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House falls one vote short of tapping coal trust fund

HELENA - The House appeared to be on the verge of breaking a logjam over where to find more money for balancing the state budget.

Representatives voted 74-26 Wednesday to approve a bill that makes a withdrawal from the coal tax trust fund and more than triples the cigarette tax to provide an estimated $72 million over the next two years.

The preliminary vote was one shy of the three-fourth's majority needed to tap the coal trust. A crucial final vote on the measure is expected Friday, but no one was sure whether the single additional supporter would surface by then.

''I'm not going to force any of my caucus to vote any differently than they did,'' said House Majority Leader Roy Brown, a Billings Republicans and disgruntled sponsor of the measure. ''It's the Democrats' proposal. They've got to get the votes to get it passed.''

Minority Leader Dave Wanzenried, D-Missoula, said he won't pressure any of the four Democrats voting against the bill to change their minds.

''I don't go to them and twist arms,'' he said.

House Bill 750 has been the eye of a partisan storm for several days.

Brown offered it as a compromise attempt to get Democrats to back away from their staunch opposition to providing the votes necessary to use coal trust fund money. The original version took $29 million from the trust and raised the same amount by increasing the state tax on cigarettes for two years.

Democrats rejected the proposal and offered an alternative requiring the trust fund be repaid with interest and raising the cigarette tax higher. Brown rejected that idea, but the House on 57-43 vote Wednesday rewrote the bill to include that idea.

As approved by 43 Democrats and 31 Republicans, the modified bill permanently raises the cigarette tax from 18 cents to 65 cents a pack. That will raise an estimated $51 million over two years, with $8 million used to begin repaying the coal trust.

Combined with the coal trust money, the bill will provide $72 million in its first two years to help balance the budget.

Despite the bipartisan support, Brown was clearly irritated with the condition of his bill. Republicans gave Democrats everything they wanted, he complained.

''We have given 300 percent on this and you got all the concessions,'' Brown told Democrats. ''You get everything you want; we have to give in all of it.''

Wanzenried countered that both sides gave ground. While Republicans agreed to support a tax increase they don't like, Democrats agreed to drop their blockade of the coal trust, he said.

Democrats said they would support a coal trust withdrawal only if accompanied by a long-term source of funding to meet the state's ongoing need to finance important government programs.

''Democrats came into this session and said no more short term fixes,'' said Rep. Kim Gillan, D-Billings. ''We need money now and the Democrats will agree to use the coal trust. But we can't kid ourselves. We need money in the future.''

But opponents said the state's financial crunch is expected to pass by 2005 and a permanent tax increase isn't necessary.

''Why put a tax on that will never go away, when our revenue projections say we will never need it?'' asked Brown.

Rep. Joe Balyeat, R-Bozeman, argued against any tax increase, even temporary. ''It is the exact wrong time to be squeezing more money out of the private sector when we're trying to recover from a recession,'' he said.

If his bill survives the House, Brown said he will try to make it more palatable by asking the Senate to use some of the money for tax relief.

Although Republicans grumbled that the Democrats got their way with HB750, some said the GOP support was understandable.

The willingness to support a tax increase reflects a feeling that cigarettes are the right place to find more money or an acceptable trade-off to finally tap the coal trust for general government operations, lawmakers said.

In the past, money has been taken from the trust only for specific purposes and not for routine state agency programs.

 

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