House fails to override veto of Regier tax bill

HELENA — House Republicans on Tuesday failed to muster the two-thirds majority needed to override Democratic Gov. Steve Bullock’s veto of a major income tax reduction passed by the Legislature.

The bill’s sponsor, House Majority Leader Keith Regier, R-Kalispell, made the motion asking the House to override Bullock’s veto on Friday of House Bill 166. The bill would have cut state income taxes, and reduced state tax collections, by $164 million over four years.

The attempt failed on a party-line 59-41 vote, with Republicans voting for the override and Democrats opposing it. Regier needed 67 votes to override the bill and then the Senate would have had to follow suit.

HB166 would have reduced Montana’s income tax rates by two-tenths of 1 percentage point in each of the state’s seven tax brackets. In the highest bracket for taxpayers with taxable income exceeding $13,900, for example, the tax rate would drop to 6.7 percent from the current rate of 6.9 percent.

Regier said Montana has about 450,000 income taxpayers or about 4,500 per legislative district.

“I’m asking you to vote for the 4,500 hard-working Montanans that fund our government,” he said.

House Minority Leader Chuck Hunter, D-Helena, said Bullock’s veto message was clear, noting that the Legislature already had proposed $945 million in new spending and tax cuts, leaving the state with a $47 million deficit if they all passed.

Hunter said it would be more prudent for the Legislature first to adopt a revenue estimate, package up the tax cuts and see what the appropriations bills total up to be.

A separate income-tax reduction soon will come to the House floor for debate.

On Tuesday, the House Taxation Committee heard testimony on, then endorsed and sent to the House floor another income-tax reduction bill, SB200, by Sen. Duane Ankney, R-Colstrip.

The panel voted 12-8, with Republicans voting yes and Democrats no on the bill.

SB200 would reduce individual income taxes, widen the tax brackets and reduce the capital gains tax credit rate. It would cut taxes and reduce state tax collections by $193 million over four years.

Meanwhile, the House, on a mostly party-line vote of 58-42, endorsed HB213, by Rep. Mike Miller, R-Helmville, to reduce the amount of taxable income on business equipment by increasing the exemption from the tax to $500,000 from the current $100,000.

As amended in committee, the bill would reimburse local governments, schools and the university system for the loss in taxable value it would create. HB213 would reduce the general fund balance by $18.1 million over the next two years and by $23.6 million in the following two years.

“If it were up to me, the entire business equipment tax could go away,” Miller said.

Rep. Kathleen Williams, D-Bozeman, said she agreed with some of Miller’s criticisms of the business equipment tax, but added: “I would say this kind of relief is not the highest priority this session.”

In other tax action Tuesday, the House rejected HB310, a proposed constitutional amendment by Rep. Tom Jacobson, D-Great Falls, to set up an oil and gas trust fund, similar to the state’s coal severance tax trust fund that was established in mid-1970s.

Investing money in the coal tax trust fund since now provides the state with about $50 million a year in revenue annually, Jacobson said.

“This is a vote for our kids and grandkids,” Jacobson said.

After the debate, the bill failed 48-52. It would have needed 100 combined votes from representatives and senators to appear on the November ballot. Even if all 50 senators had voted for it, HB310 still would have failed by two votes to reach the 100-vote threshold.