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Peer review

“Citizens jury” to look at revamping Montana tax code


A randomly selected “citizens jury” will convene next month in Helena to examine Montana’s tax structure and make recommendations to the Legislature for possible changes. However, two legislators are expressing doubt that the deck is already stacked in favor of a sales tax, and believe a special session of the Legislature will be called, partly as a result of the jury’s recommendations. Still, one state employee involved in putting the jury together says the process will be impartial and will not trigger a special session.

The idea for a citizens tax jury was born of the frustration and gridlock that typically result when changes in tax policy are considered, says Kathy van Hook, a project coordinator with the Montana Consensus Council, a nonpartisan advisory body established in 1994 by then-Gov. Marc Racicot to help resolve thorny problems that tend to polarize Montana citizens when discussing natural resources and public policy decisions.

The tax issue is such a problem, says van Hook, where “people line up on their side of the issue and there’s no chance for dialogue. The positions haven’t changed in a decade. That’s why we’re looking at the process.”

The Consensus Council has invited a Minneapolis organization called the Jefferson Center, a non-profit, non-partisan group that works to strengthen democracy by forming these citizen juries. The Jefferson Center has assembled juries in other states to closely investigate other public policy issues.

Already, 1,000 Montana citizens have been contacted by phone and asked if they were willing to participate in the citizens tax jury. Of those, 426 have said they were interested and 140 returned a follow-up questionnaire. This week, the Consensus Council and the Jefferson Center will choose 18 people to represent a cross-section of Montana on the jury.

The jury convenes in Helena on Jan. 28 and will listen to various tax experts discuss the nuances of income tax, miscellaneous taxes, a sales tax and possibly property taxes.

It’s the sales tax that has two lawmakers, Rep. Michelle Lee (D–Livingston) and Sen. Dan Harrington (D–Butte), already concerned. They say that a third group sponsoring the jury—the Montana Citizens Partnership—is stacked with pro-sales tax organizations like the Montana Chamber of Commerce, the Montana League of Cities and Towns and the Montana Association of Counties. Both fear that the citizens tax jury will only hear a one-sided tax story and recommend a sales tax.

“I do feel the deck is stacked,” says Lee.

“I know they’re going to come in and say ‘We want a sales tax,’ ” Harrington adds.

Typically, Montana’s tax structure is reviewed and altered every legislative session. But in the past few sessions, both legislators say, the Legislature has granted significant tax relief to the state’s biggest industries, making up for lost tax revenue by passing along the tax burden to homeowners. What the Legislature should consider instead, Lee suggests, is not more changes in tax policy, but tax equity. “For 12 years we’ve seen one sector—industry—paying less and less taxes and residential property taxpayers paying more,” she says.

Harrington says the Legislature has cut business taxes by more than $500 million in recent years. Since 1995, the Legislature has reduced taxes on business from 9 percent to 3 percent. By 2004, business taxes will be phased out altogether. “In other words, these big corporations won’t be paying anything. They won’t be paying a dime. There’s no fairness there,” Harrington says. “I tell you, that’s why all the local property taxes went up.”

For example, a senior citizen on a fixed income in Lee’s district recently called her to complain that her property taxes jumped $539 in one year. Local governments and homeowners are making up the difference for the cuts in business taxes, and they’re crying enough, Lee says.

Lee believes any recommendations in tax policy from the citizens jury will coincide with a jobs plan expected at the end of this month from Gov. Judy Martz’s economic development advisor, David Gibson. Without elaborating, Lee says those two reports will contain enough gloom and doom to prompt the governor to call a special session, probably in March.

Taxes, jobs and skewed budget priorities will dominate the governor’s agenda in early 2002, Lee predicts. “There’s been a lot of speculation.”

But Van Hook is skeptical of such predictions. The Montana Consensus Council, she says, seeks to inform and involve citizens in policy issues in a non-partisan, impartial manner. Neither the Consensus Council nor the Jefferson Center, she says, has any hidden agenda. “There’s nothing to lead me to believe a special session will come out of this,” says van Hook. “That’s not where I see this going.”

Instead, the citizens jury will act much like any court jury. Jurors will hear testimony on tax principles, as well as an overview of Montana’s tax system, a “Montana Taxes 101,” if you will.

Jurors will also hear opponents and proponents of various taxes, with equal time given to both sides. Thus far, the tax experts who will present this information haven’t been chosen, though there is a list of suggested presenters.

Once the jurors hear all the information, they’ll deliberate and come up with a written list of recommendations for changes in state tax policy, recommendations that of course will be made public.

Legislators, in a better position to act on the recommendations than ordinary citizens, can do with the recommendations as they wish: They can mull them over, draw up legislation, or ignore them altogether.

The point of the week-long exercise, says van Hook, is to put the tax issue on the table, to examine all the options and let Montanans and their elected representatives take it from there.

“Whatever the jury recommends, the jury recommends,” she says. “Part of the beauty of this is we don’t know what the jury will say.”

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