Can Legislators Jumpstart Our Economy?

By Beacon Staff

Montana’s 62nd Legislature, commencing this week, has more lawmakers from Northwest Montana in leadership positions than any session in recent memory. As the president pro tempore, Bruce Tutvedt of Kalispell will be the second ranking Republican in the Senate. As speaker pro tempore, Rep. Janna Taylor, R-Dayton, will hold the corresponding position in the House.

Rep. Bill Beck, R-Whitefish, will be vice chairman of the powerful House Appropriations Committee, which is charged with drawing up the state budget. Tutvedt is also chairing the Senate Taxation Committee, while Rep. Mark Blasdel, R-Somers, will chair its counterpart in the House. Ryan Zinke, R-Whitefish, will chair the Senate Education Committee, and Rep. Scott Reichner, R-Bigfork, will chair it in the House. Sen. Verdell Jackson, R-Kalispell, will be the vice chairman of the committees charged with overseeing energy issues, as well as handling business and labor.

To an outsider, the staffing of these leadership positions might look like simple administration. But in fact, the committee chairmen and women wield significant power, determining which pieces of legislation advance, which ones receive improvements, and which bills whither and die on the vine.

As such, the 2011 Legislature will bear the distinct imprint of the Flathead Valley, and the lawmakers – all Republicans – who represent it. Those Republicans will enjoy a 68-32 majority in the House, and a 28-22 edge in the Senate. That leaves Gov. Brian Schweitzer’s veto pen as Democrats’ most powerful bulwark against legislation they oppose.

And though, as Tutvedt said in an interview, “the 62nd Legislature is focused on jobs and balancing the budget,” there will also be a significant number of conservative measures likely to emerge from the session, including a strict immigration bill similar to Arizona’s, and a strong push to join several other states in rejecting President Barack Obama’s health care overhaul.

Medical marijuana regulation, abortion, physician-assisted suicide and a host of other issues are going to arise in the Legislature, but with lawmakers on both sides focused chiefly on improving unemployment and encouraging business growth, what follows is a preview of what’s ahead in the 2011 session when it comes to Montana’s economy.

BUDGET

The Legislature’s primary responsibility is to pass a state budget for the next two years, beginning in July. At its core, any budget is a best guess as to how much money will come in, and how much can be spent as a result. The central conflict emerging in Montana concerns revenue estimates by Gov. Schweitzer that are far more optimistic than the Legislature’s. In mid-December, Schweitzer adjusted his budget proposal to account for an additional $119 million in tax revenue, which he said could be used to create a bigger cash reserve at the end of the 2012-2013 budget period, and which makes deep cuts to state programs unnecessary.

Republican lawmakers, however, stand by more conservative estimates from the Legislative Fiscal Division that Montana potentially faces a “structural imbalance” of $368 million or more by the end of the biennium.

“The governor’s overly optimistic revenue estimate is just that,” Tutvedt said.

Schweitzer’s proposed budget, at $3.76 billion over the next two years, increases spending by 2 percent, but also seeks to eliminate the business equipment tax for all but the biggest businesses in the state, and would provide a property tax refund of $50 in the first year and $100 in the second. The governor also proposes taking nearly all of the oil and gas revenue that now goes to fund schools in those oil and gas producing counties in eastern Montana, and distributing the roughly $77 million across the state through a per-teacher allotment called the quality educator payment.

Eric Feaver, who leads the powerful MEA-MFT union, said he likes Schweitzer’s redistribution of the oil and gas money, despite the outcry from those school districts already benefiting from it, and sees it as a challenge to Republicans to come up with a better way to fund the quality educator payment.

“The oil and gas money is unutilized money,” Feaver said. “When school districts put a bunch of money in a sock and stuff it under the mattress, well, people will notice.”

Tutvedt indicated the GOP may be amenable to changes that make the oil and gas revenue distribution to districts “more fair,” but that also don’t gut the program for oil and gas producing counties.

“What we would like to do is remove some of the strings and overhead that the schools have,” Tutvedt said, “and move as much money as we can to the classroom – that’s our goal.”

TAXES

Eliminating the business equipment tax has long been a goal of Republicans, and now that Schweitzer has incorporated a plan to jettison the tax as well, this could be the session to achieve it.

“It’s a tax of the past,” Jon Bennion, government relations director for the Montana Chamber of Commerce, said. “It’s a tax that is completely contrary to economic growth and making good decisions about business expansion.”

Schweitzer proposes raising the tax’s threshold from $20,000 to $500,000 by 2013, leaving only the largest 400 businesses in the state to pay it. But any tax cut has to be paid for.

Republicans may try to roll back certain tax credits to pay for about half the cost of eliminating the business equipment tax, Tutvedt said, and enlist the help of county governments to pay for the rest as a way to boost job growth.

“The counties, I think, realize that the business equipment tax is a ‘jobs bill,’” Tutvedt said. “It’ll probably be a 50-50 thing where we backfill half and have the counties either cost-shift or cut their budgets.”

Property reappraisal, which was controversial in Northwest Montana but not as much of an issue elsewhere, will also see some changes with two Flathead lawmakers chairing the taxation committees. Tutvedt thinks the best approach may be to move toward a sales assessment ratio-based system, where if a home sells for 20 percent less than its appraisal value, for example, other homes in the same neighborhood, or area, would also be reduced 20 percent in their taxable value.

Such an approach may have a better chance of gaining the votes of eastern Montana lawmakers, representing areas that fared quite well under the 2008 reappraisal, than attempting to amend the Constitution to impose a cap on the amount property taxes can rise, or moving to an acquisition-value based system, like in California.

“I think we can get the votes to do that,” Tutvedt said. “I don’t think we can get the votes to amend the Constitution to do a cap.”

JOBS

To emphasize a focus on improving employment, the Legislature will be holding a “Jobs Listening Session” Jan. 8, where private-sector employers are invited to address a joint session of the Senate and House and tell lawmakers directly what changes are necessary in state policy to make Montana more conducive to hiring and business growth. Ray Thompson, founder of Semitool, is scheduled to address the Legislature.

Another key goal of Republicans and business groups is to reform the state’s worker compensation system, the rates of which are currently the highest in the U.S. North Dakota, on the other hand, enjoys the lowest rates, and Reichner, of Bigfork, has been charged with carrying the main worker compensation reform bill.

“It hurts business, which hurts business development, which hurts jobs,” Reichner said of Montana’s rates. “We’re hindering job creation and work comp is one of the biggest reasons why.”

His aim is to get Montana’s ranking to somewhere in the mid-range of states, so it’s not such a deterrent to new business. But managing the competing interests involved, from unions to medical providers, will make for delicate negotiations.

“This is the 50-yard line job arena, as far as what government can do for jobs,” Reichner said.

ENERGY/LAND USE

Another key plank in Republicans’ goal to make the state more hospitable to business involves encouraging natural resource development by rolling back certain environmental regulations required for everything from oil and gas drilling, to coal mining, to timber harvesting. And environmental groups are already gearing up for a fight.

Bill drafts are in the works to repeal the Montana Environmental Policy Act – which requires big energy or water projects to undergo a review of its environmental impacts – and undo incentives to develop renewable power. Rep. Derek Skees, R-Whitefish, has introduced bill drafts that would repeal the ban on nuclear power facilities and force the loser in an environmental lawsuit to pay the opponent’s legal costs. Other measures would weaken state Superfund clean-up requirements.

Anne Hedges, a lobbyist for the Montana Environmental Information Center, said moves to repeal MEPA take away the ability of citizens to learn about major energy or natural resource projects occurring in their communities by forcing a certain level of disclosure.

“So much of it, I think, is an attack on the public’s right to participate in government,” Hedges said. “People want a voice and they want the ability to hold agencies accountable if agencies ignore their concerns.”

She also has her eye on a so-called “takings” bill, by Senate President Jim Peterson, R-Buffalo, that requires the government to compensate a landowner if a regulation restricts the use of their property. Hedges fears such a law could bankrupt the state.

“We can’t afford it and it’s a bad idea,” Hedges said. “It’s going to be one of the most difficult things we face this session.”

But Tutvedt confirmed Peterson’s measure is a priority for Republicans.

“That’s really near and dear to our heart,” Tutvedt said. “Government should not be taking people’s property or right to do business without at least a reasonable compensation.”

COOPERATION, OR LACK THEREOF

Despite the drubbing her party received in November, Senate Minority Leader Carol Williams, of Missoula, said her fellow Democrats holding the offices of the presidency, Montana’s two U.S. senate seats, the governorship and other elected seats have her, “not at all feeling in the minority.”

“We go into every session looking at what’s important for Montana families,” Williams said. “The fact that we had a bad election, and people didn’t turn out, doesn’t make us behave differently.”

While she is eager to find areas where Democrats and Republicans can work together to improve the economy and lower unemployment, Williams is also glad Schweitzer will be at his desk, able to veto Republican bills when necessary.

“I have to say I thank my lucky stars every night we have him,” she said.

Meetings between GOP leaders and the governor have, by all accounts, been friendly thus far, but Republicans remain wary of whether that will continue through the session.

“The governor has offered to work with us and we’ll see,” Tutvedt said. “He says the right things at times and then he takes low-blow, pot shots at us other times.”

Tutvedt also emphasized Republicans intend to demonstrate the differences between their governing philosophy and that of Democrats. Those differences could be most apparent in a bill that calls for the governor and attorney general to join states filing suit against the federal government over the requirement to purchase insurance as part of the recently passed healthcare overhaul. He also mentioned a strict new immigration law modeled after Arizona’s.

“We are going down to do jobs,” Tutvedt said. “But there’s a little Tea Party in all of us.”

Should Schweitzer veto certain bills, Republicans will move to put three or four of them on the ballot as referendums to let the voters decide. Tutvedt described the criteria would be those issues, “that best define our Republican values of jobs and states’ rights.”

“We believe the governor is going to veto some of the principles that we hold dear,” Tutvedt said. “We are going to differentiate ourselves.”

Stay Connected with the Daily Roundup.

Sign up for our newsletter and get the best of the Beacon delivered every day to your inbox.