Schweitzer Proposes Business, Property Tax Cuts

By Beacon Staff

HELENA – Gov. Brian Schweitzer launched plans Monday to cut almost all the state’s tax on business equipment and give homeowners a property tax refund as part of his budget plan — making tax relief a primary goal even before Republican lawmakers taking over the Legislature have a chance to do so.

The Democratic governor unveiled the highlights of his budget plan to a room full of agency directors, staff and a few Republicans who will be running the Legislature at the start of the year.

Schweitzer said his budget increases base funding for local schools and higher education to ensure Montana remains competitive economically. But some government programs will be facing cuts, such as at the Department of Commerce, and overall spending goes up a relatively modest 2 percent.

Schweitzer’s presentation addressed potential Republican issues, and undercut many of their past legislative ideas in a session that was as much about political theater as it was about releasing a budget plan.

Schweitzer said the proposed property tax refund would be $50 in the first year and $100 in the second year.

The business equipment proposal from Schweitzer would entirely eliminate a tax for most businesses that has been slowly decreased in recent years. Schweitzer said only the largest 425 companies in Montana would still be paying the tax after the $20,000 threshold for the tax is increased to $500,000 in 2013.

No one expected the governor to propose the idea in the midst of an economic downturn.

“I was a little surprised,” said state Sen. Jim Peterson, a Republican from Buffalo who is expected to lead that chamber next year. “But we have been talking about doing that ourselves.”

Republicans were left criticizing Schweitzer for the way he wants to balance the books by spending down leftover money from this current budget period. They also warned that Schweitzer was overestimating how much tax money the state would bring in over the budget period that runs from July 2011 to June 2013.

They warned that the so-called “structural imbalance” makes it harder down the road if tax revenue doesn’t pick up.

“Those are the significant things that jump out at me,” said Peterson.

He said Republicans want to hold listening sessions around the state before lawmakers meet, and then analyze Schweitzer’s offering before judging it.

Sen. Keith Bales, R-Otter, said he thought the governor was “waging war” on the Legislature by mocking some of their past actions during his budget presentation.

The governor did take plenty of jabs.

Schweitzer said he is proposing cutting his office’s budget by 2 percent — and pointed out lawmakers have asked to increase the Legislature’s operating budget by 2 percent.

The governor said in 2009 a proposal to lower the business equipment tax bogged down amid partisan bickering in the Legislature. Schweitzer said he would be happy if a Republican carries his proposal this time around in the Legislature in order to ensure it gets done.

He held up an editorial past Republican leadership wrote criticizing him for putting so much in the state’s savings account — a move Schweitzer said is helping the state easily navigate an economic downturn that has nearly sunk other states.

He mocked Republicans for saying Montana is a bad place to do business with all of their “hot rhetoric” that the state regulatory scheme is unattractive to business. He says such messages tell out-of-state business to not even bother looking.

“We have a good story to tell. We just have to tell it,” said the state’s self-proclaimed lead salesman.

To top it off, he had a slide on the big screen projector prepared just for Helena state Sen. Dave Lewis, a Republican who recently pitched a plan to cut all state salaries over $80,000. The slide showed that Lewis — a retired state worker — used to make $70,000 nearly 20 years ago for the state — an amount worth more than $100,000 in today’s dollars.

The governor smiled — even laughed — as he spotted Lewis in the audience and pointed out the Legislature employs a much higher proportion of the higher-paid workers than the executive branch does.

“The highest percentage of them are in the legislative branch where they are completely under your control,” Schweitzer said to Lewis.

The budget proposal goes to the Legislature in January, where it will be the subject of debate and tinkering for nearly four months.