Month: May 2020

Recognizing that Covid 19 will stunt Income tax collections, special sales tax collections affiliated with tourism and an unknown impact on property tax collections in November (though mils retain their value).

1. Implement statutory special education funding. To date, the increases in such allocations are done on a one time basis. A minimum indexing allocation will provide additional predictability for school district budgeting purposes.
2. Create and establish ANB applicability for a pre-k program. Governor Steve Bullock and Rep. Eric Moore R, Miles City presented a hybrid Pre-K program that blended some private providers with mainly public schools. It was killed by purists in pursuit of a 100% public program. Establishing a per student (ANB), eligible funding increment that contributes to a districts base budget and includes pre-K is the essential first step. Data strongly infers that a program increases student achievement. Young moms and dads need child care assistance. It’s a winner!
3. Provide health insurance assistance to districts. Health Insurance costs are disproportionally effecting districts. Less money available for funding classrooms and staff salaries. The statutory increases for funding is at the inflationary level. My bill last session aimed to incentivize the formation of large group plans by rewarding assistance for such outcomes. Possibly this upcoming legislation, additional funding can be awarded through direct payments. Less or no impact on property taxes would be my preference.
4. Create Magnet School definitions and assistance. Such facilities are school board governed and provide opportunities for students who wish to concentrate on such topics as science/math, CTE (career/technical), foreign languages and the arts.
5. Address the West Yellowstone incident of a tortured and murdered child who was removed from school to be home schooled. It was an anomaly, but a horrible incident that must never again occur. The trial is upcoming. Seek common county application and removal procedures including a plan to implement a successful home school experience for the child. Work with OPI and counties to increase accountability for home schooling parents.

Goal: Fund state government and schools at a sustainable level, progressive as practical with numerous circuit breakers to assure fairness. Build a system that is resistant to recession and recognizes current economic trends.

Weaknesses in current system:

1. Income tax is bracketed so that the max entry is a low income level. The system fails to recognize lower middle class income earners from high income earners. The maximum is 6.9% , about the average nationwide.
2. The system has a 2% discount for capital gains.
3. Corporate income allows carry backs that may attribute to volatility.
4. Property taxes fail to account for irrational appraisals and the impact on working age residents.
5. The system fails to significantly address the school bonding impacts of low taxable value districts and impacts on property taxes of more vulnerable owners.
6. Taxes on electronic sales are not collectable.
7. Select sales taxes capitalizing upon tourism with circuit breakers for reimbursement to residents do not exist at the state level.
8. Resort taxes are restricted to towns below 5,500 impacted by tourism
9. The Coal Trust Fund is restricted to earnings that are overly restrictive.
10. Decrease unfunded liabilities in PERS and TRS retirement systems

Modernizing the system:

I will likely support components of the Interim Revenue Committee tax study. I worked with Chairman Redfield of the House Tax Committee on the language of the study and promoted it’s passage. Can a sales tax be fair? Some legislators believe a consumption tax is the most equitable form of taxation. I don’t agree with that BUT with the inclusion of smart circuit breakers and such a tax limited to non-essentials and a sales cap to protect large ticket necessities; such a method can assist lower income Montanan’s. A substantial amount of the proceeds must assist flattening the regressive curve. Revenues should fund a bracketed earned income tax credit for lower income wage earners, a property tax reduction through the funding of a circuit breaker that refunds some taxes paid to property and dwelling owners who’s income is disproportional from their tax burden and consideration to a renters dividend for applicable Montanan’s.

The so called Amazon Tax recognizes that large out of state entities should have some skin in the game in generating income for Montana government and schools.

Cap gains should be reviewed as part of the Interim Revenue Committee’s scheduled tax credit review process. Consideration should be made for carve-outs for one time discounts for family businesses or property.

The state should consider funding the 80% base budget of public schools and the six mil levy for universities. This allows for increased property tax reduction with funds from a sales and income tax.

The Coal Trust Fund should be diversified to include additional sources of energy and or irreplaceable minerals in anticipation of the possible demise of coal mining. The earnings from the Trust should look to the New Mexico Trust for guidance in higher risk (but not risky?) investment strategies. This may require a constitutional change.

The legislature should pass a study bill to better understand the implications of two large pension systems currently funded at a 71% level. The system should be sustainable without dependency on legislative cash infusions. The committee should look at investment rates and the amortization schedules to assure a sound system for future generations of eligible state and school and university employees.

Your comments are welcome!