Panel eyes tuition tax break
HELENA - It's time the Legislature take responsibility for skyrocketing tuition increases that amount to ''tax increases'' on students, a leading Democratic lawmaker told the House Taxation Committee today.
House Minority Leader Dave Wanzenried, D-Missoula, wants to offer students a tax credit to offset tuition increases that he says are certain to follow any budget cuts the Legislature makes.
''Everybody knows that when we leave here, tuition is going to go up,'' he said in support of House Bill 755. ''The question is how much?''
The proposal could cost the state millions, while a second bill before the panel today would raise money by targeting out-of-state property owners.
House Bill 754 would increase property taxes by 20 percent for those who do not pay Montana income taxes. Exclusions would be made for state residents who don't pay income tax because of ''age, infirmity or misfortune.''
The idea is to make nonresidents with large vacation homes in the woods pay for the cost of suppressing wildfires, said the bill's sponsor, Rep. Hal Jacobson, D-Helena.
''This legislation is designed to address what I feel is a tax inequity in our state,'' he said. ''These people don't pay Montana income taxes.''
The panel didn't take immediate action on either proposal.
An analyst said the 20 percent property tax surcharge could raise about $7 million a year. The measure calls for placing the money in accounts to pay for emergency government services.
Opponents said the bill indiscriminately targets all nonresident property owners, regardless of whether they have a home in a city or on the edge of wilderness.
''It sweeps nonresidents in to pay no matter what kind of structure they live in,'' said Peggy Trenk, Montana Association of Realtors lobbyist.
She said the measure could hurt the construction and real estate trades by driving away the vacation home market.
''There are some parts of the state whose economy relies very heavily on the development of second homes,'' she said.
The student tax credit bill was just introduced by Wanzenried, who said he was disappointed that the state's main budget bill, hammered out last week, offered little help to universities.
Education officials estimated legislative budget cuts will increase tuition by about 20 percent - or nearly a $1,000 a year at some institutions. Tuition has already doubled since 1994, they said.
He said his measure would give each student a refundable tax credit of about $300 each year to help offset the increase.
''We are no longer competitive with neighboring states with tuition going up so fast,'' Wanzenried said.
Student groups from both Montana State University and the University of Montana supported the plan. No one spoke against it today.
Students said it costs less for a Montanan to attend college in North Dakota as a nonresident than it does to stay in Montana for school.
''I feel one area where we are becoming less and less competitive is our university system,'' said Will Hammerquist, representing the MSU student government.
Supporters of the tax credit said the university system gets less state money now than it did in the early 1990s, when it educated about 2,000 fewer students.
''I honestly believe you've been to sever with the university system over the past six years,'' Acting Commissioner of Higher Education Carroll Krause told the taxation committee.