By BOB ANEZ Associated Press Writer
HELENA - A Senate Republican plan to blend income tax relief with increased sales taxes to feed a money-hungry budget stalled Thursday, and a GOP leader said the proposal will be abandoned.
Majority Leader Fred Thomas, R-Stevensville, said the bill will be overhauled so that it provides only enough revenue to cover the tax cuts.
He was plainly irritated that the measure garnered only 25 votes, far short of the 34 needed to override Gov. Judy Martz's promised veto. Eighteen of the 24 votes against the bill were Democrats; just two voted for the measure.
''Those who voted no on this bill will have to live with less revenue this session,'' Thomas said after the 4-hour debate. ''We tried to raise revenue this session. If this is the tiny, little bit of support you get, maybe we won't have any additional revenue.''
Minority Leader Jon Tester, D-Big Sandy, said most Democrats couldn't vote for the bill because it did not go far enough.
''There were some deficiencies in funds there,'' he said. ''The funding was not adequate. We didn't want to go with a partial funding solution.''
Thomas' decision to remove all extra money from the bill before it is debated again is retaliation, Tester charged. ''What's going to come back out is going to be punishment for Democrats.''
The original version of Senate Bill 407 was Gov. Judy Martz's plan for tax relief. It would have raised just enough new sales tax revenue to cover the cost of the tax cuts.
But the Senate Taxation Committee remodeled the measure to become a moneymaker, and Thomas hoped it could garner enough Democratic backing to overcome Martz's veto. She objected to the extra money generated by the bill.
The measure had been seen by supporters as the answer to lawmakers' search for additional money to put into the budget and avoid deep cuts in crucial government programs.
It provided about $53 million in income tax relief over two years and created or increased sales taxes to offset that loss and raise an additional $53 million.
Republicans also said the tax relief would improve Montana's economy. Provisions to reduce the top state income tax rate and to cut the tax rate on capital gains will encourage the wealthy to live and invest in the state, they argued.
But Democrats said this is the wrong time to be talking about tax cuts that provide big savings for the state's wealthiest residents.
Sen. Jim Elliott, D-Trout Creek, disputed GOP contentions that decreasing taxes helps the economy. ''Stop the experiment of cutting taxes at least until we can judge whether or not it has had an effect,'' he said.
''I don't object to doing something about the top marginal (income tax) rate,'' he added. ''What I object to is doing it today. It is not wise fiscal policy.
''It's fun to cut taxes, but that's not what we're here to do primarily,'' Elliott said. ''We're here to take care of Montanans, the elderly and frail in our state.''
Tester said he couldn't support the measure because it didn't provide enough money to help education.
Sen. Bob DePratu, sponsor of the bill, called it a ''good start toward tax reform'' and defended its benefits for the rich. ''The wealthy are the people who create the jobs; they are the ones who create new wealth,'' said the Whitefish Republican.
He said the bill recognizes the state must adjust its tax rates to be more attractive. ''States with an uncompetitive tax structure stick out like a sore thumb,'' he said.
Montana must encourage the wealthy to remain in Montana where they can pay taxes and help the economy, he said.
Thomas agreed the Legislature has to cater to those people and said this bill helps them.
They are the ones who pay for state government, he said. ''Those are the people you want to take care of. If they're not developing and earning money, we don't have money here. You want those people prosperous.''
The GOP majority rejected repeated Democratic efforts to adjust the bill so that it would produce more money.
Elliott wanted to eliminate the income tax relief, Tester tried to delay the tax cuts for two years, and Sen. Jon Ellingson, D-Missoula, proposed eliminating the capital gains tax cut.