March 10, 2014
At the Revenue and Transportation Interim Committee meeting last month we discussed one of everyone's least favourite topics, property taxes. Six years have passed since the top-of-the-bubble 2008 appraisals.
The new appraisals will be based on the value of our property as of January 1, 2014. According to the Director of the Department of Revenue, most residential property has returned to the 2008 level. There are a couple of exceptions; in the northeast and Billings's values have sky-rocketed and in Missoula, they are down nearly 5%. It will take the department about a year to complete their assessments, so we will see our statements at this time next year. We will have preliminary data this fall. Last legislative session we were unable to agree on a bill to reduce the six year cycle to one or two years. You may remember that I was worried about the aerial evaluation system. Too much like spying, but I think it is the wave of the future. I have not been able to get an answer to the question: will Governor Bullock ask for no net increase in property tax like our last Governor did? There will still be winners and losers, just like last time, but this might help most of us. The main problem will be with agricultural appraisals. Agriculture taxes are based on production, and commodities have risen sharply. I expect our ag producers to be pretty upset. Our system pits residential against commercial against agricultural against forest land. Compared with other states Montana ranks about in the middle for property taxes. But we rank second form the bottom in average income. With no sales tax we have to realize that income and property taxes have to support our state. Only about 30% of property taxes go to the state, most for schools, and rest supports the county. Now for revenue - besides the federal dollars the state receives, individual income tax is our main source of funding. Collections are coming in as expected. Looks like we will have a surplus similar to the beginning of last session. But there is still some concern. Corporate taxes are way down so far. We will know the whole story after April 15th. Also, the legislative fiscal staff uses information from forecasting experts. They say much like we all say; slow growth. But they just sent out a revision. The gross domestic product (GDP) projections are down. Why? Bad weather, Obamacare, slow car sales and weaker exports. Also, in the next few years they project the price of a barrel of oil will fall below $100. By the way, you pay your state employees very well. Not school, state. The average salary of executive branch employees is $45,360. The real money is in benefits - retirement and healthcare total an average of $17,000 per year. Remember that most benefits are not taxed. Guess that's why Obamacare wants the value of Cadillac health plans listed on our taxes next year. This is the 100 year anniversary of women's suffrage in Montana, six full years before the 14th amendment to the constitution. And it is the 97th anniversary of the election of the first woman to the US Congress, Republican and pacifist, Jeanette Rankin from Montana. Please call me with any questions or comments. My cell number is 253-8766. Or email firstname.lastname@example.org. Never forget that I work for you.
May 1, 2013
We still donít know all the final details in the $10 billion budget. There are several bills still on the governorís desk. Some of them spend a lot of money, so they may get vetoed.
The latest balance sheet still has all the spending bills listed, so the bottom line looks bad: negative $7.2 million for fiscal year 2014 and negative $20.9 million for 2015.
At the end of the session, the governor negotiated $13.5 more spending in the big budget bill. Many of us wanted to see some of the surplus returned to the taxpayers.
There are two tax bills still waiting on the governor. One bill, SB 282, simplifies Montana taxes, making our tax forms more like the federal tax forms. We had dozens of credits and exemptions. Pension, annuity and interest credits still are there for seniors. SB 282 also lowers our top tax bracket to 6 percent from 6.9 percent.
These changes are expected to save a lot of Department of Revenue staff time and the CPA Association said it will make filing Montana taxes much simpler.
The other tax reform is SB 96, to lower the business equipment taxes. I believe that the first $100,000 in equipment will be exempt, and then there is a 1.5-percent tax up to $3 million and 3 percent after that. This should help almost all of our small businesses and farmers and ranchers. Important to Lake County, there is a payback for any lost revenue. This change will help Montana attract businesses but most of our neighbors do not have equipment taxes.
I am very disappointed that the property tax bill did not pass. We worked for many weeks to get the two-year cycle perfected. Some agricultural landowners wanted to remain on the six-year plan. This time real estate values have still not fully recovered, so the six-year appraisals will benefit most of us.
If the governor doesnít veto or sign a bill, it will become law without his signature. Governor Bullock said that he would let the bill to require parental approval for a minor to obtain an abortion become law because he expects a lawsuit.
So in Montana, a minor needs parental approval for body piercing or tattoos, but not for an abortion. Doesnít seem logical. Of course, there is a judicial override if a minor must avoid her parents.
The pension reform bills had a reduction in the yearly guaranteed benefit increase. Hereís another lawsuit. Employee benefits are contractual. But some cities and counties have been able to reduce benefit packages as part of bankruptcy. Because of our balanced budget requirement, Montana is a long way from that problem. Still, the unfunded liability is $4.2 billion.
It is great to be home. Iím watching the final disposition of bills and waiting for interim committee assignments. Looks like Iíll be on revenue and transportation as well as one or two other committees.
Iíd like to thank everyone for the comments and opinions throughout the session. You can reach me on my cell at (406) 253-8766 or my email at email@example.com. Remember that I work for you during the interim as well as the session.
April 24, 2013
Last session at about this same time, I wrote about the disappearing surplus. Well, this session itís the same. Four months ago, we were looking at a $458 million surplus. Now it is gone.
I am writing this a few days before you are reading, so I canít tell you all the results. It is not unusual for everything to happen at the end of a session. In fact, often the budget gets decided on the last day.
Also, the governor has 10 days to decide if he should sign, veto, amend, or just let a bill go into law. We have agreed with many of his amendments, but have to wait for his actions on several critical bills.
For the next two years, the state budget is $9 billion. Of that, nearly $4 billion is federal money. Federal sequestration has only removed $2.5 million in royalty payments to Montana so far, but I donít like the reliance on federal dollars.
Looks like the pay plan will be about $114 million. The executive branch will decide how the money is to be allotted. The legislature has asked that the lower pay levels receive the largest increase, but the governor will have to negotiate with the unions.
A percentage increase always benefits the higher salary employees. For example, the Commissioner of Higher Education earns about $265,000 per year. His 5 percent increase is $13,250, while someone earning $30,000 a year would receive $1,500.
We have many hardworking state employees. I hope everyone can get a raise in salary. Over the years that unions claim to have no increases, healthcare benefits have risen more than $3,000 per year for state employees.
The loser in the entire budget process is the taxpayer, both individual and business. There are still a couple of tax relief bills alive, income tax and personal business equipment, but there may not be enough money left. The governor may veto those.
It looks like the Medicaid expansion bill died in the House. We had a reform plan, but that didnít make it, as well. There are pension bills, both for the public employees and the teachersí retirement plans. They include a reduction in the guaranteed increase in retirement. We will have to pay for that lawsuit.
There was a very innovative funding method that surprised me. Everyone is worried about fires this coming year, so we passed a bill that any corporate tax that comes in higher than estimated, will go to a fire suppression fund. Many of us intentionally want to keep the estimates low. So we expect to see the corporate tax dollars increase. Good use of the money, but not good method of budgeting.
I received dozens of emails asking me not to vote for an extension of the water compact between the feds, state and CSKT because it included a legislative study. That is the only way to get the necessary information to legislators from across the state. I hope negotiations can be reopened, because I do not believe that a lawsuit would benefit anyone.
Next week I can all give you a true legislative wrap-up. Until then continue to leave me a message at (406) 444-4800. My cell is (406) 253-8766 and my email address is firstname.lastname@example.org. Remember that I work for you.