Bill Would Use Coal Money for Affordable Housing Projects
The Montana House of Representatives has passed a bill that would use money from the coal severance tax trust fund to pay for low- and moderate-income housing projects.
House Bill 16, carried by Rep. Dave Fern, D-Whitefish, passed the House on a 71-29 vote and will now move on to the Senate. The bill would allow a loan to be taken from the coal trust fund’s investment pool to fund the development of housing originally financed by the U.S. Department of Housing and Urban Development and the United States Department of Agriculture.
In an interview, Fern said when he talked with constituents, he consistently heard about a need for affordable housing. He says the state is making progress.
“I think we’ve come a long way in a pretty short time of recognizing it and putting it into policy,” Fern said.
Fern said this bill is similar to one passed in 2011 that provided affordable housing for veterans, and he said it’s been a successful program. He added there has only been one default on one of these loans for veterans in the eight years it’s been available.
Rep. Kerry White, R-Bozeman, who has been a major advocate for coal country, was originally opposed to the bill. But after working with Fern on changing the program’s default process and interest rates, he voted for the proposal.
White said during debate in the House of Representatives last Tuesday that he gets frustrated when coal trust money is invested outside the state.
“This bill specifically invests our natural resource money back into the state of Montana,” he said.
Sales Tax Proposal Would Eliminate Some Property Tax
A massive, 426-page bill in front of the Montana Legislature would create a 2.5 percent statewide sales tax while cutting three different types of property tax.
House Bill 300, sponsored by Rep. Kerry White, R-Bozeman, would tax most transactions, including internet sales, with some exceptions, like SNAP-eligible food and medicine.
White said the revenue collected from the tax will go to local governments to fund K-12 schools and infrastructure projects. White also said no money collected from the tax would go into the state general fund.
“I want this money to be focused on infrastructure, health, safety and welfare,” he said.
The bill also sets a “tax holiday” between October 20 and November 20. During this period, the tax would be lifted. White said the tax targets tourists, who, he said, will pay 33 percent of tax burden in his bill. The “holiday” sits between summer and winter tourism seasons.
Rep. Mark Noland, R-Bigfork, was the only supporter of the bill during the House Taxation Committee’s public hearing Wednesday. He said Montanans are burdened by high property tax and the state tax system is in need of restructuring.
“You will see this is a relief. At first glance, you might say ‘no, who wants a sales tax?’ And I’m a Republican, why in the world would I support a sales tax?” he said. “However, with the revenue we’re going to be bringing in by reducing our property tax, I’m going, ‘this is a win.’”
Director of the Department of Revenue Gene Walborn opposed how the bill cuts agricultural, residential, commercial and timberland property tax. He says relying on income and sales tax would create new problems.
“So, we take away one of our most stable tax revenue sources, move to a sales tax, and also rely on an income tax,” Walborn said. “Those states that have that type of model, during the great recession, really had fiscal problems.”
The bill also completely eliminates the property tax office, which collects the kinds of property taxes that would be cut. White said removing the office would save the state $26 million. Walborn said this would also remove about 200 employees from the Montana Department of Revenue.
Heather O’Loughlin is the co-director of research and development at the Montana Budget and Policy Center, a non-partisan, nonprofit that researches Montana budget, tax and policy issues. She was one of nine opponents to the bill at the hearing, and said a sales tax harms low-income people who spend most of their income on goods and services.
“Montana is still asking those at the bottom to pay a greater share of their income in taxes than those at the top,” she said.
The House Taxation Committee did not immediately vote on the bill.
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