Federal Tax & the State Budget: More Revenue Problems to Come?
Dec 11, 2017
As Congress reconciles the differences between the House- and Senate-passed versions of their tax bills this week, here is our next installment of combing through the details of this terrible tax bill.
Both chambers’ tax plans provide large tax cuts to the wealthy and corporations, raise taxes for many low- and moderate-income people, boost the number of uninsured Americans by millions, and expand deficits.
But did you know that the federal tax proposal would also shoot a hole through our Montana state budget?
For today: Federal Tax & the State Budget – More Revenue Problems & Cuts to Come?
Based on the Senate tax bill, the Montana Department of Revenue estimated that the federal tax changes could impact the State General Fund
to a tune of $122.5 million per year in 2018 and 2019. The estimated revenue changes as a result of corporate and individual income tax provisions are shocking to say the least.
That $122.5 million per year figure breaks down along four different tax categories:
- The Senate provisions for individual and pass-through income tax result in $80 million lost in general fund per year.
- The Senate provisions for corporate income tax result in $13 million lost in general fund per year.
- The repeal of the ACA’s individual mandate in the Senate bill will result in the loss of $5.5 million in general fund revenue per year. Since it is predicted less Montanans would enroll, the state would lose revenue from no longer collecting the health insurance premium tax from enrollees.
- The Senate bill could also cause Montana to lose $24.0 million in federal mineral royalty payments each year. This revenue loss would impact Montana counties that depend heavily on coal and oil production.
Just last month the state legislature held a special session to address the budget crisis in our state and find answers to solve the $227 million revenue shortfall on top of $218 million in present law reductions already taken during the regular legislative session and through triggered cuts in SB 261
Montana cannot weather another hit like this.
Senator Daines and Representative Gianforte should work to advance tax policies that strengthen the state of Montana and invest in our working families. A vote for the federal tax bill would be a vote to send Montana spiraling back into a budget crisis.