Business tax break dies in session

The last bill offering significant reductions in the state's business equipment tax was defeated Wednesday in the Montana House on a narrow 51-49 vote.

For the bill to die on tax deadline day was a bitter irony for Rep. Jon Sonju, R-Kalispell, who made the motion to bring Senate Bill 490 to the House floor for a vote.

"That was just putting salt in the wound," Sonju said Thursday.

"I said on the floor that I'm getting so tired of debating this," Sonju said. "People use this for their campaigns and they run on these principles. Well, if they are going to do that, they need to push the green light."

Reforming the tax on business equipment was a major issue for many legislative candidates in the Flathead last fall, and providing some form of significant tax relief was a huge issue in the 2007 legislative session.

But Wednesday's vote got "zero attention" from most media in the state, Sonju said.

Instead, the focus in recent days has been on the Legislature's deliberations over how to spend federal stimulus money and Republican efforts to pare back an expansion of the Child Health Insurance Plan to achieve a balanced budget.

Senate Bill 490, sponsored by Sen. Roy Brown, R-Billings, would have increased the exemption on business equipment to cover one-third of the market value of equipment valued between $20,000 and $5 million. The 3 percent tax effectively would be lowered to 2 percent on that property.

The net impact on the general fund would be $9.5 million in 2010, increasing to $25.4 million in 2011, according to the Legislative Fiscal Division.

But to Sonju and others backing the bill, that's $25 million that would be kept by Montana businesses every year to invest in new equipment, jobs and production.

"It's very disappointing to see this bill going down," said Sonju, whose family operates a manufacturing business in Kalispell. "I question why we have this [tax] at all. It is so anti-business, I just don't get it."

The bill cleared the Senate on a 33-17 vote, but stalled in the House Taxation Committee on a 10-10 party-line vote. Sonju's motion was aimed at "blasting" the bill out of committee.

On the floor vote, most Republicans supported the bill and most Democrats opposed it. The exceptions were a couple of Republicans voting no - Rep. Bill Glaser of Huntley and Rep. Walt McNutt of Sidney. Rep. Cheryl Steenson, a freshman Democrat from Kalispell, voted in favor of the bill.

Sonju said the chief argument against the bill was that the state, faced with a tight revenue forecast, could not afford the loss of equipment tax revenue without having to cut essential government services.

But Sonju said the budget being developed in the Legislature doesn't cut any government programs. "There are only decreases in the increases' in spending, he said.

Sen. Ryan Zinke, R-Whitefish, sponsored another business equipment tax bill with a lesser fiscal impact on the general fund, but most senators chose to advance Brown's bill.

Zinke supported Brown's bill as well, but he was concerned that it had a greater potential to stall in the House - which it did.

Reporter Jim Mann may be reached at 758-4407 or by e-mail at jmann@dailyinterlake.com