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Montana Viewpoint

MIDPOINT BLUES

February 25, 2001

This is the midpoint of the legislative session known as Transmittal, and a traditional time for legislators to take three days off after working six day weeks since the New Year. Transmittal is the 45th day of the session, and the deadline for bills originating in one house of the legislature to be transmitted to the other. This means that if a bill has passed the Senate by the 45th day, it will automatically go to the House to go through the same process of hearings again. So, what great works has the Senate accomplished to send to the House for approval or rejection? Not much. At least, not much if you’re talking about the major issues facing Montana, like what to do about deregulation, how to fund education, how to find enough money to do what needs to be done.

To be fair, the House doesn’t seem to have done much either. For the first time in the five sessions I’ve served in, there is no “plan.” It seems to be a strategy of trying a whole bunch of ideas, seeing what gets passed, and hoping for the best. Previous Legislatures, Democrat or Republican, knew what they were going to accomplish—and how—long before the session started. Of course, it’s easy for me to criticize, being in the minority and not having any say in the matter. But previous legislatures had John Mercer (R–Polson) in a leadership position, and love him or hate him, he had a plan, and a fall back plan, and, I bet, an alternative plan to that. He knew what he was doing and he generally got it done and made into law.

Now, it’s just a matter of floundering around, and that’s too bad, because the stakes are higher for Montanans than they have ever been. Paramount among the concerns is how to handle the cost of electricity when price controls come off for Montana homeowners and small businesses in 16 months. So far, the most significant bill is one by Royal Johnson (R–Billings) to contract with electrical producers for a mix of short– and long–term contracts to supply power to whoever takes over the electric transmission lines from Montana Power. In concept, it’s a good idea, but when you look at what the going rates are, it’s cause for concern.

Recently, a group of Montana companies (who supported deregulation, by the way) proposed a deal to PP&L Global to buy 5 years of power at what they thought would give PP&L a fair profit…say, 100%. The companies figured that this would be in the neighborhood of $45 a Megawatt hour (MWh). PP&L came back with a counter–offer of $350–a–MWh for a one–year contract, and $100–a–MWh for a five–year contract. Current regulated prices are about $25 per MWh. These folks are not going to be easy to deal with. On top of this, the Senate passed a bill that would guarantee electrical companies a profit.

My friends, if they can’t make money in this market, they are totally incompetent and shouldn’t be allowed a government subsidy. Tax reform was a big deal for Governor Martz and the Republican Senate and House going into this session. There was widespread desire to eliminate what’s left of the tax on business equipment (it has gone from 9% to 3% in the last 5 years), and to revise the income tax by lowering the top rates. These would have caused a significant decline in tax revenues to the state and local governments.

Now, these items seem completely off the table as the legislature scrambles to come up with enough do–re–mi to fund a conservative Martz budget. In fact, Martz and Republican legislators are looking at ways to raise taxes without causing a hue and cry. Ways being looked at are a huge increase in tobacco taxes to fund education, and an enormous increase in an electrical generating tax which would be paid by out of state purchasers of power.

What’s not being looked at is an across–the–board tax increase. Read my lips, the man said. As a result of this, the possibility of increased funding for education seems remote, the corrections system is having its budget cut, and government in general will be tightening its belt. Some folks don’t find much wrong with this: I do.

Not that I’m a fan of big government programs, but I am a fan of having a good educational system and a communications infrastructure so companies will have some enticement to move here. Of course, with Montana having the soon–to–be highest electrical rates in the Northwest, why would they move here? So maybe we don’t need all those fripperies like education and roads anyway.

I’m home at the ranch in Trout Creek for a couple days enjoying the solitude and the company of my wife. By the time you read this, I’ll be back in Helena trying to make sense out of an almost–impossible problem along with 149 other citizens. Wish us luck.

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

jim@jimelliott.org