Republican leaders also want to drop 100,000 low-income taxpayers off the income tax rolls

HELENA - Republican legislative leaders proposed Saturday expanding next month's special session to extend economic-development to everyone by cutting taxes by $50 million to $100 million, besides devising a permanent solution to finance economic development.

"How about giving a little economic development to me and you - a little jingle in the pocket that isn't taken away in taxes," said Senate President Bruce Crippen, R-Billings. "We're proposing a significant, substantial tax decrease in income taxes and property taxes."

Added House Speaker John Mercer, R-Polson: "We're certainly in a downturn of the Montana economy. Our philosophy is to leave the money in the hands of the people. With good entrepreneurship and hard work, they will be the ones that will stimulate the economy and provide the businesses and the jobs we so much need."

A key Democrat, Senate Minority Leader Steve Doherty, D-Great Falls, contacted later, said he wants to see how the GOP tax cut plans would affect different taxpayers but was dubious of the plan, calling it "an election-year conversion."

"I guess I'd be looking for a flashy model car to sell to the Montana voters if I had the kind of record they do to run on in the election," Doherty said. "Historically, when the current majority party has narrowed the tax base, they continually shift it (the tax burden) to homeowner property taxpayers."

Republican leaders advocated a permanent method to fund economic-development programs by creating a trust within the $625 million coal tax trust fund, a move that takes only a simple majority of votes. That prompted Doherty to say, "Where have I heard that idea?" He had proposed a similar trust within a trust for economic development several months ago, but Republicans rejected the idea.

If the GOP plan is enacted, interest from the trust within the trust would go to fund state economic-development programs. That means Republicans have abandoned, for now, attempts to divert money going into the coal tax trust fund, as they tried last year. That funding mechanism was found to be unconstitutional in January by the Montana Supreme Court.

Announcement of the plans came at a meeting in Helena of about 120 people, mostly GOP legislators and candidates running for the Legislature in 2000.

In addition, GOP leaders called for dropping 100,000 low-income taxpayers off the income tax rolls and reducing the individual-income tax rates, which now range from 2 to 11 percent, depending on taxable income. Finally, they want to reimburse local governments more for 1999 property-tax cuts and require them to reduce property-tax mills, thus cutting property taxes for homeowners and businesses.

The plan drew support from lawmakers in the audience, although Sen. Ric Holden, R-Glendive, asked why leaders hadn't proposed lowering the state gas tax. Crippen replied that idea would draw opposition from legislators who are strong backers of the state's highway building because state gas-tax collections match federal highway money.

Although they did not initially welcome the special session GOP Gov. Marc Racicot intends to call, top Republican legislative leaders said they now look forward to using it to lower individual income and property taxes, in addition to passing the funding mechanism for economic development.

"We're billing it as an opportunity instead of a burden," Mercer said.

Crippen said GOP leaders and others, working on the telephone recently and meeting for dinner Friday night, have come up with a plan to permanently fund economic development programs but want to extend it further to everyone through lower taxes.

Crippen said Republican leaders are committed to getting all of this accomplished in no more than a week of special session, which begins May 8.

"It will be one week - six days at the most," he said in an interview. "There are 24 hours in the day and we can use most of these if we need to."

Although Racicot hasn't yet issued his official special session call, he has said it will be limited to funding economic development and possibly addressing the state Public Service Commission jurisdiction over Montana Power Co.'s sale of all of its energy businesses.

If Racicot won't include the tax cuts in the agenda, Republicans are prepared to expand the scope of the session, with the signatures of 76 of the 150 lawmakers. In half an hour, GOP lawmakers quickly had gathered 41 of the needed signatures. There are 91 Republicans in the Legislature and 59 Democrats.

And if Racicot, as he has threatened, vetoes any items beyond his call such as tax cuts, lawmakers believe they can muster the two-thirds majority to override the veto. In recent weeks, Mercer has discussed the possibility of getting around a Racicot veto by putting the tax cuts directly on the November ballot as a referendum, which doesn't need the governor's signature.

Mercer said Saturday he doesn't believe a referendum will be necessary.

"We're expecting that the governor will see the merits of the package," he said. "If he does, there will homeowner relief, local government relief and targeted income-tax relief for people holding two jobs."

Racicot couldn't be reached for comment, but Lt. Gov. Judy Martz, a candidate for governor, applauded the plan and said: "I'm going to be talking to the governor to ask him to support what the leadership has come up with."

Martz said the plan dovetailed with her own ideas on improving the state's economy, adding: "I'm willing to grow this economy. I'm not running for governor for us to stay where we are."

Racicot called the special session to find a new way to fund the economic-development programs after the Montana Supreme Court in January tossed out the method approved by the 1999 Legislature.

As a result, the economic development package proposed by Racicot and modified by the Legislature has been stymied because of the lack of funding.

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