Property taxes, controversial audit

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The press reports that our past week of trainings, seminars and interim committee meetings allowed legislators to “try on” annual sessions. It’s a bit of stretch to make any comparison of legislative week to an actual session, though a valuable experience.

I testified before a sub-committee on SB310 (the study bill concerning annual sessions). Those legislators had common threads to their testimony including: Incoming freshman are not properly prepared for the onslaught of legislative items they must navigate, interim committees are important and potentially allow for deliberate in depth research with staff and a small group of senators and house members in preparation for the subsequent session, policy and budget are often in “separate silos” and the result potentially being; finance and appropriations nix or support bills with a price tag, often interjecting policy in making their decisions.

Some legislators thought annual sessions would make it easier on their work lives (shorter chunks of time removed from the ranch or workplace), but others thought the opposite on the impacts of work and family. I don’t think there is a strong consensus as to annual sessions.

In my testimony I expressed agnosticism to the proposal (I can see the good and bad), but stressed a few points: “If we retain biannual sessions, consider an off year legislative week, retain a strong interim committee infrastructure and implement additional training especially for newly elected legislators.”

Better compensation would help attract younger legislators (we currently are paid a little north of $11 per hour) and term limits have had a deleterious effect on the institutional knowledge in the body.

I attended and testified before the Property Tax Study Sub-Committee. This is part of a study bill to contemplate the effectiveness of the Montana Tax Code. Two policies of interest were reviewed to mitigate the harmful effects of appraisals (I call it an irrational system when the result forces home sale or starvation of home owners). Circuit breakers are rebates on property taxes offered when the percentage of tax to income is disproportionally high. I called for the committee to ask for a committee bill to create such a system. The difficulty with such tax equity policy is paying for the smoothing out of such a system. The good news for now being, our tax collections (mostly income), is yielding a healthy reserve. Maybe a start. A second method suggested would envision caps placed on the annual increase of appraised property and dwellings. If constitutionally acceptable, this may offer some relief moving forward.

The state legislative auditor (not the elected auditor/insurance commissioner), has elected to use a different methodology to audit Medicaid payments. Previous to this method (using tax returns), the auditor recognized a complicated vetting system for eligibility as mandated by the federal government in doing audits. Critical members of the Audit Committee accuse the auditor of moving the goal post, their logic being the Department previous to the recently enacted renewal of Medicaid expansion was not allowed to examine the tax returns of potential recipients. The method used by the auditor has revealed wrong doings in part of 60 cases examined and extrapolated out, places a stellar bond rating of the state in jeopardy and may complicate selling bonds for infrastructure as passed by the last legislature. It’s complicated and becoming more political. The final report is due out in April. There are too many unknowns at this point as to the future of on time construction and the state’s bond rating.

The aforementioned report does scant justice on the content and depth of topics covered. I’m available to talk to you. You can reach me at fern@montanasky.net

Democrat Dave Fern of Whitefish represents House District 5 in the state Legislature.

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