HELENA — A Republican-led committee sought Thursday to help the Montana budget’s bottom line by approving a rosy revenue forecast, then took steps to kill a proposed tobacco tax increase that would bring in an extra $30 million a year.
The House Taxation Committee approved a revenue estimate that is $100 million higher than budget writers had been working from when they were struggling to plug a budget shortfall through spending cuts.
The Senate added tens of millions of dollars back to the 2018-2019 budget bill, which is now back in the House at $10.3 billion, but left an ending fund balance that is short of the $200 million Republican majority lawmakers want to leave in reserve.
Adopting the new revenue estimate would erase that gap — on paper. Democratic lawmakers and Gov. Steve Bullock said it’s risky to assume the additional money will actually come in, and if it doesn’t, more spending cuts and a special legislative session will be required to balance the books.
“Banking on a $100 million windfall is probably a roll of the dice that Montanans can’t afford because if we don’t have that unprecedented growth in the next three months, as that estimate suggests, we’d be forced by law to be making harmful cuts,” Bullock said.
Hours after passing the higher revenue estimate, the committee voted on party lines to effectively kill the tobacco tax bill. The committee voted 12-8 to submit what’s called an adverse committee report, meaning that 60 of the 100 representatives would have to vote Friday to bring the bill to the House floor.
The money from the tax would go, in part, to increase the wages of the caregivers of elderly and disabled Medicaid patients and shore up the state’s revenue.
A day earlier, supporters lined up to tell the House Taxation Committee that the bill would help reduce smoking, make cigarettes too expensive for children to buy and help caregivers who are desperately in need of a raise.
Sen. Mary Caferro, D-Helena, is the bill’s sponsor and she acknowledges the votes aren’t there.
“I think it’s dead,” she said. “It looks like this Legislature is going to turn its back on people who have disabilities and senior citizens, and ignore the problems of the people who care for them.”
Rep. Kerry White, R-Bozeman, made the motion to effectively kill the bill. He said he had grave concerns about the tax hike’s impact on poor people, and that the price disparity that would result between Montana and neighboring states could create a black market for cigarettes.
“We’re talking about a $30 profit on a carton,” White said. “I’ve got a big problem with that.”
The cigarette tax now appears headed to the scrapheap of tax bills that Bullock has proposed to increase state revenue, along with tax increases on the wealthy and alcohol. Republicans have repeatedly said they didn’t want to raise taxes in a tight budget year, and Senate Majority Leader Fred Thomas, R-Stevensville, said last week that the cigarette tax hike was no longer needed because of the new revenue estimate.
Bullock said the new estimate is giving Republicans cover to say they did their jobs — without actually doing it by raising taxes.
“The silliness about that is saying oh we don’t have to do it because all of a sudden we have this magical $100 million dollars,” Bullock said. “You can’t actually balance a budget by just putting out a new revenue estimate, you have to do the hard work.”