The tax rebate and a hill of beans
Montanans will have a lot of fun with Gov. Brian Schweitzer's $400 property-tax rebate, now that the Legislature has finally approved a budget that provides for it.
That is, Montanans who have owned a home in Montana for at least seven months last year.
The rebate will most likely be gobbled up by America's insatiable consumer economy — $400 will buy a nice skateboard or bike, maybe a snowboard or a set of skis, or maybe the latest video game system for the kids. Don't expect parents to sock it away for the kids' college education or even their own retirement plan.
The rebate could go toward a vacation — everyone deserves a vacation. But the average family relying solely on the governor's rebate for a vacation will have to drive a car in-state and do some camping to stretch $400 over a week.
Homeowners might have trouble stretching the rebate through the year. Take $400 and divide it by 12 months. That amounts to $33.33 per month, not enough for even a tank of gasoline these days. It's maybe enough to pay half a month's worth of a typical mortgage payment or electric bill, but it won't put a big dent in most families' bills.
While the governor's property-tax rebate may amount to only 1 percent of a median family's income, it's better than nothing, which is what renters got. They were looking at a $120 rebate for a while, but when the smoke cleared from the special session, renters got zip.
When it comes to tax rebates, homeowners are typically favored over renters. This came up over and over again several years ago during the debate over a Montana sales tax aimed at capturing tourist dollars without hurting Montanans.
Under consideration at one point was a plan to reimburse Montanans who paid the sales tax with a combination of property tax and income tax deductions.
But according to the 2000 Census, 45 percent of housing units in Whitefish were rentals. In Columbia Falls, the figure was 35 percent, and in Kalispell, it was 44 percent. Those figures can't have changed all that much in the past eight years — renters account for a third to nearly half the housing units in Flathead's three cities.
Somehow in some convoluted and nefarious way, renters have become second-class citizens. The theory that they don't pay property taxes is not only spurious, it's ridiculous. If property taxes are not being paid on the homes renters live in, then a trainload of landlords should be shipped off to tax-dodger prison. But that's not the case — renters pay property taxes through their leases.
For the fortunate homeowners who do get the money, it's a sure bet the $400 rebate will evaporate within a year — in some cases within 24 hours. Poof — gone. So what would be a better use of the $95.7 million in estimated tax rebates?
For one thing, put it somewhere where it not only never disappears, it might even grow. Think of the coal tax trust fund, where interest on the fund is doled out as grants for local water and sewer projects.
Or how about a revolving trust, where local governments could find low-interest loans for their infrastructure problems. Since the money would be paid back, it would never disappear.
Using the money for infrastructure makes sense for a number of reasons — it's local city and county governments who are strapped with the big bills that accompany rapid growth, not the state.
The boys in Helena should have redirected a large portion of the budget surplus back to where it's needed — local roads, water, sewer, police and emergency services.
The state has a $1.3 billion projected surplus because of strong economic growth and rising oil and gas prices in Eastern Montana — it's not just coming from higher property taxes.
Investing in infrastructure with a revolving fund would help to reduce property taxes in the long run — cities and counties could borrow money at low interest rates and get needed infrastructure built in an orderly way that would save money in the long run.
Instead, we got a farce that some legislators shrug off as politics as usual.
- Rick Hanners