Billings Chamber Priorities: Tax Reform, Public Safety, and Montana’s Workforce.
By Dan Brooks
The Billings Chamber supports the Governor’s proposals to increase the Business Equipment Tax exemption and decrease the top marginal income tax rate. Both will provide significant benefits to our businesses.
In Yellowstone County, there are 502 entities with business equipment tax liability in tax year 2022. Raising the exemption threshold to $1 million would fully exempt 273 entities, reduce liabilities for the remaining 229, and provide a total savings of $1.293 MILLION to businesses in Yellowstone County. Local government and school district revenues will be backfilled through adjustments to Entitlement Share and Guaranteed Tax Base funding mechanisms.
The Billings Chamber’s membership primarily consists of small businesses (about 90%), many of which will file as pass-through entities. Lowering the top marginal income tax rate from 6.5% to 5.9%, as the Governor is proposing, will provide tax savings to many small businesses, allowing them to reinvest in their businesses. The decrease also makes Montana more competitive as we currently have the highest top marginal income tax rate among our neighboring states.
The Billings Chamber remains incredibly grateful to Billings voters for passing the 2021 Public Safety Mill Levy (PSML), adding resources to our police department, fire department, and other public safety needs. The PSML constituted a significant improvement among a constellation of complex public safety factors that need addressed. Fortunately, we have a legislative delegation working to fix some of those issues.
Currently the state pays less than the actual cost of housing state inmates at local detention facilities. Which means Yellowstone County taxpayers are effectively subsidizing state inmates. One of our local legislators, Rep. Kerri Seekins-Crowe (R) HD 43, has a bill draft (HB 174) to deal with that.
Billings has over 30 sober living homes, the most in the state. While many operate in good faith, intending to keep folks sober and get them back on track, the lack of oversight and regulation have led to bad behaviors by a few landlords, leaving people who need help out of luck, and neighborhoods concerned about unwanted activities on their streets. Another local legislator, Sen. Barry Usher (R) SD 20, is sponsoring a bill (SB 94) to provide oversight to sober living homes.
When we hear from businesses about the challenge of finding workforce, it often stems from a difficulty of new employees finding housing; not only is it too expensive, we simply don’t have enough. This isn’t just a Bozeman and Missoula problem. A recently updated housing study estimates that four of Billings’s top five occupations—about 36,000 people—don’t make enough to afford a median priced home. So what’s causing much of this problem? Local government regulations.
A recent study by the National Association of Homebuilders indicates almost $100,000 of new home costs (23.8%) are due to government regulation, largely at the local level.
A Pew Research analysis, presented to Montana lawmakers in 2021, sums up the research consensus on housing, “Strict zoning regulations increase costs, reduce growth.”
What’s the solution to affordable housing? A CATO Institute study offers the answer, “policymakers can tackle housing affordability problems at the state and local levels by overhauling zoning and land-use rules. They can cap or reduce local regulation, fast-track approval processes, and compensate property owners for regulatory takings. Additional federal aid is not the answer, and it may even undermine incentives for local governments to make needed reforms.”
The Billings Chamber will be supporting pro-housing legislation that helps address our housing challenges.
While we are very optimistic about changes that will benefit our members, we are concerned about some proposals with significant consequences.
Concerns in western Montana about tourist overcrowding have resulted in suggestions to reduce or even eliminate tourism promotion and marketing funding. “Time to stop promoting Montana,” read a ridiculous recent headline. Dax Schieffer (Voices of MT Tourism) provides an excellent response, noting that tourism provides Montana with 50,000 jobs.
We already know what happens when you turn off the tourism marketing tap because Colorado did it in 1993. An analysis on the impact found, “As a result, Colorado’s domestic market share plunged 30% within two years, representing a loss of over $1.4 billion in tourism revenue annually. Over time, the revenue loss increased to well over $2 billion yearly.” It wasn’t until 2015, over two decades later, that Colorado regained the market share it had lost.
Our local tourism organizations, Visit Billings, and Visit Southeast Montana, work tirelessly to attract each tourist we can bring to eastern Montana. Western Montanans may be jaded about tourists, but we recognize the benefit to our rural businesses when a few extra patrons each week is significant.
The Billings Chamber will work to defend tourism funding that benefits Montana’s small businesses.