The Latest Plan to Deny Assistance: Shrinking the Poverty Line

The federal administration’s proposal to lower the federal poverty line would cut benefits for most health, nutrition, and assistance programs

On May 6, the Trump Administration’s Office of Management and Budget (OMB) put out a request for comments on the possibility of adjusting how the government determines the official poverty threshold, also called the federal poverty line (FPL). That’s the calculation used to determine eligibility for a range of government social safety net programs, including Medicaid, Affordable Care Act insurance premium subsidies, SNAP and school meals, and home heating and cooling assistance. These are all determined relative to the FPL, and that measure is adjusted annually for inflation. Need a quick recap of what FPL is? Read our Wonky Word blog.

The OMB has proposed changes to the way inflation is calculated. They propose updating the Census Bureau’s poverty thresholds using an alternative, lower measure of inflation than the traditional Consumer Price Index (known as the CPI-U) — either the “chained” CPI or the Personal Consumption Expenditures Price Index. This change would result in lower poverty thresholds, with the gap between the current and proposed methodology increasing each year.

How would the proposal affect people living on low- and moderate-incomes?

This is a highly wonky, technical change – and it has significant, far-reaching consequences.

Each year the US Department of Health and Human Services (HHS) puts out poverty guidelines, which are the basis for program eligibility and/or benefits in many health care, nutrition, and other basic assistance programs. Because the HHS poverty guidelines are based directly on the Census Bureau’s poverty thresholds, the proposed change would lower the income-eligibility cutoffs for all of these programs, cutting or eliminating assistance to some individuals and families.

Over time this change would lead to a decrease in the number of people living in “technical” poverty, not because they are earning more money, but because they will not meet the increasingly narrow definition of it. The Administration is effectively proposing to impose an automatic cut to eligibility, adversely affecting children living in low-income households (as well as parents, pregnant women, seniors and people with disabilities), with the magnitude of the cut becoming sharper each year.

Cuts Under the Proposal Would Increase Each Year

After 10 years, these changes would result in:

  • More than 250,000 seniors and people with disabilities would lose or get less help paying prescription drug costs
  • More than 300,000 children would lose Medicaid/CHIP coverage
  • More than 250,000 adults would lose coverage through Medicaid expansion
  • More than 150,000 individuals accessing health care coverage on the marketplace would lose cost-sharing assistance and see higher deductibles; tens of thousands would lose premium tax credits

Any attempt to measure poverty accurately needs far more than a change in the inflation adjustment; it should take into account current estimates of income and expenditures. It should also incorporate the evidence that people with incomes currently defined as above the poverty threshold still suffer considerable hardship (food insecurity, little or no savings, falling behind in rent or other bills, etc.)

The change would not make the poverty line more accurate

  • The poverty line is already below what is needed to raise a family. For example, it doesn’t take into account the full costs of families’ basic necessities, and largely excludes some necessities that have become more important in families’ budgets in recent decades like child care.
  • High rates of hardship among families with incomes just above the poverty line provide more evidence of its inadequacy. The Administration proposal, by ignoring all other issues and making a single change that would further lower the poverty line, would have the opposite result of its stated intention and make the poverty line even less accurate.
  • Studies suggest that costs may rise more rapidly for households with low-incomes than for the population as a whole. This means that adjusting the poverty line — meant to equal the level of income needed for families to be able to afford the basics — by a lower measure of inflation would make the poverty line more out-of-touch with families’ true expenses each year. For example:
    • Households with low-income spend a larger share of their income on housing — especially rent, which has been rising faster than the overall CPI-U in recent years. The cost of rent rose 31 percent from 2008 to 2018, much faster than the overall CPI-U (17 percent).
    • Low-income households may have fewer retail outlets in their neighborhood, lack access to convenient transportation, be less able to buy cheaper items in bulk, or lack internet service at home that would let them take shop cheaply online, for example. Or, in other ways, they may be less able to change their consumption patterns when relative prices change.

What’s the next step in the Administration’s process?

Currently, OMB is seeking comments on the possible change. Comments are due June 21 and can be submitted here. It is not clear whether the Trump Administration will undertake any additional process after the comment period closes; it might simply implement a change through OMB guidance, rather than seek additional comments and issue a regulation. Comments opposing the change are important, especially from advocates and service providers. The Montana Budget & Policy Center will be submitting a comment to push back on the federal Administration’s proposal and will post these comments to our website.

The policy’s impact would be small at first but would grow each year. For example, by the tenth year, millions of people would lose eligibility for, or receive less help from, health and nutrition programs.

Indian Country and the 2020 Census

The 2020 Census is just around the corner and ensuring an accurate count of Montanans, including American Indians, will be a big issue. An accurate count in 2020 matters because it ensures proper representation in state and federal government, protects tribal sovereignty, directs sufficient federal funding to meet communities’ needs, and protects vulnerable populations and marginalized people.

American Indians are a significant part of Montana’s population and our state’s future

American Indians are one of the fastest growing populations in the nation. According to the 2010 Census, the number of Native Americans increased nearly three times as fast as the total U.S. population, growing by 27 percent, from 4.1 million in 2000 to 5.2 million in 2010. Montana has the fifth highest representation of American Indians, as a percent of population (after Alaska, Oklahoma, New Mexico, and South Dakota).

Despite population growth, Americans Indians continue to experience the largest census undercount of any population group. The Census Bureau estimates that American Indians and Alaska Natives living on reservations or in Native villages were undercounted by approximately 4.9 percent in 2010—more than double the undercount rate of the next closest population group. American Indians living in Montana – on reservations and in urban areas – face a number of barriers to be accurately counted.

Congress and federal agencies use census results to allocate critical federal funding

The government distributes more than $800 billion per year for 300 different federal programs based on the Census. In Fiscal Year 2016, Montana received $2.99 billion through 55 federal spending programs guided by data derived from the 2010 Census. Every Montana resident that is not counted equates to lost federal funding of $1,989 per person per year. An accurate Census count ensures our communities receive equal access to federal funding.

How much funding does Montana receive that impacts Indian Country and is tied to the Census?

Education & Employment

  • $46 million in K-12 education funding through Title I Grants. Nationally, about 90 percent of American Indian and Alaska Native students attend Title I public schools.
  • Seven Region XI Montana Head Start Programs, which are specific Tribal Head Start and Early Head Start programs. These programs provide child development services to economically disadvantaged children and families, with a special focus on helping preschoolers develop the early reading and math skills they need to be successful in school.
  • $974,000 in Native American Employment and Training program. This program provides American Indians with employment training and skills, as well as support for daycare and transportation services to enable Native peoples to thrive in the workplace. The program also provides funding for mentoring, community service, leadership development, and other activities that help young people achieve academic and employment success.

Healthcare & Nutrition

  • Indian Health Service (IHS) and Urban Indian Health Program (UIHP) provide access to comprehensive and culturally acceptable healthcare to Natives, a critical program that fulfills the federal treaty and trust obligations to tribal people. The IHS provides services to 2.2 million Natives nationwide and uses census data for planning and implementation of programs. UIHP reaches Native peoples who are not able to access the hospitals, health care centers, or contract health services managed by the IHS and tribal health programs.
  • Over $970 million in Medicaid funding, providing health coverage to low-income families and individuals, children, parents, seniors, and people with disabilities. In 2016, 43 percent of American Indians and Alaska Natives were enrolled in Medicaid or some other public insurance program. Medicaid also provides critical supplemental revenue for the chronically under-funded IHS.
  • $166 million in food assistance through the supplemental nutrition assistance program (SNAP). More than one-fourth (26 percent) of Native households nationally and 32 percent on reservations received SNAP benefits in 2015.
  • $3.3 million in Special Programs for the Aging Title VI, Part A. This program provides grants to tribal organizations who deliver home and community-based supportive services to Native American, Alaska Native and Native Hawaiian elders.

Housing

  • Over $5 million in Indian Housing Block Grants. Nationally, the block grant program, which is based almost entirely on census data, served, helped build, or rehabilitated 4,687 units in 2014.
  • Indian Community Development Block Grants (CDBG) –The Indian CDBG assists low-to-moderate income tribal communities in improving housing, community resources, and economic development on reservations.
  • Over $32 million in Section 8 Housing Choice Vouchers the nation’s leading source of housing assistance for low-income seniors, people with disabilities, and families with children.

Historical challenges of undercounting during the Census

Roughly 103,000 (or 1 in 10) Montanans live in neighborhoods that may be considered hard-to-count for the 2020 decennial census. These are areas where response rates were low in 2010 and tend to be more rural and remote census tracts. About half of American Indians in Montana, a total of 40,779 individuals, live in hard-to-count communities.

Low response-rates in Indian County are a result of several factors and socioeconomic barriers, including geographic isolation, non-traditional mailing addresses, high mobility, low homeownership, poverty rates, educational attainment, and age. To read more about the barriers that make the American Indian population harder to locate and contribute to low mailing response rates, undercounting, and low participation in the Census, read: Ensuring Natives Count: Overcoming the 2020 Census Count.

What can be done in 2020 to ensure a complete count

Efforts to ensure an accurate count have already begun in Montana, with the creation of the Montana Complete Count Committee (CCC). We applaud the efforts of the CCC and others to focus on ensuring a complete count of American Indians. No single solution can remove all of the barriers to obtaining an accurate count in Indian Country. Instead, a multifaceted approach must be used for the 2020 Census.

Here are several recommendations to ensure that American Indians living within Montana’s state borders have appropriate access to the 2020 Census, are counted fully, and are represented for the significant population they are in our state.

  • Representation of American Indians on Montana’s Complete Count Committee. American Indian tribal leaders, tribal health directors, and grassroots advocacy organizations in Indian Country should be proactively invited to the table and respected for their leadership in conducting the census work in their communities.
  • Hiring of American Indians for the 2020 Census. It is critically important for the federal government to hire locally in hard-to-count communities, especially tracts on and near reservation lands and in cities with higher urban Indian population. The state of Montana should actively work to recruit American Indians to apply for census positions and prioritize hiring individuals from the areas of the state which are historically the most underrepresented.
  • In-person canvassing for census survey work. Communication means such as conventional mail, phone, and online forms to complete the 2020 Census are not appropriate or effective channels to reach American Indians – especially in the more rural parts of Montana. Broadband access, nontraditional mailing addresses and PO boxes, as well as limited cell phone use are very real barriers. In-person canvassing to reach people at their homes will be far more successful to counting people.
  • Funding for statewide educational campaign. Unless individuals understand the significant opportunities and consequences of the 2020 Census, they may not complete the census survey accurately or at all. The state of Montana should invest more public funding in a statewide educational campaign to prevent the undercounting of American Indians.

Below are additional resources on the 2020 Census information, specific to Montana and Indian Country:

 

Summary of Missoula’s new strategic plan to meet the city’s housing needs

On May 15, the city of Missoula released a comprehensive, community-driven housing policy that was years in the making. The 95-page document, titled “A Place to Call Home: Meeting Missoula’s Housing Needs”, provides a strategic plan to give the city more tools to financially support housing services, eliminate regulations hindering affordable housing development, and provide incentives to private developers who help meet community housing needs. Altogether, the housing policy proposes the development or adoption of over two dozen policies and code changes that are interdependent and grouped into four action areas. Below is a brief summary of one recommendation from each category:

Align and Leverage Existing Funding Resources to Support Housing

The strategic plan calls for establishing a Housing Trust Fund, which can provide Missoula with one of the most flexible and effective tools for ongoing support of affordable housing development. A housing trust fund creates a dedicated local funding mechanism that can meet very specific local needs and provide the consistency and predictability that enables multi-year projects. To learn more about housing trust funds, see MBPC’s report “State and Local Strategies to Improve Housing Affordability.”

A common source of funding that state and localities use for housing trust funds is revenue from real estate transfer taxes. However, Montana amended the State Constitution in 2010 to prohibit local governments from imposing any new tax on real estate sales. Therefore, with that option off the table, Missoula must tap into other, existing city funding sources, which may include revenue from selling city-owned land, allocating Tax Increment Financing (TIF) support, and directing existing infrastructure funding to housing projects. New funding sources can include a mill levy approved by the city council and bond financing that would be subject to a city-wide vote.

Reduce Barriers to New Supply and Promote Access to Affordable Homes

Accessory Dwelling Units (ADUs), also known as “granny flats”, were identified in the strategic plan as a more resource-efficient type of housing than typical single-family homes, and a useful way to increase density because they can be built using existing infrastructure. However, only 13 ADUs have been permitted and constructed since 2013. Last year, Missoula took an important first step to increase production by updating city code to remove ADUs as a conditionally approved use, meaning that property owners face fewer financial barriers to permit an ADU. Missoula can further action to update aspects of land use codes to increase ADU supply and make construction less expensive. In West Coast communities (where ADU construction is mostly concentrated), officials are finding that removing or amending city-level ordinances can jumpstart ADU permitting and construction, and making these changes can go a long way in increasing the number of affordable homes in crowded cities.

Specific proposed actions the city can take include eliminating parking requirements for new construction of ADUs, revising minimum housing unit size requirements to allow for smaller structures, and expand financing tools to help property owners pay for ADU construction.

Partner to Create and Preserve Dedicated Affordable Homes

The new Missoula housing policy includes a recommendation to create a Community Land Trust (CLT) Acquisition Program to preserve the supply of permanently affordable housing. A Community Land Trust is designed to preserve long-term housing affordability through a shared ownership model where a leaseholder owns their home and the CLT holds the land on which the home is built. This arrangement ensures that the land value of a site is not included in the cost of buying a home and makes homeownership possible for buyers on low- and moderate- incomes.

Funding for property acquisition and development can be a challenge for CLTs, as these organizations are mission bound to provide long-term, below-market home prices for those with lower incomes. Missoula can create a formal process for the city and individuals to donate homes and transfer surplus land to CLT partners already working in the community, like Trust Montana and the North Missoula Community Development Corporation. An acquisition program would add existing homes to the city’s stock of permanently affordable housing and help CLTs offset the high costs of acquiring property.

Track and Analyze Progress for Continuous Improvement

Missoula must create a systemic approach to its affordable housing programs and be accountable to the goals it sets. The city can undertake a five-year comprehensive assessment that will measure program impacts, and in the short-term, design an annual assessment process tracking home production goals, housing outcomes among specific groups of residents, among other indicators. These assessments will function as a tool for decision-making about program investments and how to best spend public resources.

Conclusion

“A Place to Call Home” offers an example of a city-level housing policy roadmap to guide the future of housing in Montana. The voices of nonprofit service providers, local developers, and everyday citizens were integrated into its recommendations. While the mix of short- and long-term recommendations reflect a home-grown effort, other cities and counties can look to Missoula when developing their local housing policies and adapt certain recommendations to fit their own communities.

With this housing policy in hand, Missoula officials now must make thoughtful decisions about which recommendations to prioritize and take meaningful steps to implement them. Too many families in Montana struggle to afford a secure and quality place to call home and local governments have an important role to play in addressing their community’s housing challenges. Having an affordable and safe place to live supports family stability, enables children to learn and thrive, and promotes a robust local economy. We look forward to seeing how the city of Missoula turns its housing policy vision into real action.

 

 

2019 Montana Legislative Session Recap

Over the past four months, Montana Budget & Policy Center’s staff analyzed nearly every part of the state budget, provided research and testimony on important tax policy, advocated for essential investments in Indian Country, and worked with a broad coalition to pass HB 658, continuing Montana’s Medicaid expansion. In May, MBPC travelled the state to attend four Legislative Session Wrap Up events hosted by Montana Women Vote and Forward Montana.

Below is a recap of the work that we shared with partner organizations, community members, and volunteers at these events.

State Revenue & Tax Policy

MBPC researches and advocates for sound tax policy that is fair to taxpayers living on low- and middle-incomes and also brings in sufficient revenue to provide the public programs, services, and infrastructure essential to maintaining healthy communities and families.

During the 2019 legislative session MBPC:

  • Saved over $400 million in general fund dollars over the next four years by defeating bills that would have eroded Montana’s tax base;
  • Defeated HB 148, which would have crippled future state tax policy by requiring a two-thirds supermajority vote by the Legislature to raise revenue;
  • Garnered bipartisan support for progressive bills that reform the capital gains tax credit (HB 707) and the tax on rental cars (SB 360). Unfortunately, neither of these bills made it to the governor’s desk;
  • Increased revenue by passing HB 694, raising fees for out of state investment; and
  • Defeated a sales tax (HB 300) that would have made our state’s tax system more regressive requiring households with lower-incomes to pay an even greater portion of their income in taxes compared to those households with higher incomes.

Social Safety Net & Health Care Access

Montana should be a state where everyone has the opportunity to benefit from a growing economy. Ensuring Montana citizens have affordable, accessible health care and access to paid family and medical leave is critical to reaching this goal.

During the 2019 Legislative session MBPC:

  • Produced 14 reports on Medicaid expansion, arming the successful reauthorization effort with the information necessary to effectively defend health care coverage for 100,000 Montanans;
  • Generated 200 positive news stories about Medicaid expansion and worked with partners on a rally where over 400 Montanans showed up at the Capitol to make their voices heard;
  • Supported the passage of SB 30, allowing Medicaid reimbursement for peer support services; and
  • Fought for paid family and medical leave for working Montana families, continuing to educate legislators and businesses on the policy’s benefits for the economy and families.

Housing

MBPC is dedicated to studying how housing instability impacts low-income residents and developing policy solutions that support inclusive and economically viable communities.

During the 2019 legislative session MBPC:

  • Supported HB 16, a bill establishing an affordable housing loan program that successfully passed out of the legislature.

State-Tribal Policy

MBPC has a special focus on state-tribal policy to promote sound fiscal and budget policy that can help reverse the history of economic injustice that has led many American Indians to unacceptable levels of poverty, unemployment, and poor health.

During the 2019 legislative session MBPC:

Education

Investing state and local resources in our children and our schools produces short-term and long-term dividends for Montana’s economy as a whole.

During the 2019 legislative session MBPC:

  • Supported the repeal of the sunset on the 6-mill levy that passed through the Senate with bipartisan support. Unfortunately, SB 152 did not make it to the governor’s desk; and
  • Opposed a bill that would have drastically reduced the property tax base for public schools. HB 692 failed without a hearing.

 

 

End-of-Session Affordable Housing Updates

During the 2019 Legislative session, several bills that would increase access to affordable housing for Montanans attracted significant support and interest. There were two primary pieces of legislation that MBPC supported, House Bill 16 and Senate Bill 18, related to funding the construction and preservation of low- and moderate- income housing.

  • HB 16 will direct $15 million from the permanent Coal Tax Trust Fund to create a loan program for low- and moderate-income multifamily housing developments. This program is targeted towards smaller-scale projects in rural communities, which often go unfunded because developments in rural areas tend to be more expensive to build and maintain, and house fewer residents compared to larger communities. HB 16 successfully passed the legislature and was signed into law on May 10, 2019. It will be a critical resource to overcoming the shortfall in supply of the affordable housing needs in Montana.
  • SB 18 would have established program providing a state tax credit to investors in qualified affordable housing production and preservation. It was designed to match with the federal low-income housing tax credit (LIHTC) program. Given the high cost of construction, long-term rent, and income limitations attached to low-income housing property, developers rely on tax credits to make affordable housing projects pencil out. However, the amount of federal LIHTC is does not meet Montana’s current demand for low-income housing and each year the Montana Board of Housing can only fund about 25% of multifamily rental home projects due to lack of funds. SB 18 garnered bipartisan support, but it was voted down on the Senate floor after being blasted out of committee.

MBPC was among the proponents who provided testimony in support of SB 18 in the Senate Committee on Taxation and provided committee members with county-level fact sheets from MBPC’s interactive housing map, which highlight housing needs in their respective communities. Although SB 18 did not pass, the bill advanced far into legislative process.

The impact of Montana’s 66th Legislative Session goes beyond the number of housing bills that passed. Affordable housing is a more robust part of the policy conversation, and there is momentum to take action. As the housing challenges that face everyday Montanans gain more attention at the state level, we expect future legislative bodies to prioritize housing solutions.

Healthy Budgets Make for Healthy Communities

Medicaid expansion was a big priority for the 2019 Montana Legislature. However, state budget and tax decisions of all kinds impact the social determinants of health, or the conditions in which people live, work, learn, and play. Focusing exclusively on health care ignores the importance of a wide variety of state and local investments in promoting better health, according to a recent report released by the Center on Budget and Policy Priorities.

Access to food, affordable housing, quality schools, parks, reliable transportation, public health infrastructure, and economic opportunity all influence whether people and communities are healthy. The Legislature determines how and where we make these types of investments, which means the Legislature also plays a big role in how, when, and if Montanans can access opportunities to be healthy.

State Budget and Tax Decisions Impact Opportunities to Invest in Health

Tax revenue is critical to funding the programs and services that support healthy people and communities. Yet, this legislative session, the Legislature failed to pass a number of reasonable proposals, like House Bill (HB) 697, that would have raised much-needed revenue.

Currently, Montanans on low incomes pay a higher share of their incomes in state and local taxes than do wealthy Montanans. Montana’s tax code is intentionally structured this way. HB 697, however, would have restored some tax fairness by revising individual income tax laws and restoring top income tax brackets on higher-income households.

In 2003, the Legislature made significant changes to Montana’s income tax system. Those changes have resulted in all Montanans making more than $17,900 today paying the same top tax rate. That means someone earning just over the minimum wage is paying the same top tax rate as a millionaire. As a result of the tax cuts, the wealthiest households experienced the greatest tax reductions. More than half of the reduction in income taxes went to households with incomes of more than $500,000. Not only does this tax break largely benefit high-income households, it disproportionately benefits white households. According to U.S. Census data, of Montana households making more than $100,000 in income, more than 96 percent of those households are white households.

By putting in place two top income tax brackets on incomes above $250,000 and $500,000, HB 697 would have increased general fund revenue by more than $45 million across the next two fiscal years by helping the wealthiest pay their fair share. However, the House Tax Committee voted party-line, 7-11, killing the bill. With an additional $45 million, we could have more than fully funded a statewide preschool program, greatly improving Montana children’s readiness for school and improving long-term health, learning, and earning outcomes.

When wealthy Montanans do not pay their fair share, Montana communities suffer, as we struggle to invest in the programs and services that promote good health.

Montanans of Color Are Disproportionately Denied Opportunities to Be Healthy

Families on low incomes, who are disproportionately families of color, are more likely to live in under-resourced communities that more often are lacking in things like access to healthy foods, good jobs, and quality schools. According to the National Equity Atlas, 31.7 percent of all Montanans of color lived in poverty in 2015, more than double the rate of 13.2 percent for white Montanans. This is no coincidence. A number of factors come into play, including discrimination and income and wealth inequality.

Median hourly wages in Montana systematically vary by race, a trend that holds true across education levels. Among full-time workers with a bachelor’s degree in 2015, for example, Montanans of color made $19 per hour, while white Montanans made $24 per hour. Assuming a 40-hour work week and 52 weeks worked, that amounts to $10,400 in wages lost in one year.

There are deep connections between inequality, poverty, and health. Poverty prevents families from saving for future health-related costs or even from paying for health services today, making it harder to stay healthy and, thus, harder to find and keep work.

Access to economic opportunity and opportunities to be healthy impact how long and how well we live. Data tells us that Montanans of color are more likely than white Montanans to report having poor or fair health, are less likely to have health insurance, and are less likely able to get needed medical care because of cost. These differences hurt all Montanans by impacting our shared prosperity.

The Legislature Helps Decide Who Has Opportunities to Be Healthy

While not necessarily explicitly race-based, state budget and tax decisions often exacerbate racial inequalities in power and wealth. Tax cuts that have largely benefited special interests leave Montanans on low incomes, who are disproportionately people of color, paying a greater share of their incomes in taxes than wealthy Montanans, who are overwhelmingly white. Making the tax code more progressive would mean wealthy Montanans would start paying their fair share. This would leave us better able to make important investments in our communities and give all Montanans, regardless of place or race, access to parks, healthy food, clean air, and all of the other ingredients that make healthy communities.

End of Session: What happened to taxes in Montana?

At the end of the legislative session, it is time to reflect on the policy wins and losses specific to our work on state tax policy. While revenue projections for the biennium did not come in significantly lower than projected, Montana has struggled through two difficult budget cycles, rounds of deep cuts to health and social services, and insufficient revenue to restore funds. MBPC staff pursued thoughtful and reasonable revenue proposals, provided research and testimony on over 100 tax bills, and fended off irresponsible tax policies from becoming law throughout the past 90 days. Here is a summary of our work related to tax legislation this session:

Advocating for revenue

The Legislature saw a range of proposals that would have raised revenue from a variety of different sources. Earlier this session, MBPC published a summary of tax bills that could have raised much-needed revenue to fund essential state services. The blog provides detail on the following proposals MBPC supported that were heard in House and Senate Tax Committees:

  • HB 707, which limits the capital gains income tax credit. While HB 707 did have bipartisan support, unfortunately it died in committee on March 26, by a vote of 8-10.
  • HB 697, to revise individual income tax laws, was a proposal to make filing taxes easier for Montanans, ensure that someone earning minimum wage pays a lower tax rate than the wealthy, and help the super-rich pay their fair share. On March 27, the House Tax Committee voted party-line, 7-11, tabling the bill.
  • SB 339, proposing an increase to liquor taxes, was heard in Senate Tax Committee. SB 339 failed in committee on a tie vote, 6-6 on March 27.
  • HB 650 proposed increasing liquor, beer, and wine taxes by 10 percent, a modest proposal to raise taxes that have not been increased in more than 20 years. This bill failed in House Tax committee, with a party-line vote of 7-11 on March 26.
  • HB 691, eliminating the oil and gas tax holiday, was heard in House Tax Committee. This bill was expected to raise $8 million each biennium for communities impacted by oil and gas development and the development of a renewable resources trust fund. HB 691 failed in committee on March 26 on a 13-5 vote.
  • SB 360, a modest proposal to increase the tax on rental cars from 4 to 6 percent. SB 360 passed out of the Senate but ultimately failed on a party-line vote of 7-11 in House Tax Committee on April 11.
  • MBPC and many of our allies were deeply disappointed when Senate Bill 152, which removes the sunset on the 6-mill university levy to provide university funding, was tabled in House Tax Committee. Seventy years of overwhelming support by the voters should be enough to know that the 6-mill levy, which provides much-needed funding for our state universities and colleges, should be permanent.
  • HB 723 provides for a review of income tax credits and MBPC supports this bill. While the amended version of HB 723 is not a strong as the original version, we support the Revenue and Transportation Interim Committee’s work to review the range of income tax credits in Montana. We will be watching this action throughout 2019 and 2020.
  • HB 694 would increase the investment license fee from $200 to $400 and the individual license fee from $50 to $100. Investment advisors and companies pay license fees to the state. This proposal is estimated to raise $12.1 million over the 2021 biennium, and these fees have not been raised in over 2 decades. HB 694 passed on April 25.

 Successful defensive work to table harmful tax bills

While this session proved challenging once again to pass responsible revenue-raising bills, MBPC was able to successfully defend against many harmful tax bills. Below is a short summary of the bills we testified against:

  • MBPC successfully organized and presented opposition testimony to HB 148. This bill would have required a supermajority of the Legislature to pass any tax or fee increases and would make it even harder for policymakers to enact a responsible and adequate budget. Senate Tax Committee made the right choice and tabled HB 148.
  • HB 269 proposed a constitutional amendment that would limit the types of taxes Montana could levy to two of the following: income tax, property tax, and a general statewide sales tax. If it had passed, it would have resulted in severe consequences for the state budget, public services, and the state’s credit rating. MBPC successfully organized opposition to HB 269 and it was defeated on the House floor.
  • MBPC testified against HB 130, which would revise income tax law to exempt military pensions. When fully phased in, the original bill would have reduced general fund revenue by $17 to $18 million each fiscal year. Once the bill was amended, it still would have cost the state $7.4 million per fiscal year. Given the state’s challenging budget cycles and significant cuts in the last biennium to senior and long term care services that have not been fully restored, MBPC opposed this bill. Current state law also exempts certain pensions based on income, and 45 percent of seniors over 65 years-old are currently exempt. While HB 130 made it through the House, it was tabled in Senate Tax Committee on April 11.
  • MPBC actively opposed House Bill 401. This bill would have repealed the property tax exemption for tribal trust lands while the federal government reviews the application. This bill undermines tribal sovereignty and self-determination of the tribes. Simply put, it is a policy rooted in racism against American Indians. In addition, the fiscal note for this bill estimates only $125,000 in additional revenue to state government for FY 2020 through 2023.
  • Senate Bill 217, which increases the amounts used in the federal calculations for taxable social security benefit, would have resulted in a loss of state revenue of approximately $20 million each year. Montana already exempts some social security income from taxation, targeted at lower income levels. Despite MBPC’s efforts, SB 217 passed both chambers and made it to the governor’s desk. Fortunately, Governor Bullock vetoed the bill on April 18.

The tax bills that got away 

There were two tax bills that MBPC opposed, but unfortunately made it to the governor’s desk.

  • Senate Bill 239 provides a temporary property tax exemption for new fiber optic facilities. MBPC opposed this bill because local property tax is a zero-sum game, meaning that a taxpayer’s gain in taxes due is balanced by the losses experienced by other taxpayers. Schools, roads, and water system do not cost less because taxes were cut for one property tax payer. Cutting taxes for fiber optic facilities will result in other taxpayers paying more property taxes. In the last two decades, the share of property taxes falling on the backs of individual homeowners has risen – from 30 percent in 1994 to over 48 percent today. This bill made it through both the Senate and the House and will shift even more property taxes onto Montana home owners. MBPC is hoping the governor will make the right decision for home owners and veto this bill.
  • House Bill 507 expands the property qualifying for the data center tax rate of 0.9 percent. Like SB 239, the lack of property taxes paid by these companies will have to be made up by other taxpayers, like residential property taxpayers. This bill unfortunately made it through both the Senate and the House. MBPC hopes the governor will veto HB 507.

 

MBPC is disappointed that the House and Senate Tax Committees were unable to advance reasonable revenue proposals. Responsible revenue policies are an important part of the equation to build a state budget that can serve all Montanans. Despite the uphill battle, our work was crucial to prevent bad tax policies from becoming state law. Even though this session has ended, MBPC’s work is not done. The bills to cut taxes for the wealthy will keep coming in the future and MBPC will be there to fight back. In the interim, MBPC will continue to do everything we can to bring communities, businesses, advocates, and policy makers across the state together to have meaningful conversations about revenue in Montana. We can do better. Montana families deserve better.

Reflections on the 2017 federal tax bill, one year in

As Americans are nearing the end of tax season, many people are finishing up filing their taxes and seeing what their tax return looks like. This is the first full year that we’ve seen the results of the GOP tax bill, also known as the Tax Cuts and Jobs Act (TCJA), that was rushed through Congress in 2017 and largely crafted behind closed doors. In case you forgot the details on the TCJA, you can review MBPC’s summary here and to better understand the impact this legislation has had on health care affordability you can look here.

As MBPC predicted over a year ago, the wealthiest individuals and corporations are the biggest winners, while working families are experiencing small cuts and even smaller returns. It is apparent today that this federal tax legislation did not provide meaningful tax reform for individuals and families who are middle- and low-income in our state.

Corporations benefit at the expense of workers

So far, the TCJA has created a short-term economic boost, but this boost has largely benefited the corporations and stockholders. Apple, Netflix, Amazon, Google, and other multi-national corporations paid little to no income taxes prior to the TCJA in 2017. With the passage of this legislation, large, multi-national corporations got yet another tax cut with the promise that these cuts would benefit workers through increased wages and benefits. However, as of March 2019, workers have not seen significant benefits and corporations are fattening their bottom line.

Workers see uncertainty and no meaningful tax relief

Corporations pledged that workers would receive generous bonuses as a result of the corporate tax cuts, but data from the Bureau of Labor in December 2018 shows that the promised cash bonuses gave workers a measly two cents extra an hour and only about 4.4 percent of workers received a bonus or wage increase as a result of the TCJA. Congress could have passed legislation to provide meaningful changes for workers, such as increased wages. Instead, the TCJA allowed corporations to buy back stocks and create a temporary boost in the stock market. In spite of the significant benefit to these corporations and the promises of benefits to workers, some of these large corporations, notably General Motors, has implemented layoffs despite their $150 million saving due to the TCJA.

The reality of who gets a tax cut

An analysis of the bill from the Institute on Taxation and Economic Policy, a non-profit, non-partisan tax policy organization, found that 70 percent of the tax cuts will go to the top 20 percent of taxpayers. For the top one percent, the average tax break in 2018 is estimated to be $48,320 per year, or the entire yearly salary of a firefighter in Montana. This is by design and benefits the wealthiest tax payers due to changes to the federal tax code, including:

  • Doubling the estate tax exemption to $11 million, which benefits individuals with $11 million or more in assets;
  • Cutting the corporate tax rate by two-fifths (from 35 to 21 percent), which creates a powerful incentive for wealthy Americans to shelter large amounts of income in corporations;
  • Cutting the top individual tax rate from 6 percent to 27 percent; and
  • A special new 20 percent deduction for pass-through businesses. The deduction effectively means that certain pass-through income will face a lower tax rate than wages and salaries, creating an incentive for high-income individuals to reclassify their salaries as pass-through income.

For individuals who earn between $45,200 to $135,600, and are considered in the middle of income distribution, they receive an average tax cut of just 1.6 percent. This equals about $810 per year per household. The bottom of the income distribution, those who make less than $45,2000 per year, will receive an average tax cut of 0.9 percent, which is roughly $120 per year.

So far over the course of tax filing season, returns have fluctuated from being above average and below average when compared to the same time last year, and it is unclear where tax returns will land at the end of this tax season. This uncertainty comes on the heels of the 35-day government shutdown from December 2018 and January 2019 that hurt 7,000 Montana workers and their families. Regardless of where refunds stand at the end of tax season, it is clear that TCJA has yet to meaningfully and substantially improve the lives of workers as promised. Instead, the changes to the tax code help for the wealthiest first and foremost.

Working families seemed largely an afterthought in congressional deliberations over the new tax law. Rather than providing more tax cuts for the rich and multi-national corporations, lawmakers need to pass tax reform measures that increase the progressivity of the tax code, raise revenue, and reverse the damage of the TCJA. Some places to start would be to end the preferential treatment of capital gainsreform the estate taxlimit itemized deductionscurb deprecation tax breaks, and close offshore loopholes.

 

Position Announcement: State-Tribal Policy Outreach Coordinator

Organizational, Project, and Position Background

Founded in 2008, the mission of the Montana Budget and Policy Center (MBPC) is to advance responsible tax, budget, and economic policies through credible research and analysis in order to promote opportunity and fairness for all Montanans.

In 2011, MBPC established a special focus on State-Tribal policy to promote sound fiscal and budget policy that can help reverse the history of economic injustice that has led many American Indians to unacceptable levels of poverty, unemployment, and poor health. Our work aims to inform policymakers on how tax and budget choices affect Indian Country, and to increase participation among American Indians in advocacy for sufficient investment in the state budget.

As a part of this effort, MBPC is opening a new position – State-Tribal Policy Outreach Coordinator – to conduct outreach to tribal communities and coordinate efforts on the state fiscal issues and policies that have an impact on Indian Country in Montana.

Duties and Responsibilities

The State-Tribal Policy Outreach Coordinator reports to the State-Tribal Policy Analyst. The duties and responsibilities include, but are not be limited to:

  • Work with the State-Tribal Policy Analyst on conducting research and analysis on the state budget, tax, and other policies that affect Indian Country in Montana.
  • Support the development of reports and other materials for use by tribal and Indian leaders, policymakers, national partners, advocacy groups, the media, and general public.
  • Evaluate and identify best practices for state-tribal advocacy, outreach, and communications.
  • Serve as one of MBPC’s contacts with Indian Country.
  • Strengthen partnerships with leaders from Indian Country, including from urban and reservation communities, and attending relevant tribal-focused meetings and conferences when appropriate.
  • Work with the State-Tribal Policy Analyst on coordinating MBPC’s state-tribal advisory committee.
  • Assist the State-Tribal Policy Analyst with the Indian Caucus during the session including drafting rapid response reports and talking points, drafting testimony, finding and developing stories for testimony, and meeting with members to assist with policy advancement.
  • Assist in the planning and execution of events.
  • Write blogs regularly to highlight range of issues specific to Indian Country.
  • Present to a variety of audiences, including policymakers, advocates, and American Indian leaders.
  • Maintain contact with and respond to requests for information from state and national partners.
  • Provide assistance to MPBC staff in areas of work related to the state-tribal focus, with particular attention to ensuring appropriateness, accuracy, and completeness.
  • Actively work to increase awareness of the impact state fiscal policy has on Indian Country, and when necessary, support activities related to advancing policy including, but not limited to: research and monitoring of policies, community education opportunities, and rallies.
  • Synthesize technical information into relatable, simplified materials (e.g., talking points, action alerts and policy updates).
  • Staying abreast of issues impacting Indian Country and updating partners when appropriate.
  • Maintaining calendar of relevant events and outreach opportunities for State-Tribal team in addition to developing and maintaining a contact list for partners.

Required Experience and Education

The right candidate will possess the following skills and qualifications:

  • The ability to present ideas clearly and translate complicated topics into non-technical materials that can be understood by broader audiences.
  • Exceptional written and verbal communication skills.
  • Experience with how public policy topics such as education, health, social services, or other applicable policies impact tribal communities.
  • Sense of humor.
  • Strong ability to work independently as well as in a collaborative environment.
  • Significant knowledge of and experience working with Native people and Native organizations.
  • Capacity to build and maintain relationships with various constituents including tribal leaders, advocates, researchers, students, and other partners.
  • Ability to prioritize, multi-task, and work at a high capacity in order to meet deadlines.
  • Strong abilities in Microsoft Office Suite and Internet research tools.

Position Details

The ideal candidate will work full-time and be based in Helena or Missoula. However, a truly outstanding candidate who is based elsewhere in Montana will be considered.

Montana Budget and Policy Center provides competitive salary and benefit packages within the nonprofit sector, including health, retirement, and leave benefits.

A printable version of the job description can be found here.

To Apply:

To apply, submit a cover letter and resume by email (preferred) or mail to:

pparish@montanabudget.org

-or-

Montana Budget and Policy Center

15 West 6TH Street. 3E

Helena, MT 59601

The position is open until filled. Initial application review will include all applications received by May 17.

MBPC is an equal opportunity employer and does not discriminate on the basis of race, creed, color, sex, national origin, marital status, sexual orientation, religious or political affiliation, disability, and any other classification considered discriminatory under applicable law.

State-Tribal Legislative Updates

With the final days of the 2019 legislative session less than a month away, MBPC wanted to share updates on several key bills that would impact Indian Country.

Montana State Budget

House Bill (HB) 2, the General Appropriations Act, is the bill that provides for Montana’s state budget and includes several direct investments in Indian Country. The Indian Country Economic Development (ICED) Grant Program, which funds projects that strengthen Montana’s economy through the development and enhancement of business opportunities in Indian Country and for American Indian businesses, and the Montana Indian Language Preservation Program (MILP), which aims to preserve tribal languages in Montana, are two important investments.

Currently, both programs are funded on a one-time-only (OTO) basis, meaning their funding must be reapproved by the Legislature every two years. Despite the governor’s request to make both ICED and MILP funding permanent, the Legislature is proposing to maintain their OTO status for the biennium at $1.75 million for ICED and at $1.5 million for MILP. The funding level for both meets the amount requested in the governor’s proposed budget. However, OTO funding presents some challenges for both programs. For tribal languages, it means uncertainty around future resources that support preservation efforts to curb the alarming rate of language loss. For ICED funding recipients, it means more difficulty in making long-term business plans. Both programs benefit Montana. The Legislature should reflect that by making funding for both ICED and MILP permanent.

To learn more about economic development in Indian Country, read MBPC’s report, Economic Development in Indian Country: A State Investment with Continued Returns. To learn more about language preservation, read MBPC’s report, Continued Preservation of Tribal Languages in Montana.

Missing and Murdered Indigenous Women

The Legislature has heard a number of bills that would address the high rates of Missing and Murdered Indigenous Women (MMIW). At the center of the package of MMIW bills is HB 21, or Hanna’s Act. Originally, the bill would have authorized the Montana Department of Justice (DOJ) to assist with the investigation of all missing persons cases, created a missing persons specialist, and appropriated $100,000 from the General Fund to the DOJ for each year of the biennium. The Legislature, though, has stripped Hanna’s Act of its funding and has made it optional for the DOJ to hire a missing persons specialist, effectively removing any teeth the bill had. The Legislature’s recent actions demonstrate a severe lack of commitment to address the unacceptable rates of missing and murdered indigenous women and girls in Montana.

Health

Healthy communities make for a healthier state. Yet, American Indians in Montana face persistent health disparities, including increased risk of suicide and a shorter life expectancy than non-Indian Montanans. Reasons include limited access to quality care, historical trauma, and discrimination. The Legislature has had multiple opportunities this session to help improve the health of American Indians, but it must act.

HB 599 would establish the Indian Health Service’s Community Health Aide Program (CHAP) in Montana. Although CHAP is a federal program, states must adopt it through legislation. CHAP is a proven strategy for expanding access to health and dental care in underserved communities by allowing for the use of paraprofessional health care workers, like community health aides, to perform a wide range of duties, such as health education and dental health. After passing the House, the bill is now in the Senate.

SB 30 comes at the request of the State-Tribal Relations Committee and would allow peer support services to be reimbursed under Medicaid, increasing access to much-needed behavioral health services in Montana. Specifically, SB 30 would allow people experiencing behavioral health disorders to receive support, mentoring, and guidance from peers with similar life experiences. The bill passed the Senate and is now in the House.

HB 696 would appropriate $500,000 to the Department of Public Health and Human Services to support suicide prevention efforts among groups at increased risk of suicide – American Indian youth and service members, veterans, and their families. For almost 40 years, Montana has had one of the highest suicide rates in the country. Yet, the Legislature has resisted supporting a number of suicide prevention bills this session. HB 696 is a last option for legislators to invest in efforts to address this ongoing public health issue. The bill passed the House and is now in the Senate Public Health, Welfare, and Safety Committee, where it will be heard on April 15.

Tax

HB 401 would repeal SB 412, which the 2011 Montana Legislature passed with overwhelming bipartisan support. SB 412 created the temporary tribal property tax exemption (for up to five years) for tribal fee lands when those lands have a trust application pending with the federal government. MBPC opposed this bill because it failed to honor tribal sovereignty and recognize the political status of tribes. The House Taxation Committee tabled HB 401 in committee, but the bill’s sponsor has since introduced a similar bill, HB 733. It would allow counties to recapture any taxes that they may have missed during the fee-to-trust application process, should the application be denied. Like HB 401, HB 733 undermines tribal sovereignty. It passed the House and is now in the Senate Taxation Committee, where it will be heard on April 10.

Conclusion

Montana is stronger when Indian Country is stronger. MBPC urges the Montana Legislature to make the right choice to invest in Indian Country and Montana.

 

The status of the bills in this blog are current as of April 3, 2019.