he would recommend for the projected budget surplus.
Brown said he would concur with the Legislative Fiscal Division suggestions to set aside in reserves
$126.5 million for the ending fund balance or surplus;
$16.4 million for the governor's emergency fund and $35.5 million for wildfire suppression. He also would go along with the legislative agency's suggestion to subtract $275 million from the projected surplus to account for economic downturns.
Besides the $300 million set aside for property tax reductions and $63.6 million to offset the loss of the business equipment tax, Brown said he would allocate $20 million to his Keep Our Kids Here incentive. It's a program to give businesses tax breaks that hire Montana college graduates and help them pay back their student loans.
Brown also would reserve $10 million for what he calls his accountability initiative to post state budget numbers on the Internet for the public to see and to have a state Budget Accountability Commission, made up of business people and legislators, to review state spending and recommend savings by ending duplication or finding more efficient ways to perform services.
Brown would use the remaining $109.2 million for education, depending on what happens in the court challenge to Montana's K-12 school funding, the pay plan for state employees, infrastructure, as well as possible decreases in tax revenues because of the national economy.
“It is imperative, as the Legislative Fiscal Division is already estimating nearly one-quarter of our budget surplus will be eliminated due to national economic troubles,” Brown said.
It also is critical that the state enact “meaningful, permanent property tax relief for Montanans that will help our economy weather the current economic crisis,” Brown said. “As history has shown, a decrease in taxes leads to economic growth and an eventual increase in state revenue.”
Likewise, eliminating the business equipment tax will make Montana more competitive to companies that Brown said “are now finding economic prosperity across our state's borders, employing workers and spending money in communities there.”
- Jones. The Libertarian candidate from Bozeman said he prefers to pay off state and local government debt, spend the money on future expenditures and lower property and income tax rates than to refund money to taxpayers.
“Trying to send the money back to taxpayers will always be unfair under the complex tax structure that we currently have in the state of Montana,” Jones said.
Jones said he opposes “rainy day” funds, calling them “a permanent sinkhole for funds in the hands of government. Government should get only what is absolutely essential to perform authorized government functions and not a dime more.”
He advocated implementing “zero-base” budgeting every two years to prevent money once spent from becoming a permanent part of future budgets. Under such a system, budgeting is started over from scratch every two years, and all spending, not just new spending, must be justified.
Jones said he believes Montana will be somewhat shielded and won't see the “extreme effects of the economy that other parts of the nation will see.” The construction industry, employing 32,000 Montanans, and the leisure and hospitality industries, which employ 61,000 people, likely will be the most affected.
“Government should never have excess funds on hand,” Jones said. “It will always lead to increased spending that has the effect of becoming a ‘required' part of future budgets.”
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