House Bill 621 Would Bring Recreational Cannabis Tax Revenue to Indian Country

In November 2020, Montanans voted to pass I-190 to legalize possession and use of recreational cannabis and to establish a 20 percent tax on recreational cannabis sales. MBPC has chosen to use the race-neutral, scientific term “cannabis,” except when referencing state accounts.

What Is House Bill 621?

On Wednesday, March 24, House Tax is scheduled to hear House Bill (HB) 621. HB 621 would distribute 8.4 percent of recreational cannabis tax revenue to a newly created state-tribal marijuana revenue-sharing account for the Department of Revenue to provide tribal governments with grants for:

  • ensuring that cannabis is controlled based on state law;
  • addressing substance use;
  • fire and police protection;
  • emergency-related or disaster-related expenses; and
  • health services.

HB 621 would be a significant revenue boost for tribal governments. The fiscal note estimates that HB 621 would deposit roughly $382,000 into the account beginning in 2022, with that amount increasing annually to as much as $3.3 million in 2025. For comparison, the Department of Revenue’s latest biennial report notes that the 2020 tribal allocation was nearly $3.6 million for the cigarette tax.

Tribal Governments Need Revenue

Like all governments, tribal governments need revenue to fund programs and services on which Montanans rely. The power to generate revenue through taxation is inherent to tribal sovereignty. Yet, over time, state and local governments have hamstrung the ability of tribal governments to raise needed revenue by challenging tribal governments’ once-exclusive taxation authority. This means that tribal governments must provide many of the same services as other governments without the usual tax revenue on which those governments rely.

Tax revenue is an insignificant revenue source for tribal governments. While taxes represent the largest revenue source for the state and local governments in Montana, the largest source of tribal revenue comes from federal funding, most of which stems from the federal government’s trust responsibility to tribal nations. However, the federal government chronically fails to uphold this legally binding obligation. The Indian Health Service budget, for example, meets just more than half of American Indian health-care needs.

By competing with tribal nations for tax revenue, state and local governments worsen fiscal problems for tribal nations, extract wealth from tribal communities, and deny tribal governments the ability to adequately invest in their communities. (For more on taxation in Indian Country, see MBPC’s report, Policy Basics: Taxation Authority in Indian Country.)

House Bill 621 Would Help Pave a Path to Economic Recovery in Indian Country

HB 621 provides legislators with one tool to provide tribal nations with the fiscal relief they are overdue. The coronavirus pandemic has shone a brighter spotlight on deeply rooted inequities in Montana. Years of underinvestment, plus the outlined challenges to the ability of tribal governments to generate tax revenue, have resulted in outsized consequences of the pandemic for tribal communities. Recreational cannabis sales are estimated to bring millions of dollars of tax revenue into the state, meaning there is enough to share. The Legislature should vote yes on HB 621 to make this smart investment that helps pave the way to economic resilience and opportunity in Indian Country.

To make your voice heard through remote testimony, register through this link by noon on Tuesday, March 23.

Transmittal Update: State-Tribal Legislation

The Montana Legislature has reached transmittal, or the point in the legislative session at which general policy bills must move from one chamber to the other. That means that if a general policy bill started in the House, the Legislature must refer it to the Senate (and vice versa). If the Legislature fails to do so, that bill dies. This deadline does not apply to bills that appropriate money or deal with revenue.

This blog provides an update on some of the state-tribal bills that the Legislature has considered so far, not just those bills that are impacted by the transmittal deadline. The following bills are not a comprehensive run-through of all bills relevant to Indian Country.

Missing and Murdered Indigenous People (MMIP)

House Bill (HB) 35 would establish a missing persons review commission, which would review closed missing persons cases. The commission would 1) examine patterns and trends of MMIP cases, 2) educate stakeholders about MMIP and investigation and prevention strategies, and 3) make recommendations to curb MMIP rates. For the biennium, HB 35 would appropriate $85,000 from the general fund to the Department of Justice (DOJ) to operate the commission.

HB 36 would establish a grant program to help fund training opportunities for community-based missing persons response teams. For the biennium, HB 36 would transfer $61,000 from the general fund to the missing persons response team training grant account for the DOJ to administer.

The 2019 Legislature created the missing indigenous persons task force and the Looping in Native Communities (LINC) network grant program when it passed Senate Bill (SB) 312. The LINC grant program supports efforts of tribal nations to identify, report, and find missing indigenous persons. The task force administers the grant program. HB 98 would extend the termination dates of both the task force and the grant program from June 30, 2021, to June 30, 2023. HB 98 would also require the task force to identify causes of and make recommendations to reduce MMIP cases. The bill would also require the task force to produce a written report of its findings and recommendations. HB 98 would transfer $50,000 from the general fund to the LINC special revenue account for the biennium for the task force to provide matching grants to tribal agencies to implement LINC.

Senate Judiciary is scheduled to hear all three bills on March 10. MBPC supports all three bills.

Property Taxes

In 2011, the Legislature passed SB 412 to create a five-year tribal property tax exemption that tribal nations apply to fee land with a pending trust application. (For more on what this means, see MBPC’s report, Policy Basics: Land Status of Indian Country.) SB 138 would have repealed this exemption. As MBPC wrote about in early February, SB 138 has deep roots in settler colonialism. This bill is possible because of the forced allotment of reservations, which the federal government used in its efforts to dissolve tribal governments and reservations and assimilate American Indians into non-Indian society. One legacy of this policy is that it allows for state and local taxing jurisdictions to assess property taxes on tribally owned fee land. Senate Tax tabled SB 138 in committee.

SB 214 would revise the previously mentioned tribal property tax exemption to allow for counties to recapture “lost” tax revenue, should either the federal government deny a tribal nation’s fee-to-trust application or should the application remain pending after the five-year exemption expires. Senate Tax passed the bill on a 7-4 vote.

HB 526 would allow counties to challenge property tax exemptions that the Department of Revenue provides. The bill passed 3rd reading in the House on March 2 on a 66-33 vote. It now moves to the Senate for consideration.

MBPC opposes these bills.

Again, this blog does not capture the full breadth of bills that impact Indian Country. There are bills related to language preservation, voting rights, cannabis revenue, and more. MBPC will continue to track legislation and provide updates.

Present Law Budget: What does it mean and how does it affect our communities?

With the 2021 Montana legislative session less than a month away, decisions made by our state level policymakers will determine how Montanans weather this pandemic. The state budget is a big piece of that puzzle by providing funding for schools, health services, and maintenance of our roads and bridges.

Key budget terms that will be used a lot this session include present law budget, present law adjustments, and statewide present law costs. These are important actions the legislature will take to ensure the state can continue to provide critical services for our communities. Since it has been a while, we should brush up on these terms, so we can track and understand the decisions that will affect our friends, families, and communities.

Present law is the level of funding the state needs to maintain services, at the level and under the laws approved by the legislature in the last session. Present law, by itself, does not include any changes that may be a result of increased school enrollment, services caseloads, or inflation. Those are included in present law adjustments.

Present law adjustments are agency-specific budget adjustments (either up or down) needed to maintain services at the level approved by the legislature since the last budget. This could include changes in the number of people served by the Department of Corrections, the number of seniors or individuals with disabilities accessing nursing home or community services, or inflationary adjustments to provide the same level of services for the next two years. An example of a present law adjustment in the most recent budget is an increase in federal funds for the Department of Public Health & Human to continue to provide existing services for their food and energy assistance programs, given the rise in food insecurity and demand for energy assistance during the coronavirus pandemic. The budget also provides an inflationary and enrollment adjustments to support Montana’s public schools.

Statewide present law costs are costs that are adjusted for all agencies using the same methodology. Increases in the cost of personnel benefits or increases in insurance costs are examples of statewide present law costs. Present law adjustments are different from statewide present law because they are agency specific, and are not applied to all agencies, due to varying agency responsibilities.

While these adjustments to the budget may be construed as “growth,” they are really adjustments to ensure the state can continue to provide critical services at the current level. These are services allowing seniors and people with disabilities to stay in their home and live with dignity, ensuring our children are getting the education they need to succeed, and maintaining health care coverage for nearly one in four Montanans through Medicaid and CHIP.  As we head into another legislative session, we hope policymakers will keep in mind how important these adjustments are to their communities and constituents.