MT Gov. Gianforte faces $2.6 billion budget surplus, proposes tax rebates

Gov. Greg Gianforte reiterated his administration's priorities to improve Montana's economy in his State of the State address delivered Wednesday to the Legislature, whose job over the next few months will include determining how to allocate an unprecedented $2.6 billion budget surplus.

"The fact of the matter is Montanans overpaid," Gianforte said of tax payments. "We need to give it back."

Montana is among many states that built large budget surpluses through a surge in state tax revenues following coronavirus shutdowns and because of an influx of federal pandemic relief funds and increased wages.

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Gianforte, a Republican, has proposed $500 million in property tax rebates for primary residences, a reduction in the top income tax rate, a child tax credit for families with young children and paying off the state's $118 million in bonded debt.

He also urged lawmakers to pass bills to further cut business taxes and government red tape, encourage more innovation in education and make it easier for credentialed health care workers to move to Montana and begin working right away without licensing barriers.

"Montanans want greater opportunity, good-paying jobs, tax relief, the best education possible for their kids, affordable, accessible, high-quality health care, safe communities, attainable housing, stronger families and responsible, effective government," he said.

But his tax proposal is not the only one lawmakers will be considering.

Earlier this week, a little more than a third of the 102 Republicans in the Legislature introduced an alternative bill calling for paying off $100 million of state debt, $275 million in property tax rebates and a $1 billion income tax rebate, which would include up to $3,500 per person depending on their 2021 state income tax liability.

Democrats, who are in the political minority, want to see tax relief targeted more to low- and middle-income residents and renters, an expanded child tax credit and more money directed to childcare and affordable housing.

Montana’s population has grown since 2020 by nearly 39,000 people, or 3.5%, according to U.S. Census estimates. However, housing inventory hasn’t kept pace, leading to increased housing and rental costs, pricing some people out of the market.

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The governor’s proposed budget calls for setting aside $200 million to help developers pay for sewer and water service to reduce the cost of building new housing projects.

The governor "failed to provide any real solutions to the housing crisis," Rep. Shannon O'Brien said in the Democrats' response to his speech.

"The governor says that business has grown in Montana, bringing new jobs, but business can't thrive when they cannot find the staff. What good are new jobs if people can't afford to live where they work?" she asked.

Democrats want to put $500 million in a workforce housing trust fund to help developers and nonprofits build affordable housing, as well as offering incentives for landlords to accept reduced rents.

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Montana's unemployment rate has remained at 3% or lower since October 2021, while the number of working Montanans is at an all-time high, the governor’s office has said.

Gianforte asked lawmakers to help him incentivize work by increasing the state's earned income tax credit.

The proposed tax credits don't begin to meet the needs of Montana families who are paying up to $1,000 a month per child for child care — if they can find it, O'Brien said.

Democrats want to create more child care scholarships, allowing current stay-at-home parents the freedom to choose whether they want to work, O'Brien said.