Spending

Gianforte launches billion-dollar tax cut proposal and state surplus spending plan

BILLINGS — Governor Greg Gianforte recently announced a proposed $1 billion tax cut as part of his budget plans for the next two years.

“Montana taxpayers trust us to be good stewards of their hard-earned money, and I’m proud that our budget, built for hard-working Montana families, lives up to their trust,” he said during of a press conference on Thursday.

It comes as Montana has a budget surplus totaling more than $1 billion, thanks in part to U.S. federal bailout dollars for COVID relief.

The plan mentions several major infrastructure investments, including $300 million for the Montana State Hospital and the expansion of health services throughout the state, $200 million to improve and expand the prison of State, $200 million to expand water and sewer infrastructure and $100 million to repair roads and bridges.

According to publicist Brooke Stroyke, the plan allocates funds to the Montana Firefighting Fund and invests $10 million annually in forest management expansion.

The budget funds 16 new highway patrol officers and criminal investigators, as well as six new prosecutors at the Montana Department of Justice, Stroyke said.

Rep. Emma Kerr-Carpenter, a Democrat from Billings, said on the face of it she would agree with some of the governor’s priorities.

“There are a lot of proposals in the budget that are democratic proposals,” she said.

Missing from the budget is one of his priorities for the session, however – helping families cope with the high cost of childcare.

The governor splits the $1 billion tax cut between permanent income tax cuts and property tax cuts.

Five hundred million would be offset by permanent tax cuts on Montana’s top tax bracket, which includes anyone earning more than $19,800 in taxable income.

Gianforte proposes to cut top income tax from 6.5% to 5.9%, $1,200 child tax credit, $5,000 adoption tax credit and $500 million dollars in property tax reductions for principal residences.

“With property tax relief, if you don’t do it right, you can end up defunding your local communities and causing your local communities to not have enough money to, you know, provide sewers and water,” Kerr-Carpenter said.

Other tax credits include expanding the commercial equipment tax exemption from $300,000 to $1 million.

The governor plans to release the full proposal on Tuesday.

“Is he going to use this once-in-a-generation surplus to kick-start some of these investments and offset his tax proposals? How does he plan to do this? I’m very curious,” Kerr-Carpenter said.

The Montana Budget and Policy Center researchers say the top-slice tax cut will give more relief to some and less to others.

“These kinds of top-rate tax cuts benefit the wealthiest Montanese over everyone else. Millionaires will receive thousands of dollars in cuts, but those with low and moderate incomes will only receive a few dollars, if any,” said Rose Bender, director of budget and research at the Montana Budget and Policy Center.

Bender said they are looking closely at who would qualify for the child tax credit.

“We are looking to see more details on the child tax credit and who will be able to access it. We hope that those living on lower wages and struggling to afford food, childcare and housing will be able to benefit. We’re curious to see details of the property tax proposals that the governor mentioned,” Bender said.

Republicans consolidated a supermajority in last week’s general election.

The proposal will be considered by the legislature, which will begin on January 2, 2023.