House committee says no to Bullock on eliminating business equipment tax

Governor Steve Bullock

Governor Steve Bullock.

HELENA — On a mostly straight party line vote, the House Taxation Committee defeated Democratic Steve Bullock’s bill to eliminate the business equipment tax for 10,300 small businesses in the state.

The committee rejected House Bill 332, by Rep. Mary McNally, D-Billings, on an 11-9 vote. All Republicans but one opposed her bill, while all Democrats and Rep. Nicholas Schwaderer, R-Superior, supported it.

The committee then tabled the bill.

HB332 would have ended the property tax for any business whose total equipment is valued at $100,000 or less for tax purposes.

It carried a price tag of $6.6 million for the next two years and $8.1 million for the following two years for the cost of reimbursing local governments, school districts and the university system for the lost property tax revenue.

It was a threshold, not an exemption. That means a business with $99,999 worth of equipment would have paid no business equipment while one with equipment valued at $100,001 would pay the tax on the full value of equipment.

The vote came after the committee heard-- but did not vote on--these three major property tax bills:

--HB472, by Rep. Jerry Bennett, R-Libby, which would exempt the first $250,000 of business equipment from taxation.

As an exemption, all businesses would be able to deduct $250,000 from the total value of their business equipment on which they are taxed.

Its price tag is $22.1 million for the first two years combined and $25.6 million over the next two years.

“It’s the fairest proposal for businesses,” Bennett said. “It will have a positive impact on 18,000 businesses.”

--HB361, by Rep. Chuck Hunter, D-Helena. This is another Bullock bill that proposed to give a one-time, $400 property tax rebate to all Montana residents on their primary home.

The bill has a price tag of $99 million.

“It’s simple, it’s direct and puts money into where it’s needed,” Hunter said.

This was a major proposal in Bullock’s campaign for governor last year and mirrors a proposal passed in 2007 at the request of then-Gov. Brian Schweitzer.

--HB230, by Rep. Scott Reichner, R-Bigfork. It would reduce the state school equalization mill levy to 19.6 mills from the current 40 mills.

It would reduce state property tax revenue by $52 million in fiscal 2014, $54 million in 2015 and would continue to grow over time.

He called Bullock’s $400 rebate a “one-time gimmick.”

“Citizens don’t want don’t want a one-time gimmick,” he said. “They want permanent property tax relief.”

Missoulian State Bureau reporter Charles S. Johnson can be reached at (406) 447-4066 or by email at chuck.johnson@lee.net.