AG Calls for Dismissal of Tax Credit Lawsuit

By Beacon Staff

HELENA (AP) – Attorney General Mike McGrath says a District Court should dismiss a lawsuit filed by a Republican legislator who claims the Schweitzer administration illegally authorized a $140-per-homeowner tax credit.

McGrath and Assistant Attorney General Anthony Johnstone argued in a brief filed Tuesday that the lawsuit by Sen. John Cobb, R-Augusta, “is not susceptible to review or remedy by this court and is inconsistent with expressed legislative intent.”

Cobb, a rancher-attorney, filed his lawsuit Nov. 1 before Helena District Judge Thomas Honzel to block the tax credit authorized by Democratic Gov. Brian Schweitzer’s administration. The credit would be in addition to the $400-per-household tax rebate given to thousands of homeowners this fall.

At the May special legislative session, lawmakers passed a law saying if tax revenues for the fiscal year ending June 30 topped $1.802 billion, any excess money would go back to taxpayers as income tax credits the next year.

In July, the Department of Administration certified the revenue had exceeded the trigger by $36 million. That would amount to a tax credit of about $140 per taxpayer for 259,000 taxpayers. A tax credit is a dollar-for-dollar reduction of tax liability.

Cobb maintained the department failed to use “generally accepted accounting principles” and improperly included a number of items in making the calculation. He said the calculation was erroneous so the trigger was improperly met.

In their brief, McGrath and Johnstone conceded the legislative bill “deals in the arcane realm of legislative budgetary accounting.”

“Unfortunately, it is not a model of clarity, even by those standards, due largely to the rush of legislative business resulting from the failure to enact a budget in the regular session,” McGrath and Johnstone said.

They argued that Cobb’s claims are not subject to the court’s jurisdiction for several reasons, including “the Legislature’s clear assignment of the complicated duty of certifying revenues to the department and not the courts.” Cobb also failed to allege any injury resulting from the department’s certification that the revenue trigger had been met, McGrath and Johnstone wrote.

They also argued the Department of Administration certified the correct revenue amount.

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