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Montana Viewpoint

WHEN IS A TAX BREAK NOT A TAX BREAK?

January 7, 2001

If you don´t know by now, I´m here to tell you that the Legislature has begun its work for the next two years. I’ve been appointed to three committees: State Administration, Education, and Local Government. The last two committees will be seeing some important bills that will affect your pocketbook, and you can expect to hear a lot about them from me.

We have all been told that the Legislature has been reducing our taxes over the last couple years, so maybe you´re wondering why yours went up. Well, I can´t swear that yours did, but mine did, and on average in our Senate District homeowners and business folks should have seen an increase in their property taxes. How can this be, you may wonder. Well, basically, while homeowners and business real estate and buildings were given a modest property tax decrease, utilities, railroads, and owners of business equipment got major decreases. This was a kind of surprise to schools and counties who were used to counting on those property taxes to run the nuts and bolts of local government. As a short term reprieve, the state agreed to reimburse some of those lost tax dollars to local governments for a couple of years. Meanwhile, they also lifted a 1987 voter initiative property tax cap called I-105, and let local governments and schools raise your taxes to make up the balance of monies lost to them.

So, if the legislature lowers your property taxes one percent, and local governments raise it three percent, you can probably figure out that you got a tax increase which the Legislature is claiming was a tax decrease. Go figure. However, if big electrical generating facilities got a 50% decrease, even if the county also raises taxes by 3%, they still get a decrease, OK? So, everybody gets a decrease and an increase, and what could be fairer (or more confusing) then that?

Here´s a short list of statewide increases and decreases for you to ponder, courtesy of the Office of Public Instruction: homes, up 0.69%, the land they sit on, up 3.42%; business buildings, up 3.95%, their land, up 5.31%; forest land, up 2.04%. On the down side: farm, mining, manufacturing and commercial (business) equipment, down 47.8%; railroads, down 26.96%; electrical generating facilities and natural gas production, down 41.48% (there was a new tax installed on electrical generation which partially offsets this decrease).

Lincoln County saw homes go down 1.68%, but residential land went up 6.55%, with commercial land and buildings virtually unchanged, and forest land down 2.92%. Business equipment was down 51.43%, and railroads down 26.49%. There was little tax on electric and natural gas in Lincoln County.

For Mineral County: tax on homes up 5.67%, their land up 14.56%; business buildings up 8.85%, their land up 15.42%; and forest land up 6.7%. Business equipment was down 44.09%, electric and gas down 20.13%, and railroads down 29.16%.

Missoula County homes went up 6.31%, their land up 7.64%; business buildings and their land up 5.94% and 4.5% respectively. Forest land went up 4.95%. Business equipment was lowered 45.1%, electric and natural gas down 36.69%, while railroads decreased 23.94%.

In Sanders County, homes were up 4.7%, their land, up 10.1%; business buildings up 9.39%, their land, up 13.13%; forest land up 1.57%. Business equipment was down 48.32%, electrical generation, down 84.56%, and railroads down 32.52%.

Remember, in each county there was a new tax imposed on electrical generation which modified the decrease in their property tax breaks, but in no case did it come close to eliminating them.

Well, this whole article reminds me of padding a term paper by putting in real long quotes, but I think it´s important stuff, and I hope it helps you understand that a tax break is not always a tax break. I´ll be writing articles on a weekly basis for our local papers, and also posting them on my website, www.jimelliott.org. Don´t forget to help me help you by keeping in touch. Call me at 444.4800; write me at: State Senate, Helena, MT 59620; or e-mail me at Jim@jimelliott.org. Keep well.

Jim Elliott
Phone: 406-444-1556
Mail: State Senate Helena, MT 59620

jim@jimelliott.org