NFIB End-of-Session Report on the 2023 Montana State Legislature

Small business lobbying victories added up to a very successful five months

State Director Ronda Wiggers reports from Helena on the small-business agenda at the conclusion of the 2023 session on the Montana Legislature

The 68th session of the Montana Legislature adjourned sine die [with no further meetings planned] on Tuesday, May 2, and although many industries did not find the success for which they had hoped, small business had a fairly good 87 days.

Montanans faired pretty well this session. Everyone will be receiving an income tax rebate up to $1,250 per person, limited to the amount that has been paid on your 2021 taxes. These will be automatically mailed beginning in July. No extra paperwork is required.

The Legislature also lowered the top income tax rate in Montana from 6.5% to 5.9% and made changes that will eliminate the need to file separately on a joint return beginning in 2024. As this top rate kicks in at about $20,000, this will benefit nearly everyone.

More importantly, the amount of business equipment that is exempt from taxation was increased from $300,000 to $1 million. This is a substantial benefit for Montana small businesses that are equipment heavy or require expensive equipment in their operation. To calculate this tax, you take the value of your business equipment, subtract the exempt amount and then multiply by 1.5%. You then take that number and multiply it by your local mills levy. Most counties average about 500 mills in Montana. This means that a business will save about $750 in taxes for every $100,000 in equipment that they currently have taxed. For those owning over $1 million in equipment, the saving will be about $5,250 per year.

Every homeowner will receive up to a $500 rebate on their property taxes for the next two years. A property owner must reside in the residence at least seven months of the year and no one can receive more than they actually paid in property taxes. Taxpayers will need to go on the Department of Revenue website and file between August 15 and October 1 in both 2023 and 2024. This rebate is already signed into law. An additional $175 per year rebate is included in HB 816, which has not yet been signed by the governor

HB 245 extends the business tax credit for employee training. This program began last session and this bill added a number of new trades to the list of allowable businesses and extended the $2,000 per employee tax credit for training through the year 2028. This bill was sponsored by NFIB member and House Majority Leader Sue Vinton and has been signed by the governor.

HB 652 reduces the weeks of unemployment Insurance eligibility from 28 to 24. Montana was the highest in the nation at 28 weeks. This bill was sponsored by NFIB member Rep. Steve Galloway and is awaiting the governor’s signature.

SB 22 revised independent contractor laws to make clear that if a person represents that they hold an IC certificate the hiring entity is protected. It does not allow for total abandonment of the law. What it covers is a scenario similar to this: a business hires an IC to do snow removal and they present an IC certificate, then comes spring, the business agrees to have them do the lawn care. After an accident in July, it is discovered that the IC license expired in June. Under previous case law, the IC would be considered an employee for workers’ compensation. Under SB 22, they are presumed to remain an Independent Contractor. The governor has signed this law change.

SB 216 made important changes to product liability lawsuits in Montana. Most importantly, for many small retail businesses, if the product was brought in through your back door and sold on your shelf unaltered, you cannot be included in a product liability lawsuit simply for stocking a product on your shelf. This is considered the “innocent seller exception,” For those small businesses that manufacture a product, it does not eliminate strict liability, but it expands what you can tell the jury in your defense. This bill has been signed by the governor. Under the new law you may bring evidence showing that the customer mis-used the product; that the product was compliant with all federal guidelines at the time of sale; that there was no safer alternative invented at the time of manufacture, therefore no feasible alternative or negligence from the manufacturer. Previously, none of these defenses were allowed in Montana courts.

Victories by Defeat

We successfully helped stop six different bills that proposed changes to the workers’ compensation program that would have increased premiums for Montana businesses. All but one of these bills failed to make it out of the first committee. One was defeated on the House floor during a full debate.

Also stopped were:

HB 201 would have increased the minimum wage in Montana to $11.39 and continued the inflationary adjustments yearly. It was tabled in House Business & Labor.

HB 386 would have enacted a 1% payroll tax in order to pay for a family and sick leave program in Montana. It was tabled in House Business & Labor.

SB 146 on payroll transparency was also problematic in its requirements for all small businesses. It was Tabled in Senate Business & Labor.

HB 638 would have eliminated the use of Styrofoam in Montana food businesses. It was also tabled in House Business & Labor committee.

Other Issues of Note

SB 270 prohibits the termination of an employee for legal social media posts. NFIB initially opposed this bill. However, the sponsor was very willing to work with us to amend the bill to alleviate many of our concerns. The employee may still be terminated for social media posts if they are made on an employer’s account; are governed by the employee contract or written policy; is work related misconduct or contains proprietary, confidential or financial information of the employer. This has been signed into law.

HB 55 affects public charging stations. If your business offers a public charging station, you will want to check out these changes in the law. Beginning July 1, 2023, any new charging stations must have an electric meter. Any charging stations currently in existence have until July 1, 2025, to install a meter. Beginning July 1, 2023, there will be a 3-cents per kilowatt tax on all charging stations. The power company will collect it from the charging station owner. Beginning immediately, if you charge your customers for use of the charging station, the rate must be posted, similar to gas pumps. This has not yet been signed by the governor.

SB 24 requires that, beginning next year, all businesses in Montana that are organized as a corporation and have over $750,000 in gross proceeds, must file their income taxes electronically. Your accountant should be aware of this change.

Challenges for the Next Session

The Legislature chose to do nothing to address the property tax increase that you will see in October. Everyone will see increases in their property value. The local governments must legally “float,” or adjust, their mills down to compensate. However, the statewide school mills are about 20% of your bill, and they do not float down. Some local schools and special levies also do not float. The expected increase on most tax bills is between 20% and 30% this year! Just a reminder to hold on to those August rebates, as you may be needing them in November.

Regretfully, SB 95 addressing retail theft did not survive. This proposed to increase the penalties for retail theft back to the levels they were prior to 2017 changes. It became entangled with the Department of Corrections budget, and, in the end, did not get a final vote. NFIB will continue to work with Sen. Barry Usher in the interim to bring this legislation forward in 2025.

Mark Twain is often quoted as saying “no man’s life, liberty, or property are safe while the legislature is in session.” And, as it is popular to do now on social media, Montanans can now check in as ‘safe.’

Uh, oh

The Senate motioned sine die at 3:19 p.m., May 2, followed by the House sometime after 9:30 that evening. This timing is relevant. The Senate, in its rush to surprise their leadership and head home, forgot to check with the governor’s office for any bills he may have vetoed that day.

Let me explain. When the Legislature is in session, if a governor vetoes a bill, legislators may vote to override that veto during a floor session. If the Legislature has adjourned, they are sent a mail poll to override a veto. There is a small window, where one chamber has moved to sine die and the other has not, that a veto qualifies for neither. This also applies if a governor vetoes a bill during the final hours of session and the legislature fails to bring the override vote to the floor prior to sine die.

In this case, Gov. Greg Gianforte had just vetoed a bill to allocate marijuana tax revenue that was very popular with both sides of the aisle. It seems that they may have outsmarted themselves in their rush to sine die and will likely have the interim to work on the details of the bill for the next session.

Previous Weekly Reports and Related Information