BILLINGS – Gov. Greg Gianforte announced a $1 billion tax cut proposal recently as part of his budget plans for the next two years.
“Montana taxpayers entrust us to be good stewards of their hard-earned money, and I'm proud that our budget, built for hard-working Montana families, fulfills their trust,” he said at a press conference Thursday.
This comes as Montana sits on a budget surplus totaling over $1 billion, in part due to federal American Rescue Plan dollars for COVID relief.
The plan mentions several large infrastructure investments, including $300 million for Montana State Hospital and expanded health services statewide, $200 million to improve and expand the state prison, $200 million to expand water and sewer infrastructure, and $100 million to repair roads and bridges.
According to press secretary Brooke Stroyke, the plan allocates money to Montana’s fire-suppression fund and invests $10 million per year toward expanding forest management.
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 at first glance she would be on board with some of the governor’s priorities.
“There are a lot of proposals in the budget that are democratic proposals,” she said.
One of her priorities for the session, however, is missing from the budget – helping families with the high cost of child care.
The governor splits the $1 billion tax cut between permanent income tax reductions and property tax cuts.
Five hundred million would be made up for permanent income tax reductions to Montana’s top tax bracket, which includes everyone who makes over $19,800 in taxable income.
Gianforte proposes reducing the top income tax from 6.5% to 5.9%, a $1,200 child tax credit, and a $5,000 adoption tax credit, and $500 million in property tax cuts for primary residences.
“With property tax relief, if you don’t do it well, you can end up defunding your local communities, and make it so that your local communities don’t have enough money to, ya know, provide sewer and water,” said Kerr-Carpenter.
Other tax credits include expanding the business 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 kickstart some of these investments and to offset his tax proposals? How is he planning to do that? I’m very curious,” said Kerr-Carpenter.
Montana Budget and Policy Center researchers say the top-bracket tax cut will give more relief to some, and less to others.
“These types of tax cuts to the top rate benefit the wealthiest Montanans over everyone else. Millionaires will get thousands of dollars in cuts but those on lower and moderate incomes will receive just a few dollars if any,” said Rose Bender, Montana Budget and Policy Center director of budget and research.
Bender said they are looking closely at who will qualify for the child tax credit.
“We’re looking to see some more details on the child tax credit and who will be able to access that. We’re hoping that those who are living on lower wages and struggling to afford food, childcare, and housing can benefit from it. We’re curious to see any details on the property tax proposals that the governor has mentioned," Bender said.
Republicans solidified a supermajority in last week’s general election.
The proposal will be considered by the legislature, which kicks off Jan. 2, 2023.
MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.