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Major tax bill squeaks by on fourth try


HELENA - A major bill wanted by Republicans to put more money into the state budget and provide income tax cuts finally cleared a hurdle in the House on Monday, gaining preliminary approval on the fourth attempt.

But its future remained in doubt, with just 10 days left before the Legislature adjourns.

''It continues to hang by a very tenuous thread,'' said House Speaker Doug Mood, R-Seeley Lake, after the measure was tentatively passed 51-49. It faces the decisive final House vote today.

The vote capped a daylong floor session in which Senate Bill 407 was the main attraction and disputes over the GOP majority repeatedly putting the measure to a vote left Democrats grumbling about Republican abuse.

''That is mischief of the highest order,'' said Minority Leader Dave Wanzenried, D-Missoula. ''That kind of behavior is unwarranted.''

The bill is regarded as a crucial piece of budget-balancing puzzle in the closing days of the session.

It would raise about $85 million through a new tax on car rentals and higher taxes on cigarettes and motel rooms. About $16 million of that would be used to offset the cost of income tax reductions and the rest is available for the two-year budget.

The spending plan already relies on $38 million from the bill.

But SB407 is disliked by many from both political parties.

Democrats believe it doesn't provide enough additional money for important state programs and the tax relief gives too much benefit to the wealthy. Republicans cringe at the tax increases, but want the income tax overhaul as an economic development tool.

On Monday's third vote, one Democrat joined 50 Republicans in supporting the bill. Forty-six Democrats and three Republicans were opposed.

The Senate-passed bill failed the first time Friday, 51-49. Monday morning, the House tried again and the tally was 54-46 against. On the third attempt, lawmakers deadlocked, 50-50.

Democrats failed in efforts to make the bill more acceptable to them by adding a $30 million-a-year tax on large warehouse-style retail stores like Wal-Mart and abolishing the income tax breaks.

Rep. Jim Shockley, R-Victor, came up short on a suggestion to transform the bill into just a cigarette tax increase that would raise about $60 million the first two years.

He said the idea is a compromise that removes the more controversial parts of the bill while still recognizing the budget needs an infusion of money.

''This amendment sucks,'' said Rep. Joe Balyeat, R-Bozeman. ''This is a permanent, multimillion-dollar tax increase. This is not a compromise. This is a sellout and that's the way it's going to play to the taxpayers of Montana.''

Other critics said the state shouldn't be trying to balance the budget on the backs of smokers and that spending reductions were preferrable.

But supporters said it was better than nothing for a Legislature scrounging for money.

''It's something,'' said Rep. Jesse Laslovich, D-Anaconda. ''It's not everything everyone wanted, but it's something.''

GOP leaders repeatedly emphasized that the bill must not be allowed to die because it is the lawmakers' last measure for pumping more money into the budget and should be part of the final negotiations with the Senate over the spending plan in House Bill 2.

''We need to have some sort of chip in this bargaining thing we have here,'' Majority Leader Roy Brown of Billings told the GOP caucus. ''If we don't have it, we're going to get screwed on House Bill 2. It's as simple as that.''

Democrats ridiculed the tax reductions in SB407, challenging Republican claims that they will spur the economy. They pointed to Revenue Department estimates showing the average savings for households with income between $20,000 and $45,000 is just $26.

''The hardworking Montana middle class is going to come away from here with chump change,'' said Rep. Kim Gillan, D-Billings.

In the end, Rep. John Sinrud, R-Bozeman, was the last to change his vote and support the bill to provide the deciding margin in Monday's fourth vote.

He said he still dislikes the bill, but wants to keep it alive to determine if the benefits of the income tax cuts outweigh the sales tax increases. Sinrud said he's also worried that the next Legislature might scrap the tax reductions if it needs more money.


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