Attempt to Abolish Montana State Fund Defeated

Date: April 02, 2017

NFIB uncovers flaws that would have spiked workers’ compensation premiums on small-business owners

NFIB/Montana State Director Riley Johnson reports from Helena on the small-business agenda for the legislative week ending March 31.

It was a busy week in the 65th Montana Legislature. The deadline for all money bills was March 31, and the halls of the Capitol buzzed with urgency, rumors, compromises being made, and much anxiousness over what bills were moving, and what bills were not going to make the deadline.

Looking back over the session, which began January 2, NFIB/Montana has had a lot of successes, a few disappointments, and hope as some of its target legislation for 2017 is still alive.

Local Option Sales Tax Dead

Two bills that were killed included Senate Bill 331 and House Bill 577. These measures would have given local governments the ability to impose local option sales taxes of up to 4 percent for local infrastructure projects.

A third bill, HB 579, was somewhat of a local option bill also. It would have given local governments the ability to tack on up to 40 mills on local property taxes for infrastructure projects.

All three bills were tabled in committees, thanks in a large part to an all-membership action alert that NFIB sent out the week of the hearings on these bills. The action alert worked very well. Hundreds of emails and phone calls were received in the Capitol by senators and representatives asking them to oppose all local option sales taxes.

NFIB/Montana member involvement worked again.

Business Equipment Tax Relief Fails

A favorite of NFIB/Montana’s bag of bills was Senate Bill 327 that would raise the exemption on the business equipment tax from $100,000 to $350,000. That bill was tabled in committee. NFIB/Montana will continue to bring the substance of this bill before the Legislature in future sessions. The business equipment tax is an unfair tax on the tools of production and should be eliminated. This session’s lack of revenue was not the right time to get SB 327 passed.

NFIB Helps Stop Income Tax Increases

Three bills aimed to raise the upper individual income taxpayer bracket. House Bill 452, House Bill 330, and Senate Bill 350 would have raised the upper bracket for individuals making over $500,000 to 7.9 percent from the current highest bracket of 6.9 percent. All three measures were tabled in committees with NFIB/Montana working diligently to suppress this idea.

State-Run Retirement Accounts

Another bill of interest to NFIB/Montana was SB 346 by Sen. Terry Gauthier (R) of Helena. It would have established a small business retirement system in state government. The concept was that small business employees could join together with other small businesses to develop a larger retirement investment pool.

NFIB/Montana did not support the idea because the federal government has declared that employers who withhold retirement money from wages, and direct the investment, are liable to the employees should an employee decide the employer has mismanaged the retirement fund in any way.

As NFIB/Montana said in testimony before the Senate Finance Committee March 29, “A small-business owner doesn’t want to have to spend $10,000 to $25,000 in legal fees just to prove he or she was right.”

Despite NFIB’s lobbying against the bill, it got a life of its own. SB 346 passed the committee that same day on a 16-2 vote. The next day, SB 346 passed the second reading on the Senate floor 24-22. But the work of NFIB/Montana prevailed on March 31. SB 346 failed 24-26 on third reading in the Senate.

Montana State Fund Saved

Two bills that targeted the Montana State Fund, the state’s workers’ compensation insurer, were also tabled in committee. Senate Bill 371 would have dissolved the state fund and gone to an open marketplace system of covering workers’ compensation in Montana.

Although the idea of an open marketplace rather than a state-run program generally conforms to NFIB’s pro-business philosophy, a serious flaw was uncovered by NFIB/Montana. The bill called for private carriers to write the insurance business they wanted and relegate the smaller premium employers to a high-risk pool. The bill said that the high-risk pool would set premiums to cover all costs and risks. Over three-quarters of the 26,000 State Fund’s policies today are under $5,000 in annual premium. The big insurance companies like Aetna and Liberty Mutual won’t write business that small because of the higher risk. Once into the pool, it could charge higher premiums than the State Fund is charging today by an estimated 100 percent to 138 percent, according to the National Council of Compensation Insurers (NCCI). NCCI is the independent actuary for the State Fund. A large portion of NFIB/Montana members is in this group of smaller policy payers.

A second State Fund bill, Senate Bill 369, called for an interim study commission to look at taking the State Fund into a private, non-profit mutual insurance company.

Both bills were tabled last week in the Senate Business Committee with the support of NFIB/Montana.

Get Involved

Getting involved in the 2017 Legislature is easy. The best way to have your voice heard quickly is to phone 406-444-4800. Operators are on hand in the Capitol Building to take messages for up to five legislators on each call, and delivery is within a half an hour.

More information on:

  • locating legislators
  • getting an e-mail address
  • viewing committee meetings and floor sessions on television or over the internet
  • review all hearings
  • reading of the actual bills …

… can go to and access everything electronically.

Previous Legislative Reports

March 24 Report—“I Get The Picture. Shut The Emails Down.”

March 17 Report—Local Property Tax Levy Coming up for Hearing

March 10 Report—NFIB to Fight 4 Percent Local Options Tax Proposal

March 3 Report—Montana Legislators Getting Down to Dollars and Cents

February 24 Report—Income Tax Proposals Stall; Gas Tax Increase Revving

February 17 Report—Slowest Session in 16 Years Has Not Slowed NFIB

February 10 Report—NFIB Helps Defeat Costly Workers’ Compensation Proposal

February 3 Report—Skirmish Over Funding Montana Legislature

January 27 Report—Montana Legislature Ponders Tax Credits for Startups

January 20 Report—NFIB Helps Defeat Montana Minimum-Wage Bill

January 13 Report—NFIB Readies Opposition to Montana Minimum-Wage Bill

January 6 Report—Montana Legislature Opens Biennial Session

[Tile photo of Sen. Terry Guathier courtesy of The Montana Legislature website]

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