Victories on taxes highlight the accomplishments of one of the most pro-small-business legislatures in a while
State Director Ronda Wiggers reports from Helena on the small-business agenda at the conclusion of the 2021 session of the Montana Legislature.
The 2021 Montana Legislature was a success for Montana Main Street businesses. Not only were all anti-business proposals stopped, but also pro-business legislation was signed into law along with a few positive changes in the tax code.
Victories on Taxes
- The final version of House Bill 303 increases the amount of business equipment that is exempt from taxation from the current $100,000 to $300,000.
- Two bills passed affecting income taxes. The first was Gov. Greg Gianforte’s Senate Bill 159 that reduces the top bracket from 6.9% to 6.75%. Although this is a small decrease, when combined with SB 399, it will reduce it further to 6.5%. SB 399 is a total re-write of the Montana income tax code. It changes our starting point to federal taxable income rather than gross income, and it eliminates the marriage penalty and the need to file separately. SB 159 is set to become effective first, with the more complicated SB 399 following for the tax year 2023.
- HB 663 uses marijuana tax proceeds to increase the Guaranteed Tax Base (GTB) for schools. This change will result in property taxes being reduced by more than $10 million statewide. This calculation will affect each district a bit differently, but everyone should see a decrease in the school portion of their property taxes.
All of the bills that resulted in a lower tax rate are currently on hold. The federal American Rescue Plan Act funds stipulate that no state can receive funds if they lower any of their tax collections. Montana Attorney General Austin Knudsen has joined other state attorneys general in a lawsuit that is challenging this requirement. The Legislature crafted the bills to become effective either when a judge rules in favor of the states, the federal government changes the requirement, or the funding expires. Although the tax changes are now law, you will likely not see a change in your tax bill until next year.
Pro-Business Changes that Passed
- HB 252 creates a non-refundable employer tax credit for employer-paid trades education. The program does not need to be through a College of Technology nor approved by any state agency. Simply, the employer pays for an employee to get trade/technical training and can receive a tax credit for 50% of the cost, up to $2,000 per employee with a cap of $25,000 per business. It can even cover a week of continuing education for product-specific training. There is a list of 26 trades that can use this credit.
- HB 254 – revises the state’s Wrongful Discharge Act to:
- increase the probationary period from six months to 12 months
- add “the employee’s material or repeated violation of an express provision of the employer’s written personnel policies” as a reason to dismiss for good cause
- add being absent from work for more than five days without explanation as a cause
- limit the amount of damages a dismissed employee can receive.
- HB 407 establishes statewide uniformity for auxiliary container regulations and will prevent a local government from passing any laws that ban single-use or any particular type of packaging.
- HB 472 revises liability under the consumer protection act. It limits treble damages in a civil liability action (under the consumer protection act) to only awards of less than $100,000 and dis-allows attorney fees if over $100,000 is awarded.
- HB 655 is where the Legislature addressed employer drug testing under the new recreational marijuana law. By the end of the process, the only real change this made to Montana’s existing drug testing laws is that if, after an accident, the employee refuses to take a drug test administered according to federal and state law, it is presumed the accident was caused by the use of illegal drugs for insurance purposes. REMEMBER – not every employee is subject to random drug testing. This bill would not change the law on when an employer can drug test. You can read the full text of the bill by clicking on the title.
- SB 65 protects businesses from COVID-19 liability claims and frivolous lawsuits.
Other Changes of Note
- HB 198 increases the amount worker’s compensation will pay for a funeral, when an employee dies on the job, from $4,000 to $10,000. The Montana State Fund has indicated that this will be such a minor increase that it will not affect the rates.
- HB 282 revises labor laws relating to the employment of minors. It creates the definition of a “student employee” to allow students 16 years of age or older to work under the direct or close supervision of an experienced person in jobs that were previously off limits to minors, such as:
- manufacturing explosives
- logging and sawmills
- operating power tools
- freight elevator
- slaughtering and meatpacking
- operating power-driven bakery equipment
- brick and tile work
- among others.
The thought behind this is that it may give students exposure to trades that they are currently not allowed to work during the time in their life when they are determining their future career and study path.
- HB 555 revises civil liability laws on personal property exempt from execution. This bill increases the value of personal property that is exempt from a judgement to adjust for inflation:
- for household goods, firearms, and crops from $4,500 to $7,000
- for vehicles from $2,500 to $4,000
- for tools of trade from $3,000 to $4,500.
- HB 629 provides for job creation tax credits for businesses that increase their employee count by 10 in the first year and 15 in the second year for job positions that pay at least $50,000 per year and are in the sectors of construction, natural resources, mining, agriculture, forestry, manufacturing, transportation, utilities or outdoor recreation. For counties with populations of less than 20,000 the job growth requirement is five the first year and seven the second year.
- SB 91 requires fiscal notes to include business impacts. This bill has come forward in the past and we have always struggled with how they would gather the business information, as it may be very different for different businesses. The bill is now amended to work with a college economics class, or something similar, to have them do the analysis. If the budget director cannot contract with a college class, or something similar, to do the analysis at no cost to the state, the bill is void.
- SB 118 says that if a new employee lies about existing health conditions that are relevant to the work they are being hired for, you and your workers’ compensation policy will not be liable for benefits. As you likely know, once you have made a conditional offer for employment, you are allowed to screen for existing health issues that would prohibit them from doing the work for which they are being hired. If they provide false information and then attempt to collect for an injury, the claim will be denied. In order to fully use this law, your employee handbooks and procedures must be in compliance.
- SB 367 generally revises labor laws relating to independent contractor (IC) certification. In the past, the state Department of Labor has determined that if there is no IC certification, you are absolutely an employee. This conflicts with case law and this bill proposes to say that it is NOT absolute proof and that other factors may be considered. It also moves the burden of proof onto the person claiming to have an IC, rather than the employer.
- HB 121 is a compilation of a number of bills dealing with how a local government interacts with its health board. This bill gives the local government the authority to override a health board order.
- HB 230 is the companion bill to HB 121 and compiled all the different bills dealing with governor’s authority during a state of emergency. This limits the governor’s state of emergency to only 21 days unless approved by the Legislature for a longer period of time. It limits those extensions to only 45 days at a time.
- HB 158 creates a study commission to review COVID-19 statutes and rule suspensions. This study will look at the emergency rules that were put in place and determine if some of them should be allowed to remain.
- HB 257 limits a county health board authority to fine or revoke a business license for a business that allows a customer access to goods and services if the customer is not in compliance with county health ordinances. The governor amendatory vetoed this bill to ensure that the health department would still be able to enforce health and safety violations.
- HB 702 is the vaccination discrimination bill. Basically, if you are not a school, daycare, health care or senior care facility, you cannot require your employees to be vaccinated. It is also discriminatory to refuse service to a customer based on their vaccination status. This includes all vaccines, not just for COVID-19. It is not illegal to encourage vaccination.
Bad Bills NFIB Helped Kill
NFIB joined with other business associations to defeat proposals to increase the minimum wage, make expensive changes to worker’s compensation, create a Family Medical Leave act funded by payroll taxes, and create a local option sales tax. This is the complete list of bills we assisted in defeating during the 2021 session.
- HB 187 would have allowed a local option sales tax
- HB 228 would have established family medical leave insurance
- HB 265 would have phase out use of Styrofoam in food-related businesses
- HB 284 would have instituted a “living wage”
- HB 351 would have revise disability parking laws
- HB 412 would have restored the right for employees to choose treating physician in workers’ compensation cases
- HB 431 would have revised property tax on intangible personal property
- HB 486 would have increased the minimum wage
- HB 500 would have generally revised labor laws
- HB 511 would have generally revised laws relating to the Montana State Fund
- HB 512 would have generally revise workers’ compensation laws relating to the Montana State Fund
- HB 513 would also have generally revised workers’ compensation laws relating to Montana State Fund
- HB 514 another bill to revise workers’ compensation laws relating to the Montana State Fund
- HB 512 would have revised property exempt from execution
- HB 550 would have established a presumption in workers’ compensation for COVID-19
- SB 11 would have increased the minimum corporate income tax
- SB 187 would have increased the minimum wage
- SB 289 would have revised employment applications by eliminating reference to a criminal record
- SB 313 would have provided for a local option tax via a Montana tax Fairness and Rural Revenue Initiative
- SB 322 would have generally revised workers’ compensation laws related to the Montana State Fund
- SB 355 would have revised payments related to state school trust lands (stole from tourism money)
Bills NFIB Monitored that were TABLED/Defeated
- HB 125 would have provided an exemption from income tax withholding
- HB 149 would have allowed certain card transaction fees
- HB 175 would have generally revised consumer good repair laws
- HB 212 would have generally revised laws regarding general contractors
- HB 251 would have implemented right-to-work
- HB 422 would have authorized municipalities to operate broadband utilities
- HB 600 would have established private-sector hiring preference protection for spouses of military members
- SB 73 would have provided for local distribution of lodging sales tax revenue
- SB 132 would have required accommodations to employer-mandated vaccinations to be uniformly offered
Most bills are still in the process of getting to the governor’s desk and have not yet been signed. It is presumed that he is going to sign all of those left on this list. However, just in case, there will be an “updated” final report in a couple of weeks!
NFIB will now turn our attention to the work of the HB 632 Committee on Economic Stabilization, Transformation and Workforce Development. This is the committee that will make the final determination on how this portion of the ARPA funds are distributed. You may have noticed that in their first meeting they suggested a $1,200 ‘back to work bonus” for those leaving the UI roles and taking a job. They will continue to meet until the funds are fully allocated. We will continue to offer input to help get Main Street business back to full capacity. We will also monitor the sister committees that will determine how the broadband and infrastructure elements are disbursed.
Finally, interim committees will begin meeting in late summer. One of particular interest will be the business task force on childcare.
It has been a pleasure working with NFIB members this session. The relationships you build with your local legislators make a huge difference in our success at the Capitol.
Previous Reports and Related News
- February 1—Governor Releases ‘Montana Comeback Plan’ – NFIB-backed Liability Protection Bill Advances