Legislature adjourns after passing key money bills

Senate President Bob Story brings the gavel down to adjourn the 2009 Legislature. (Photo by Molly Priddy)

By MOLLY PRIDDY
Community News Service
UM School of Journalism

HELENA – With snow falling outside, the final gavel fell on Montana’s 61st Legislature Tuesday, as lawmakers gave final approval to the state budget, the federal stimulus plan and a bill that seeks to lessen the financial blow to taxpayers from the state’s recent property appraisal.

Republicans and Democrats fought this session over funding for children’s health care and K-12 schools, but legislative leadership said the level of civility this session allowed for more compromise than the last session.

“We did have a good working relationship between the Senate and the House and between the Republican and Democrat caucuses,” said Senate President Bob Story, R-Park City.

Both parties said they stuck to their priorities throughout the session, with Republicans pushing for less state spending and Democrats promoting more state funding of children’s health insurance and education.

“I think overall we have done the people’s business,” said Sen. Carol Williams, D-Missoula.

House Bill 2, the state budget, will fully fund the Healthy Montana Kids Plan, a voter-approved expansion of children’s health insurance funded by the state. The budget will also give K-12 education a 3 percent increase in funding with help next year from federal dollars.

Democrats demanded the full expansion for children’s health care and more school funding for most of the session, but Republicans argued the state did not have enough money to pay for a new program and still maintain state agencies.

In another effort to reduce state spending, Senate Republicans cut 2 percent from all state agency budgets, a move that left a bad taste in some Democratic mouths.

“This specifically targets jobs in state agencies,” said Sen. Christine Kaufmann, D-Helena.

The Senate voted 27-23 to approve the latest version of the budget, but several senators expressed reservations about overspending.

“I’m flabbergasted that this is what we call an austere budget,” said Sen. Joe Balyeat, R-Bozeman, after describing over $10 billion of spending, including federal stimulus dollars.

Sen. Jim Shockley, R-Victor, said revenues will probably not bounce back as quickly as the budget suggests, and Montana will be in a hole. “This (budget) is a compromise, but it won’t work,” he said.

The Senate’s budget chairman, Sen. Keith Bales, R-Otter, stood behind the budget he and his committee crafted, but also expressed doubts about avoiding a special session.

“I don’t know that we could’ve crafted a budget in these uncertain times (in which) everybody could’ve gotten what they wanted,” Bales said.

Some Senate Democrats voted against the budget because it temporarily reroutes funding earmarked by voters for the Healthy Montana Kids Plan into the general fund. They also disagreed with removing an amendment that would allow the Children’s Health Insurance Program to pay for contraceptives.

“In 2009, to be standing here trying to beg and plead about having contraception being taken care of so children will have a healthy opportunities ahead of them instead of unplanned pregnancy is just beyond my recognition of where we are as a people,” said Senate Minority Leader Carol Williams, D-Missoula.

Sen. John Brueggeman also favored CHIP-funded contraceptives as a means of avoiding future abortions.

“I wish that everyone was living biblically moral lives,” Brueggeman said. “I wish that was the case but it is not.” He told Republicans that more abortions would happen because women could not access birth control.

“We all have to be clear with that,” Brueggeman said. “We all have to sleep with that.”

The House voted 56-44 to pass the budget with little discussion. House Appropriations Chairman Jon Sesso, D-Butte, said he worked with Republicans to craft an austere and prudent budget that also pays for children’s health care and education.

“I’m proud of the package that we present to you today,” Sesso said. “It’s a budget (that) we can say without a doubt is fiscally responsible.”

But the House would not stay quiet for long. The bill that seeks to lessen the sting of higher property taxes after reappraisal, House Bill 658, was hotly debated as several Democrats split with their leadership to denounce the bill.

Rep. Mike Jopek, D-Whitefish, said the bill does not provide enough money to ease tax increases, saying some homeowners could be faced with 15 percent tax increases with little help for elderly or low-income residents. Rep. Dick Barrett, D-Missoula, agreeing with Jopek, said the bill forces the poor to pay more of their wages toward property taxes than the wealthy.

But House Speaker Bob Bergren, D-Havre, said the bill needed to pass before the end of the day or a special session would have to be called.

“Right now, this is the best we can hammer out,” Bergren said. He said that if there were problems, the next session could adjust tax rates.

The bill passed with a 57-43 vote.

The 2007 session was plagued with bipartisan acrimony over spending a $1 billion surplus, which led to the Legislature’s failure to complete its one constitutional duty in a regular session: constructing a state budget.

Current lawmakers said they entered the 2009 session with that lesson learned. They said they were proud of the civility and openness between both houses and parties.

Before any of the work can officially be deemed complete, the bills have to be signed into law by Gov. Brian Schweitzer. The governor said he has yet to look over the details in the budget and stimulus bills but hopes to avoid a special session to deal with any discrepancies.

“I’m pleased with the work of the Legislature,” he said. “This wasn’t an easy session for anyone. Let us hope that there isn’t something that we left behind.”

But Schweitzer also said he was not pleased with the work done on property-tax reappraisal mitigation because it gave too many breaks to subdivision owners and businesses.

The governor also said universities should be able to mitigate tuition increases despite cuts made to their budgets in HB 2.

“I would encourage the Board of Regents to cap tuition for another two years,” Schweitzer said.

Since fewer than 100 legislators voted in favor of the budget, Schweitzer retains the power to veto individual aspects of the bill. The governor would not say if this was a choreographed effort by Democrats, but did say there is always communication between his staff and Democratic legislators.

Bergren said there was talk about ensuring Schweitzer’s line-item veto power, but nothing official.

“There were some discussions in the hall, but there was no coordinated effort,” Bergren said.

Barring special session, the next Legislature will meet in 2011.

Sponsor decries Senate’s failure to increase help for Montana's neediest property-tax payers

Nearly one in three Montana homeowners qualifies for help in paying property taxes. But few apply for it.

By LAUREN RUSSELL
Community News Service
UM School of Journalism

As legislation to help Montanans with their property taxes sailed through Senate this week, its sponsor conceded defeat in his mission to add millions in property-tax relief for Montana’s neediest homeowners: disabled veterans, the poor and elderly retirees on fixed incomes.

Rep. Mike Jopek, D-Whitefish, is sponsoring the only surviving bill to lessen the sting of the latest statewide residential property reappraisal, which rose by an average of 55 percent statewide from January 2002 through July 2009.

It’s one of the session’s most important bills because it has the potential to affect every Montanan homeowner. The impacts would vary widely, but the idea is that by gradually raising deductions and cutting tax rates, most Montanan won’t see big increases due solely to rising property values.

But Jopek worries that the Senate version of his bill won’t provide enough help to those who need it most. He had said previously that he would try to kill the measure if the Senate didn’t better fund assistance programs for such homeowners.

He later dropped that threat, but didn’t hide his frustration that instead of cutting taxes for more Montanans, the bill in its current form means homeowners will pay a total of $12 million more in property taxes over five years, due to the reappraisal alone.

“These economic times are extremely difficult right now, with record high unemployment, the real estate market has slumped drastically, and this is the highest appreciation in Montana’s history,” Jopek said. “(The years) 2002-2008 were good years, but homeowners have it tough right now, especially the elderly, the working homeowner and disabled American vets.”

Jopek fought to increase funding for special programs to help the needy pay their property taxes, but those increase were stripped from the bill Wednesday. He also objected to the Senate’s decision to exempt park land and roads in subdivisions from property taxes.

“We had a good bill, the version that came out of the House,” Jopek said. “We added about $60 million over six years to those programs. But now we’ve given exemptions to people in gated communities instead of elderly people or low-income people.”

Currently, the state offers several programs to help Montana’s needy caught between a bad economy and spiraling property values. Montana's law allows a hefty deduction for single people with incomes under $20,000, and married couples or heads of households that make less than $26,600.

Another program offers property-tax exemptions to homeowners who are honorably discharged disabled veterans and make less than $35,266 a year if single or $42,319 annually if married or filing as heads of household. Spouses of deceased disabled vets are also eligible for exemption if their income is less than $29,388 or reductions based upon income over this amount but less than $39,968.

Meanwhile, homeowners age 62 or older may qualify for an income-tax credit, depending on their incomes and the amount of property taxes they pay.

Another program, the Extended Property Tax Assistance program, passed by the 2003 Legislature, offers a reduction to those whose taxable value increases by more than 24 percent and whose tax liability increases by $250 or more the first year after a reappraisal cycle.

Ed Caplis, of the Montana Department of Revenue, said that of the 240,000 owner-occupied homes in Montana, about 70,000, or 30 percent, are eligible for one of these assistance programs.

Yet only about 8,000 homeowners, or 11 percent of those eligible, participate.

No one knows why so few apply for the help. Perhaps they don’t know it’s available. Perhaps it’s the stigma of asking for help. Perhaps it’s the red tape.

“To qualify, you have to verify your income with the local Department of Revenue, go through a bit of paperwork, which might be part of the reason someone doesn’t want to come in,” Caplis said. “Maybe (the exemption) is only a couple dollars worth so it’s not worth the hassle. There are numerous reasons why people wouldn’t be participating.”

Even so, Caplis predicts that the recession and jobs losses may inspire more Montanans to seek help.

According to the Montana Department of Labor’s Web site, the state’s jobless rate stands at 6 percent, well below the national average of 8.1 percent, but climbing nonetheless.

Jopek predicts the recession will hurt elderly homeowners his Whitefish district who have seen their property values spike because of the city’s rapid growth but now struggle to pay their property taxes.

Mike O’Neal, director of the Montana Home Choice Coalition, an organization that provides housing for people with disabilities, said low-income people pay a disproportionate amount of their income on property taxes, regardless of their ability to pay. Even so, he supports Jopek's desire to expand these special tax breaks.

“If they receive less benefit, the worry is that they’re not going to have enough money for food and medicine,” O’Neal said.

Jopek said that he is still willing to consider compromise amendments. He still wants to readdress the exemption that is being given to subdivision roads and park land.

“I think it’s pretty egregious that there are exemptions being given to developers instead of older taxpayers,” Jopek said. “We’re going to see if we can get a compromise. If we can’t, I’m willing to walk away from the bill.”

Senate OKs changes to House reappraisal bill

HELENA – The Senate voted 30-20 today for a bill seeking to lessen the potential blow to Montanans’ wallets from the most recent statewide property reappraisal.

The Senate Taxation Committee’s amendments to House Bill 658, carried in the Senate by Sen. Jeff Essmann, R-Billings (pictured), changed the bill from the House version sent over earlier this month.

“This bill is a product of a long journey,” Essmann said on the Senate floor.

Property values in Montana are reappraised every six years to ensure equity in property taxes. To help stave off a sudden hike in property taxes due to big jumps in property values, the Legislature in recent years has increased exemptions and lowered tax rates.

Essmann said the Senate amendments allow increases in property values to be phased in while tax rates are gradually reduced. He also said one of the most important amendments was adding a provision that requires the Department of Revenue to study whether statewide property values have dropped significantly since last summer's reappraisal.

“If a slump in the value of homes occurs in the next two years, they will be able to assess that,” Essmann said.

According to supporters, the bill is very similar to what was done in the past two appraisals. Property owners will still see an exemption on a percentage of their home'a value, called a “homestead exemption.” However, Essmann’s bill increases the percentage from 34 percent to 47 percent in six years. Likewise, tax rates for residential propertyh would see a phased-in decrease from 3 percent to 2.47 percent.

HB 658 also included provisions to keep four programs that help needy residents pay their taxes, including elderly homeowners, low-income owners and disabled veterans. Sen. Christine Kaufmann, D-Helena, offered an amendment that would aggregate those groups into one property-tax assistance program based on how much such people pay in income taxes.

Kaufmann said the state could pay for the new program if it removed the homestead exemption from vacant lands.

“A home is a home,” Kaufmann said. “It doesn’t seem proper to me that we provide a homestead exemption for property that doesn’t have a home on it.”

Sen. Bruce Tutvedt, R-Kalispell, said the idea is a good one but its implications need to be studied before changing the programs. He said there is already a provision in HB 658 to study this change.

The amendment failed, 23-27.

Kaufmann said the amendment would have helped low-income taxpayers because they pay the higher percentage of their salaries toward property taxes than any other group.

“I’m disappointed we seem to have ended up with very little change with what we’ve done in previous years,” Kaufmann said.

Since the Senate amended the bill, it needs to be sent back to the House for approval before it can be signed into law by the governor. It will most likely head to a conference committee, which is a joint committee of senators and representatives charged with hashing out differences between the houses.

-by CNS correspondent Molly Priddy

House OKs bill to blunt effects of reappraisals

HELENA – The House gave initial approval today to a bill seeking to prevent the recent statewide property-tax reappraisal from automatically raising many Montanans' taxes.

By a 75-25 vote, lawmakers approved House Bill 658, sponsored by Rep. Mike Jopek, D-Whitefish (pictured). The bill would follow a similar model used in past sessions by reducing tax rates and offering exemptions for residential and business properties.

Property reappraisal in Montana occurs every six years. Since 2002, property values in Montana have risen by an average 55 percent statewide.

Jopek's bill would blunt that increase by jacking up one of the major property-tax exemptions for residential property called the "homestead" exemption. The exemption would increase gradually from 35.9 percent to 42 percent by 2014.

Supporters called the bill a good starting point, adding that there are additional exemptions and tax credits for elderly homeowners on fixed incomes. They also said they expect the Senate to continue shaping the bill with amendments.

But opponents said the bill won’t help lower- and middle-class taxpayers because they will be subsidizing the tax exemptions for the rich.

“If you don’t live in Lake County, Flathead County or Madison County, this is a bad bill for you,” said Rep. Wayne Stahl, R-Saco.

Rep. Dick Barrett, D-Missoula, tried unsuccessfully to amend the bill to have property taxes based on a “circuit-breaker” system, which a person’s property taxes would be based on their income and ability to pay them.

-by CNS correspondent Molly Priddy