The House Taxation Committee on Friday endorsed two Republican bills opposed by the Bullock administration that would provide millions of dollars of one-time and permanent state income tax cuts.
Advancing to the House floor for debate were House Bill 166, by House Majority Leader Keith Regier, R-Kalispell, and HB169, by Rep. Art Wittich, R-Bozeman.
Both bills passed on straight or nearly straight party line votes, with all Republicans supporting them and all or most Democrats opposing them.
State Revenue Director Mike Kadas had opposed both bills in the hearings, criticizing their cost and saying the tax cuts go disproportionately to higher-income Montanans.
Rep. Kathleen Williams, D-Bozeman, said she opposed “piecemealing tax relief” and advocated not voting on them for a couple of weeks to give members more time to look at the bigger picture on spending and tax bills.
“We ought to be debating these bills in a broader context than one-by-one,” she said. “Mr. Chairman, I feel it’s irresponsible,”
Rep. Greg Hertz, R-Polson, said he understood some of the concerns of Williams and other Democrats, but added: “However, we don’t live in a vacuum. We have deadlines.”
He said the committee wouldn’t lose track of the bills, with members able to work with their Senate colleagues to set a revenue estimate. That will ultimately determine how much the Legislature can spend and how much it could cut in taxes.
Regier’s HB166 would permanently cut state individual income taxes by trimming the tax rates for each bracket of taxable income by one-tenth of 1 percentage point, beginning in tax year 2016. For example, the top income-tax rate would drop from 6.9 percent to 6.8 percent.
The bill would tax revenue overall by 1.6 percent a year. The tax cuts would total about $40 million over the next two years.
The committee backed HB166 on a 13-7 vote. All Republicans, joined by Democratic Rep. Tom Jacobson, D-Great Falls, voted for the bill, while the other Democrats opposed it.
At the hearing on HB166 earlier this week, Regier said Montanans paid the income taxes that have built up the state’s budget surplus and suggested they were entitled to some of the money back. He said his bill would reduce the amount of money taken out of their residents’ paychecks and put more cash in their pockets.
Wittich’s HB169 would create a one-time income-tax credit for property taxes paid on a person’s home, temporarily reducing tax rates for 2016. It would save taxpayers about $79 million in 2016.
Rep. Rob Cook, R-Conrad, amended the bill to spread the $79 million in tax savings over two years, or about $40 million a year, with a trigger to terminate it if a state budget crisis occurs because of dropping revenues.
The committee approved HB169 on a 14-6 vote, with all Republicans voting for it and all Democrats against it.
Rep. Mary Ann Dunwell, D-Helena, opposed the bill, saying: “A good deal of this bill involves giving much of the benefit to the top 20 percent of income earners. It just benefits the wealthy, not the real folks who need it.”
“The intent is not to redistribute wealth, but to give the money back to those who paid it,” said Chairman Mike Miller, R-Helmville.
At the hearing this week, Wittich said, “We’ve got a $400 million surplus with the state of Montana. The question is, whose money is it? Is it the individuals who paid into it or the government’s?“