Bullock’s Property Tax Rebate

By Beacon Staff

We could almost hear the shot of the starter’s pistol as the race for Montana governor began in earnest earlier this month. First out of the gate was Democrat Steve Bullock with an election year promise of a $400 payment for certain property owners. Republican Rick Hill responded that Montanans need permanent tax reductions, not one-time gimmicks. And they are off! And many of us are yawning.

Bullock’s proposal is bad politics, poor tax policy and cynical, recycled rhetoric. Hill’s response is more like a refrain from a GOP high school cheer than a serious response on economic policy. Maybe in a world where politics is defined by expensive 30-second TV ads that is the best we can hope for. But politicians can build a sound bite around good policy just as easily as they can around proposals that are short sighted and pander to greed and self interest. They just choose not to.

Let’s get into Bullock’s proposal. First, it is cynical, recycled rhetoric. Remember that Brian Schweitzer did the exact same thing in 2007 in a similar circumstance. Then as now, the primary purpose was to buy votes. Politics aside, this proposal leaves behind poor people, young people (students in particular), disabled people, and any other demographic group that tends not to own their home. But the fact is that many people in these same demographic groups don’t vote so why should a candidate care about them? Let’s see, that about covers recycled and cynical.

Now let’s move on to why this is bad public policy. Budget surpluses are tricky things. The most important thing to understand is that surpluses are based on guesses. Last session the governor repeatedly and correctly pointed out that the Legislature’s estimate of state revenue for the biennium was far too low. We now have a surplus because the Legislature’s guess on revenue was wrong. Income tax collections are up thanks in large part to an energy boom in eastern Montana.

Let’s also recall that the last Legislature made some really significant cuts to public services. State employees did not get a raise. No bonding program passed to build public infrastructure. College tuition on in-state residents increased and significant cuts to basic health and human service programs were put into effect. In fact, the lead news story for the two days preceding the announcement of Bullock’s proposal was a jump in insurance costs for all students in the Montana higher education system, which results in yet another increase for college students.

Some people take the moral high ground arguing that a property tax rebate is the right thing to do because it was “our” money in the first place. But this so-called surplus has been generated by income taxes, not property tax revenue. Many of those income taxes are being paid by energy companies and oil field workers (many come from out of state), and the service businesses that surround that economic activity. But I doubt you’ll hear any politician saying we ought to give money to workers from out of state and big oil companies. So much for the moral high ground.

Ironically, a minimum wage worker has contributed more to this “surplus” than a person who owns a $6 million house on the ridge overlooking town. But that worker likely won’t see a dime in this program. This is not really about creating good or even rational tax policy. It’s about politics and elections and that leads to the final point.

This proposal is bad politics. Democrats should be looking at the primary election results and shaking in their boots. In the June primary election, many more voters went to the polls to vote on a Republican ballot. Historically, that correlates to performance in a general election. Democrats in denial tend to argue that independents voted in the Republican primary and in a general election they will go the other way. But plenty of Democrats understand that a big part of their problem is that Democratic base voters are staying home. Bullock’s proposal is bad politics because it discourages base Democratic voters. It leaves them wondering why they ought to get out and support candidates who promote traditional Republican positions on taxation and other important issues.

Ken Toole is president of the Policy Institute. He also served on the Montana Public Service Commission and in the Montana Senate on the Tax Committee. He has held numerous state and local positions within the Democratic Party.