NFIB/Montana End-of-Session Report

Date: May 31, 2017

Victory on worker training, defeat of dozens of costly measure highlight accomplishments for small business

NFIB/Montana State Director Riley Johnson reports from Helena on the small-business agenda at the end of the 65th Montana Legislature.

The 65TH regular session of The Montana Legislature adjourned sine die on April 28. It was the 88th day of the 90-day constitutional meeting of the biennial Legislature.

NFIB/Montana achieved some significant legislative victories for its 5,200 small-business members. But it had a miss as well, thereby setting up new challenges for the 2017-2018 interim and the next legislative session in January 2019.


Victories by Defeat

State-Run Retirement Plans–A bill that NFIB/Montana was almost the only opponent within the business community was Senate Bill 346. This measure would have set up a state-run retirement program for small businesses within the Department of Commerce. Small employers could opt to sign up their employees and deduct the contributions of the employees from their paychecks. This is similar to the current program called 529 that allows persons to save money tax-free for college educations. This program is run by the state of Montana.

SB 346 was not on NFIB/Montana’s radar immediately. It passed the Senate Finance Committee in late March, 16-2, and it passed second reading in the full Senate 28-22 the first of April. Then NFIB/Montana became aware of the pitfalls in SB 346. Under new federal rules, an employer can be held financially responsible when investing an employee’s money. In other words, the employer could be held liable if an employee determines that the employer was not diligent in handling the investments of an employee.

Once NFIB/Montana became aware of this loophole that could endanger small employers, it went to work in the Senate and defeated the bill 24-26 on third reading the very next day.

Local Option Taxes–Three bills emerged that would have given city and county governments the ability to impose local option taxes to fund local infrastructure projects like water and sewer systems, local road and bridge repairs, and public buildings. Two of the measures, House Bill 577 and Senate Bill 331, involved establishing a local sales tax, while another proposal, House Bill 579, would have allowed counties to raise property taxes up to 40 mills for local infrastructure projects. NFIB/Montana vigorously opposed all three bills, and they were all turned down in standing committees; i.e., they never reached the floor of either the House of Representatives or the Senate for a vote.

Sales Taxes–Two bills would have established a statewide sales tax, with the elimination or reduction of other taxes, including property and income taxes. These were House Bill 620 and House Bill 640. The first bill to die in committee was HB 640, missing the deadline for transmittal of revenue bills by the end of March. HB 620 was introduced the last week of the session. It had 440 pages. The Legislative Services Division estimated that this bill was the longest bill ever introduced in The Montana Legislature. NFIB/Montana determined that the bill was “too much, too late” to be vetted and seriously considered by the 2017 Legislature. It was passed out of the House Tax Committee on an 11-9 vote but met with a resounding “no” vote on the House floor of 18-82. NFIB/Montana opposed both bills.

Income Tax Brackets–Three legislators wanted to “tax the rich” by increasing the top individual income tax bracket that is currently 6.9 percent. House Bill 330 would have raised the top bracket to 8.9 percent on income over $400,000. House Bill 452 would have raised the tax bracket to 7.4 percent on income over $200,000 and to 7.9 percent over $500,000. Senate Bill 350 would have raised the top bracket to 7.9 percent over $500,000. NFIB/Montana lobbied against these bills, and they all died in standing committees.

Family/Medical Leave–House Bill 392 called for establishing a Montana Family and Medical Leave Insurance Fund. This bill would have created a special insurance program run by the state that would pay weekly benefits to covered employees who take leaves of absence for family or medical needs. Currently, such leaves do not require employers to pay wages. The benefits would be set on a sliding scale determined by the employee’s wages, much like the current unemployment insurance fund. The funds to support this insurance program would have come from contributions by both the employer and the employee. This bill was tabled in a standing committee with strong opposition from NFIB/Montana.

Minimum Wage Increase–Early in the session, House Bill 169 was introduced that would have raised the minimum wage in Montana by 24 percent. It would have elevated the wage floor from the current $8.15 per hour to $10.10 per hour. Like the current minimum wage law, HB 169 would have tied an annual increase in the minimum wage to the inflation rate, thereby all but ensuring an annual wage increase. An attempt later in the session to blast HB 169 out of the House Business Committee failed on a 40-59 vote. NFIB/Montana worked hard to oppose this bill.

Near Miss

Business Equipment Tax–With a tight state budget and revenue expectations for the coming biennium dicey, requesting an increase in the exemption level of the business equipment tax from the current $100,000 to $350,000 was a lofty goal. But NFIB joined a vocal business community in support of Senate Bill 327. Although it failed to pass this session, NFIB will join forces with others to bring it back in 2019 as a priority.

Interim Study

An unusually long list of study bills for lawmakers to review during interim committee meetings over the next 18 months was a noticeable feature of the 2017 legislative session.

Study bills are different than regular bills. Regular bills must pass both houses, and be signed or reviewed by the governor. Study bills, when passed, do not go to the governor. They go to a list that is circulated to legislators. The lawmakers rank the study bills. Then the Legislative Services Division looks at the budget for all the legislative interim study committees and determines how many of the bills will be studied.

During the 2017 session, 56 study bills were introduced, ranging from workers’ compensation reform in the State Fund to identifying a living wage in Montana, to water rights to fantasy sports as it relates to illegal on-line gambling. Thirty-four study bills failed to pass the Legislature, while 22 study bills passed and will be voted upon. NFIB/Montana will be following interim hearings to determine any small-business impacts from these studies that could manifest themselves into legislation for the next session in 2019.

State Budget

Gov. Steve Bullock signed a $10.3 million, two-year budget bill May 12 that was a source of much bickering and tension throughout the legislative session as he and lawmakers looked to close a projected revenue shortfall for the next biennium. The last biennium budget in 2015 was $10.14 million. He signed the bill without any line-item vetoes.

Bullock’s original budget request included cutting spending and raising taxes to leave $300 million in reserve. The majority Republicans resisted most of the tax hikes and looked for deeper cuts, before settling on a reserve of $200 million.

Tale of the Tape

There were 2,611 bills requested by lawmakers to be drafted. Only l, 118 were actually introduced during the 2017 session, compared to 2,471 requests during the last session in 2015, with 1,187 being introduced.

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Once NFIB/Montana became aware of this loophole that could endanger small employers, it went to work in the Senate and defeated the bill 24-26 on third reading the very next day.

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