HELENA – Industry representatives lined up Wednesday to a support a proposal to lower the state’s property tax rate on pollution control equipment.

State Revenue Director Mike Kadas was the lone opponent, citing the lost tax revenue.

The House Taxation Committee heard House Bill 408, by its chairman, Rep. Mike Miller, R-Helmville. It didn’t vote on the bill immediately.

His bill would lower the tax by from 3 percent to 1 percent over four years, reducing it by 0.5 percentage points annually until it reaches 1 percent in tax year 2017.

Miller said the bill would provide the money to “backfill” local governments for the loss of the property tax revenue resulting from the tax reduction.

A fiscal note estimated the bill would cost $1.5 million in reimbursements fiscal 2015, $3 million in 2016 and $4.7 million in 2017.

The bill sponsor said the tax on pollution control equipment was established in 1977 when the property tax on other business equipment was at least 12 percent. Since then, the business equipment tax has been reduced to 2 percent on the first $2 million worth of equipment and 3 percent on the remainder.

“It’s time to catch up,” Miller said.

Supporters of the bill included representatives of the Montana Taxpayers Association, Montana Petroleum Association, Puget Sound Energy, Portland General Electric, Avista, NorthWestern Energy, Ash Grove, Cenex, Treasure State Resource Industry Association, Montana Chamber of Commerce, Montana Mining Association, Holcim Trident Cement Plant and the Montana Association of Counties.

They testified that the pollution control equipment does not contribute to their production processes.

“They don’t add any production or additional process to my members’ operations,” said Dave Galt, executive director of the Montana Petroleum Association. “They cost a significant amount of money.”

“It was unfair to tax equipment to clean the air mandated by DEQ (Department of Environmental Quality) or the EPA (Environmental Protection Agency),” said Tom Ebzery, representing Puget Sound Energy, Portland General Electric and Avista.

Ron Devlin, representing NorthWestern Energy, agreed.

“This equipment is mandated,” he said. “It does not add to our bottom line. We feel we should not be taxed on it. It’s part of our annual costs of doing business. It’s not a tax we pay. It’s a tax our ratepayers pay.”

Kadas said the governor’s budget office asked him to oppose it because the fiscal impact of the change.

While Miller’s bill would reduce the tax on existing pollution control equipment, a separate measure, Senate Bill 240 by Sen. Bruce Tutvedt, R-Kalispell, would exempt all new air and water pollution equipment from taxes.

All air and water pollution equipment installed after Dec. 31, 2012, would not be taxed.

This bill would reduce the general fund revenue by about $160,000 for the next two years and cut the 6-mill university levy by about $10,000.

Tutvedt’s bill was reported out of the Senate Taxation Committee on an 8-4 vote.

Missoulian State Bureau reporter Charles S. Johnson can be reached at (406) 447-4066 or by email at chuck.johnson@lee.net.

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(1) comment


I have never understood why Montana chooses to tax the means of production. It just doesn't make sense.

It is not fair that the government can force a company to spend tons of money and then tax what they bought year after year.

One group I notice absent in supporting this bill is the environmentalists. They should definitely be in favor of pollution control equipment to help keep our air and water clean.

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