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Do you know what another week of the Montana Legislative Session means? Budget subcommittee hearings! This week we want to give you an important update on Section B of the budget subcommittees and ask for folk's help in giving testimony. Section B handles funding for the Department of Public Health and Human Services (DPPHS). Let's walk through these hearings this week and how they could potentially impact Medicaid in the state.

But first, here is some background on Section B and the governor's budget:

Section B is the largest portion of the state's budget, making up 48 percent of the 2023 proposed budget. The governor's office is requesting a 16 percent increase to DPPHS with $7.08 billion proposed for FY 2024 and 2025. Part of this increase in funding is going to increase health provider rates for Medicaid. Unfortunately, the governor's budget only funds these health provider rates at a fraction of what the health provider rate study's recommends.

What's more, the budget assumes caseload reductions for many of the Medicaid waiver services, including for people with developmental disabilities and seniors. As the legislature considers the budget, it will be important to tease out exactly why the Department is projecting fewer people accessing these services, especially given Montana’s growing aging population and the boost in provider rates (that hopefully will help expand the number of providers willing to take Medicaid).

Calling All Who Can Give Testimony:

MBPC is looking for partners to give testimony in support and opposition to some tax bills that are coming up next week in the Senate and House Taxation Committee respectively: 

The Good 

• SB 15 removes the age restriction in the Property Tax Credit to taxpayers of all ages, includes renters, and increases the maximum credit amount to $1300. SB 15 is a long-term solution to property taxes that can help families struggling with housing costs get back on track. It's targeted at residential homeowners and renters who are facing high property taxes as a percentage of income. Property tax is a regressive tax, meaning families with lower and moderate incomes pay a higher percentage of their incomes in this tax than the wealthy. Currently, Montanans earning less than $30,000 each year pay nearly 9 percent of their incomes in property taxes, compared to the highest income 10 percent of Montanas who pay less than 1 percent. 
  • The Senate Taxation Committee will be considering SB 15 on Wednesday (1/18) at 8 am in Room 405. Or give your testimony virtually here.
     
• SB 119 deserves a little context: Reservation lands are a patchwork of ownership and land status, with reservation lands in Montana generally falling into one of two types of status, trust or fee. Trust land is held in trust by the federal government and includes land collectively owned by a tribal nation and allotments to tribal citizens. It is exempt from property taxes. Fee land is generally private property and can be owned by American Indians and non-Indians and is not exempt from property taxes. There is a process through the federal government by which tribal nations and individual tribal members can convert fee to trust land. In Montana, the tribal property tax exemption currently allows tribes, not individual tribal members, going through the process of converting fee to trust land a property tax exemption. SB 119 would allow tribal members who own fee land and are in the process of converting it to trust land the same property tax exemption. This is an issue of tribal sovereignty.
  • Senate Taxation is considering SB 119 on Tuesday (1/17) at 8 am in Room 405. Or give your testimony virtually here.

The Bad

• SB 121 reduces the top income tax rate from 6.5 percent to 5.9 percent and increases the earned income tax to 10 percent of the federal EITC. While bolstering the EITC is an important step in supporting families living on lower wages, it is worth considering the total cost of each of these components and the size of a tax cut at different income levels. Middle-income families receive very little benefit with this tax cut, and the vast majority of the benefit goes to the wealthiest. The wealthiest 1 percent will get nearly $6,000 on average in annual tax cuts while those near the median (with incomes between $43,000 and $67,000 annually) receive on average less than 1 percent of that. Those at lower income levels would see an increased EITC, but that would equate to at most, a few hundred dollars.
  • Senate Taxation is considering SB 121 on Tuesday (1/17) at 8 am in Room 405. Or give your testimony virtually here.
• HB 212 increases property tax exemptions for business equipment taxes from $300,000 to $1,000,000. In the last three decades, the tax rate on business equipment has been cut dropped from 11 percent to 1.5 percent on equipment valued between $100,000 and $6 million and 3 percent for equipment valued over $6 million. At the same time, the first $300,000 of business equipment has been exempted from property tax. As a result of these policy changes, the number of businesses paying business equipment taxes has fallen sharply– nearly 20,000 businesses in 2008 to less than 6,000 today. This shifts the property tax burden from big companies to residential homeowners.
  • The House Taxation Committee is considering HB 212 on Tuesday (1/17) at 9 am in Room 152. Or give your testimony virtually here.

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