NFIB to Fight 4 Percent Local Options Tax Proposal

Date: March 12, 2017

Bills on money start flowing after legislators return from five-day break

NFIB/Montana State Director Riley Johnson’s report from Helena for the legislative week ending March 10

As the legislators returned to Helena after the five-day transmittal break this week, the bills involving money started to flow from the legislative services division. The deadline for money bills is March 31.

These are the bills for which NFIB/Montana has been waiting. Coming out this week were:

  • Two local-option sales tax bills.
  • One bill to raise property taxes by local governments for infrastructure projects
  • A reduction in the business equipment tax
  • One bill to raise the current resort tax.

Leadership in both houses expect to see the biennial budget reach the House floor next
week, and plans for debate are set to happen all day Thursday and Friday, March 16-17. A bevy of infrastructure bills are expected to reach the floors of both houses the week after next.

Local Option Sales Tax

The two local option sales tax bills are House Bill 577 and Senate Bill 331.Both measures are almost identical. In fact, the introduction on each is word-for-word the same.

HB 577 would allow any local city or county to take a vote of its residents to allow the local government to apply a sales tax, within their area limits, on luxury goods and services for specific infrastructure projects like roads, bridges, waste-water systems, drinking water, and public buildings.

This bill allows up to a 4 percent sales tax to be levied. It also calls for a property tax rebate of at least 25 percent or more of the money raised by the tax, divided annually among all property owners equally.

It is being titled the “Local Option Infrastructure and Property Tax Relief Act” and is sponsored by Rep. Dave Fern (D) of Whitefish. It has been assigned to the House Tax Committee. A hearing is scheduled for March 14, Tuesday, in room 152 of the Capitol

The difference between HB 577 and SB 331 seems to be only in the amount of property tax relief mandated. SB 331 states that a minimum of 10 percent or more of the sales tax collected annually will be returned to property owners, compared to the 25 percent in HB 577.

Both bills are basically the same in what they deem luxury goods and services. They include:

  • gifts
  • rental cars
  • restaurants
  • fast-food establishments
  • hotels and campgrounds
  • destination resorts and recreation facilities
  • any goods and services normally sold to transients or tourists.

The bills would not include medicines, food unprepared and unserved, appliances, hardware, sale of motor vehicles, utilities like electricity, phones, or cable TV, and any “…necessities of life.”

SB 331 is sponsored by Sen. Mike Phillips (D) of Bozeman, and a hearing on the bill is set for Thursday, March 16, in the Senate Tax Committee at 9 am in room 405 of the Capitol.

Another local option measure introduced this week is House Bill 579 by Rep. Greg Hertz (R) of Polson. HB 579 would allow a city or county government to assess up to 40 mills on property within its jurisdiction for various infrastructure projects, such as roads, bridges, waste-water and drinking-water systems, public building maintenance and repair, and storm water projects.

HB 579 would not require a vote of the people.

NFIB/Montana has asked its members about local option taxes in previous statewide ballots. Its members have continually rejected support of such taxing authority being given to local governments.

Business Equipment Tax

Sen. Roger Webb (R) of Billings introduced SB 327 this week and even had a hearing on his measure March 9 in the Senate Tax Committee. This bill would raise the exemption on the business equipment tax, currently at $100,000, to $350,000. Attendance at the hearing was heavy on the proponent’s side.

Opponents included the administration’s head of the Department of Revenue, Mike Kadas. Also opposing SB 327 was the Montana Taxpayers Association, which objected to the bill only affecting the smaller businesses in the state, and not the larger firms. The association did support the reduction or elimination of the business equipment tax, but not on the narrow basis of raising the exemption.

If passed into law, the bill would relieve about 3,600 businesses in Montana from paying the business equipment tax. Current payers total 6,500 businesses.

Resort Sales Tax

Another revenue bill introduced this week that would raise the current resort sales tax from 3 percent to 4 percent, with the proceeds going toward building workforce housing and other local economic infrastructure. Senate Bill 343 is being proposed by Sen. Jeff Welborn (R) of Dillon.

Currently, the resort sales tax is only levied in the six resort communities of Red Lodge, West Yellowstone, Big Sky, Whitefish, Craig, and Superior. A hearing is scheduled in the Senate Tax Committee March 14, at 9 am in room 405 of the Capitol.

Electric and Hybrid Vehicle Tax

A bill of interest to NFIB/Montana this week was House Bill 205 by Rep. Alan Redfield (R) of Livingston. This measure would place an annual registration fee on electric and hybrid vehicles, and put a tax on compressed natural gas and liquefied petroleum gas placed in motor vehicles.

It would appear from comments by committee members that the annual fee on hybrid cars would probably be amended out of the bill, as it was suggested that hybrid vehicles do pay gasoline tax.

This is somewhat of a companion bill to House Bill 473 that would raise the gasoline and diesel tax by 8 cents per gallon for statewide highway infrastructure projects. This bill was heard on February 22 and is on hold in the House Transportation Committee awaiting action.

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 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 Rep. Dave Fern courtesy of The Montana Legislature]

Related Content: Small Business News | Montana

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