Taxes, Revenue, the State Budget, and the 2021 Legislative Session
As with any legislative session, one of the biggest issues during the 67th legislative session was the state budget, and how we raise revenue to fund that budget. Unfortunately, it was a tough session for tax and revenue policy, with many tax cut bills proposed and revenue-raising bills killed. Despite this, we saw some successes and lots of good work throughout the session.
Tax and Revenue
- SB 159, sponsored by Sen. Greg Hertz (Passed and signed into law) – SB 159 cuts the top state income tax from 6.9% to 6.75% until 2024. This tax cut will primarily benefit the highest income earners in Montana, with over 80% cuts going to the wealthiest 20% of Montanans.
- SB 399, sponsored by Sen. Greg Hertz (Passed and signed into law) – SB 399 is a “tax simplification bill,” though it is neither simple nor good for Montana. SB 399 goes into effect in 2024, as SB 159 phases out. It further cuts taxes for the wealthiest Montanans and eliminates dozens of tax credits. Together SB 399 and SB 159 will cost the state $60 million in lost revenue.
- SB 182, sponsored by Sen. Greg Hertz (Died in committee) – SB 182 was a tax cut “trigger” bill, which would have triggered further, deep tax cuts if state revenue came in higher than anticipated in the future. This bill would have hamstrung future legislatures and made revenue-raising policies a non-starter. MWV worked with allies to kill this bill in committee.
- HB 632, sponsored by Rep. Frank Garner (Passed and signed into law) – HB 632 implemented the state allocation of federal American Rescue Plan Act (ARPA) funds. Montana received close to $3 billion in ARPA resources, and HB 632 created a framework for how those funds will be spent. HB 632 is a mixed bag, with some good investments that will benefit low-income Montanans and other ideas that are less impactful.
The State Budget – HB 2
The state’s budget for the next two years was passed in HB 2. It is a vast, complicated, and important bill. This year, Montana saw a budget that was slightly larger than the previous biennium but still included cuts to many state agencies and programs. Overall, though we didn’t see the massive budget cuts that were proposed early in the session move forward, we did see further erosion of investments in families and communities, and we have a lot of work to do moving forward to ensure that the state budget reflects our values in Montana.
Understanding the budget is crucial to many aspects of our work, and the best summary available to date was created by our partners at Montana Budget and Policy Center. We encourage you to take a look at their thorough report. Click here to check out MBPC’s report on the state budget.