No one is happy with the state budget.
Folks are worried about critical safety-net programs disappearing for those residents who need it most. Schools continue to struggle to keep classrooms to a manageable size and keep buildings in good working order. Jails are crowding. Drugs, from methamphetamine to opioids, present public safety challenges.
And here we are in the middle of an election cycle.
Yet, that's why it's the right time to start talking about 2019 and the legislative session. When you speak to people who want to represent you in Helena, it's going to be important that you discuss what their plans are to make sure state priorities like taking care of the elderly, protecting the social safety nets and providing excellent schools and roads happen.
There is one common thing among all of those items — they all take money.
While no one likes the thought of taxes, especially more taxes, it's also essential that we consider the two problems of Montana's taxation.
In Montana we already have income tax and property tax. Most states have a third tax, sales tax, that rounds out the budget and provides other amenities or budget items.
The Treasure State has historically recoiled at any hint of a sales tax or even a local-option sales tax which would be implemented in a particular community, not throughout the state.
Yet most folks agree that the state funding model isn't really sustainable. Cuts to essential services risk doing damage to our communities, and this is a big state with a lot of needs.
We have to do better.
The two ideas that have been floated to solve our perennial budget problem are a sales tax or fixing other tax issues.
While we continue to support a sales tax or at least a local-option tax for Billings, we also believe reconsidering other tax code changes could restore a modicum of reason to the funding structure.
We support a sales tax because even though some argue it's the most regressive, meaning it hurts poorer families and individuals disproportionately, we also believe there are examples of how to reduce these effects that have been tried successfully in other states. Moreover, we believe that such a tax will help capture dollars naturally flowing through our state via our second largest industry, tourism. When Montanans go to other states and pay sales taxes, so too should we be working at capturing the revenue coming through Montana to help support the local economies.
But if a sales tax or local-option tax is still not possible, then we believe the Legislature must again look to changes it made in 2003 which helped create this problem. We must look at restoring some of the changes made to help ensure more revenue.
For example, when the Legislature made the change in 2003, minimum-wage workers pay the same tax rate as someone with income more than $1 million.
According to the Montana Budget and Police Center, Montana is one of the few states that provides a lower tax rate on capital gains, meaning those who cash out stock pay less than income earned on wages. This benefit would only be significant to those considered "super wealthy" and results in a loss of $30 million to the state.
Changing those two things alone would add nearly $50 million a year. That wouldn't close the projected two-year $227 million shortfall, but it would cut it in half.
No one likes the idea of having a long talk with a politician about taxes, but then again, who really loves the idea of talking about where those with disabilities are going to live just because the state could no longer afford the care?