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.

Early Action on the Budget Leaves Major Gaps, While Tax Breaks Move Forward

Montanans care deeply about the well-being of their families and neighbors. They want a hopeful and prosperous future for their children, safe communities, and a robust state economy that supports quality jobs and thriving businesses – big and small. As Montana’s 2021 Legislature moves forward with the state budget, it is important to prioritize those most impacted by the past year. By supporting those families, we create a state where we can move forward to a better state for everyone. And by resisting calls to cut taxes for those who are already well off, we can retain the funds our state needs to be bold, forward thinking investments in our future.

Unfortunately, legislative subcommittees in charge of first consideration of the state budget have taken damaging cuts that will harm children, families, and communities across the state. These proposed cuts come at the same time the Legislature is moving forward with tax cuts that will significantly reduce state revenue and make it challenging to invest in the long term.

As the full House Committee on Appropriations begins its hearings on HB 2, the state’s budget bill, here is a snapshot of the actions taken by initial subcommittees and where some of the state agencies stand.

Department of Public Health and Human Services

The budget for DPHHS is $162 million below the executive’s proposed budget, with deep cuts to state Medicaid funding that will also result in the loss of federal matching funds. These reductions include:

  • $128 million funding reduction tied to Medicaid caseload across all Medicaid programs;
  • $14 million general fund reduction (replaced with federal funds) aimed at eliminating continuous eligibility for adults accessing coverage through Medicaid expansion;
  • $21 million general fund reduction that would effectively end the Comprehensive School and Community Treatment (CSCT) program (efforts to provide even stopgap funding failed to pass);
  • $10 million cut in three divisions serving adults and children with disabilities (ending a fund transfer from another account, thereby reducing the divisions’ budgets);
  • $2.5 million in additional vacancy savings across six DPHHS divisions;
  • $2.4 million general fund cut, eliminating the Stars to Quality program supporting Montana’s child care providers;
  • $481,000 cut, aimed at eliminating the two tribal health positions; and
  • $770,000 cut in federal pass-through funding for the refugee services program.

The subcommittee did provide a modest provider rate increase of 1 percent for each year of the biennium for some Medicaid providers (pared back from a proposed 2 percent rate increase), as well as, $1.50 increase to the foster care provider daily rate (reduced back from an original proposal for a $5 increase).

Department of Corrections

The Corrections’ budget is roughly $14.5 million below the executive’s proposal, which was already less than the previous November executive proposed budget. The subcommittee did not approve several proposed budget adjustments, including:

  • $3.5 million in the director’s office, including adjustments to fixed costs and personal services;
  • $5 million in probation and parole, including reduction of new proposals to add presentencing investigation positions, additional officers, and a significant increase in vacancy savings rate; and
  • $5 million reduction in the clinical services division, eliminating funding for hepatitis C treatment services.

Office of Public Defender

The budget for OPD is $800,000 below the executive’s proposed budget, as the subcommittee did not approve any caseload adjustment over the biennium. Governor Gianforte’s proposal for caseload growth was already a reduction from the previous November proposed budget. (The decrease compared to the previous November budget is more than $4 million difference.)

Office of Public Instruction

Overall, legislative action is mostly consistent with the executive’s proposed budget, including $80 million present law adjustment for K-12 schools (down slightly from the executive’s budget) and implementing new funding for teacher recruitment.

The subcommittee for education also approved a line item to transfer the Montana Indian Language Preservation program from the Department of Commerce to the Office of Public Instruction, with funding at $1.5 million over the biennium.

Office of Commissioner of Higher Education

The budget for Montana’s colleges and universities currently sits slightly above the executive’s budget. This includes new one-time-only funding for research ($1 million), career and technical education program ($550,000), and need-based financial aid ($750,000). The subcommittee also provided $375,000 to continue high school equivalency test (HiSET) preparation through the tribal colleges.

Department of Revenue

The budget for the Department of Revenue is $8.5 million below the executive’s proposed budget. This is primarily due to the subcommittee not approving additional personnel needed to implement the voter-approved I-190 to legalize and tax recreational marijuana.

What’s Next?

The full House Committee on Appropriations will spend this week hearing from agencies on HB 2 and taking public comment. Legislators should prioritize restoring funding for critical services and investing in long-term solutions that support families and communities.

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.

How Does Montana Stack Up Compared to Our Neighbors?

Montana is falling behind in the investments we need to truly make it a state where we can all live, work, and enjoy all that Big Sky Country has to offer. The picture of the health and opportunity for growth of Montana’s communities, families, and economy is so much more than a tax rate. It’s about the health of our citizens, access to infrastructure like broadband, affordable housing, freedom from hunger, and livable wages. 

Call your legislator today at 406-444-4800 or message them at https://leg.mt.gov/web-messaging/ and urge them to focus on what matters for Montana. Tell them to #chooseourfuture.

Continuous Eligibility: Providing Stability During Uncertain Times.

During times of crisis, Montanans need stability. In recent months, thousands of Montanans living on low incomes have turned to Medicaid expansion to give them continuous health care coverage during a volatile job market.

Montana’s Medicaid expansion program, the HELP plan, allows recipients to maintain their eligibility for one year, even if their income fluctuates over those twelve months. This option is known as continuous eligibility. Montana has long had continuous eligibility for its Healthy Montana Kids program, providing critical health insurance coverage for Montana’s children.

During an unstable job market, continuous eligibility provides Montanans with continuity of care, as their work hours (and income) can fluctuate. Nearly 75 percent of Montana’s Medicaid recipients are working, often at jobs that are seasonal or have frequently changing schedules. With businesses opening and closing, Montanans on Medicaid need to know their health care is available, even if their incomes fluctuate.

Continuous eligibility also relieves some of the state’s administrative burden. If Medicaid recipients were forced to re-apply for their benefits more frequently, the state would likely face more recipients cycling on and off the program. This effect is known as churn and occurs when people who are still eligible for the program lose their benefits, and then must reapply shortly thereafter. Churn wastes time and money for both the state and for beneficiaries.

In 2003, the State of Washington began requiring children on Medicaid to renew eligibility every six months. As families struggled to navigate the process and provide the proper documentation, the number of children enrolled fell by 30,000 over two years. The state eventually restored 12-month eligibility, and in a year, enrollment again rose by 30,000. Continuous eligibility had previously been preventing this sort of churn of eligible individuals on and off the program.

Most Medicaid expansion recipients only need the program temporarily. The average Medicaid expansion recipient in Montana stays on the program for less than two years, and 30 percent stay on the program for less than one year. As most recipients only need the program for a short duration, a shorter eligibility period would only create unnecessary paperwork and strain for both individuals and the state.  

Not only is churn inefficient and costly for the state, but even brief gaps in health care coverage can be dangerous. Adults who have gaps in health care coverage are less likely to have a regular doctor and less likely to receive preventive care, research shows. Another study in Arkansas, Kentucky, and Texas showed that nearly half of adults who had gaps in health care coverage reported skipping doses of prescription medicine or stopped taking it all together.  

As our state begins to recover from the pandemic, Montanans should not have to worry about losing their health care coverage. A one-year eligibility period is not only more efficient for the state, but also provides Montanans the stability they need in these uncertain times.

Quick Tips: How to Testify Remotely

It’s important that our legislators hear from us, but between Montana winters, COVID, and busy schedules, going to Helena may not be possible. Fortunately, this year Montanans can testify virtually from a computer or a phone.

We created a check list of what you should know to testify remotely this legislative session. You can see it here.

You can also check out this great video about how to navigate the virtual testimony process.

Time for Montana to Provide Paid Family and Medical Leave

One year ago this March, families across the state found themselves suddenly trying to balance the responsibilities of working while carrying for children who were not in school. In the fall, as coronavirus case numbers exploded, thousands of Montanans were again faced with a potentially deadly predicament – risk losing their income or continue working while they or someone in their care was sick.

But for too many Montanans, this year of national crisis has not been the first time families have had to make these impossible choices. Mothers have left newborns to return to work, cancer patients have lost their income when they were ill, and businesses have lost valuable employees when they could not afford to pay them while on a temporary leave.

This week, the Montana Legislature will consider a bill that aims to help working Montana families keep their jobs and income when going through times of medical crises. The Montana Family and Medical Leave Insurance (FAMLI) Act would pool small contributions from employees and employers to create a dedicate source of funding for when workers need time off to care for themselves or a loved one.

The FAMLI Act Provides Paid Leave for Montanans

The FAMLI Act functions similarly to how unemployment insurance work. Employers and employees would both contribute a small amount – less than one half of 1 percent of a workers’ wages – to the FAMLI fund. These contributions would allow workers to a portion of their salary (more for low wage workers) while on leave. Workers would be eligible for a maximum of 12 weeks of paid leave.

Representative Moffie Funk introduced HB 228 last month, and the House Business and Labor Committee will have a hearing this Wednesday, February 10th at 8:30. For more information on how the FAMLI Act would work, see our report House Bill 228 – Montana FAMLI Act: A Policy Design Supporting Families and Businesses.

Paid leave Is Important for Montana’s Families, Businesses, and the Economy.

Paid leave helps families facing a variety of circumstances. Under the FAMLI Act, covered individuals would be eligible to take leave for:

  • A serious health condition;
  • A family member’s serious health condition;
  • The birth, adoption, or foster placement of a child; or
  • A family member being called to active duty.

While paid leave helps give families stability during times of upheaval, the benefits extend past the time a worker takes their leave. Mothers who take paid leave are more likely to return to their careers after their leave, enabling them to earn more over their lifetime.

Businesses and Montana’s economy would benefit from paid leave as well. Employers with paid leave experience less turn over and save money that would have been spent on new training costs. Montana’s population is aging, and with more workers retiring and fewer skilled workers moving into jobs, a paid leave policy helps the state remain attractive to workers and businesses.

Share your story

Most of us have been affected by an illness of our own or a family member, or who have welcomed a new child into our family, at some point or another. If you have a story about how paid leave would have impacted your family or strengthened your business, we encourage you share it.

There is a hearing on HB 228 on Wednesday, February 10th, at 8:30 am. If you wish to testify remotely, you will need to submit your testimony or register to testify by 12:00 pm on February 9th.  For more tips on how to testify remotely, please read our blog post here.

You can also message the House Business and Labor committee to urge their support of HB 228 at 406-444-4800 or https://leg.mt.gov/web-messaging/.

Senate Bill 138 Has Deep Roots in Settler Colonialism

On this day (February 8) in 1887, Congress passed the General Allotment Act, also known as the Dawes Act, with the ultimate purpose of dissolving tribal governments and reservations and assimilating American Indians into non-Indian society. Last week, Senate Tax heard Senate Bill (SB) 138, a bill with deep roots in this settler-colonial policy.

What Is Senate Bill 138?

SB 138 would repeal the five-year tribal property tax exemption for fee-to-trust transfers that the 2011 Legislature created with SB 412. The 2019 Legislature voted down two bills related to SB 138: House Bill (HB) 401 and HB 733.

How Senate Bill 138 Is Connected to Allotment?

SB 138 is possible because of allotment. When Congress began the allotment and assimilation era in 1887, it divided communally held reservation lands into individual parcels without tribal consent, allocated parcels to tribal citizens and households, and sold “surplus” parcels to non-Indian settlers, most often without compensating tribal nations. In total, the U.S. government took more than 90 million acres (roughly the size of present-day Montana) from tribal nations.

Now, reservation lands are a patchwork pattern of ownership and land status types, with land generally falling into one of two status types: trust or fee. This has tax implications. Trust land is held in trust by the federal government and includes land collectively owned by a tribal nation and allotments to tribal citizens. Trust land is exempt from property taxes. Fee land is generally private property and can be owned by American Indians and non-Indians. Because of the forced allotment of reservation lands, state and local taxing jurisdictions may assess property taxes on tribally owned fee land.

As intended, allotment had devastating consequences for tribal communities. In 1934, Congress ended the allotment era when it passed the Indian Reorganization Act (IRA). Under the IRA, tribal nations and the federal government can return fee land to trust status. The process can be lengthy and costly to tribal nations. To facilitate those transfers and to recognize that one government did not want to tax another while the wheels of the federal government turn slowly, the 2011 Montana Legislature passed SB 412.

By attempting to repeal this exemption, SB 138 ultimately places a greater burden on tribal nations seeking to reclaim land stolen under allotment.

A Better Path Forward

Rather than impose property taxes on tribally owned reservation land, the Legislature should work to dismantle the legacy of allotment by expanding the tribal property tax exemption. This would be consistent with the treatment of other government-owned property in Montana, where property that is owned by federal, state, and local governments is tax-exempt. SB 138 targets land owned by tribal governments, disregarding and dishonoring the government-to-government relationship and political status of tribal nations as sovereign.

Expanding the exemption would also be consistent with the approach that other states take. Oregon, for example, exempts tribal lands from property taxes when a fee-to-trust application is pending. There are time constraints. Idaho exempts tribally owned reservation land altogether, in an effort to treat all government properties the same, whether federal, state, county, or tribal.

What Is Next?

Although it was recognized as bad policy long ago, tribal nations continue to feel the impacts of allotment today. MBPC opposes SB 138 and will continue to track its progress. If the 2019 legislative session is any indication for what to expect, LC0726 could come next. This bill would allow counties to recapture property taxes should the federal government deny a trust application or should the five-year exemption expire. MBPC would also oppose this bill.

For a deeper dive into the land status of Indian Country, see MBPC’s report, Policy Basics: Land Status of Indian Country.

Update: SNAP Proposed and Enacted Changes to Help Families

The Supplemental Nutrition Assistance Program (SNAP) has helped individuals and families keep food on their table and avoid hunger during this time of national crisis. When the pandemic and ensuing recession hit in the spring, SNAP responded swiftly. For more information about SNAP’s early response to the pandemic, see our blog post here.

But difficult times have continued for Montana families. In late January, nearly 56,000 adults in Montana lived in households reporting sometimes or often not having enough food to eat. For households with children, one in ten sometimes or often did not have enough food to eat in the past week.

Below, we break down the recent proposed and enacted changes to SNAP that can help alleviate hardship for struggling households.

PASSED LEGISLATION

In December, Congress passed a COVID relief package which included a variety of relief measures to people facing job loss, poverty, and hunger.

Change to SNAP: The COVID relief package included a 15 percent increase in SNAP benefits through June 2021.

Who this helps: Back in April, USDA granted states waivers to allow them to issue the “emergency allotments” – the maximum SNAP benefit for their household size.

But this change left out or only marginally benefited 39,000 Montanans on SNAP, including 15,000 children, who had no or extremely low any income. These families were already receiving the maximum or close to the maximum SNAP allotment, and still facing increased hardship due to the pandemic.

A 15 percent increase in SNAP benefits will result in $27 more per person. With hunger still a major problem across the country, increasing SNAP benefits for all households – especially those who are struggling the most – will help lift people out of hunger and extreme poverty.

Change to SNAP: College students who are eligible for work study or have an expected family contribution of $0 and are enrolled at least half-time in an institution are eligible for SNAP.

Who this helps: Under regular SNAP rules, only college students who were currently participating in a work study program were eligible for SNAP. With classes and schools moving to remote instruction, work study positions may be difficult to obtain for some eligible for students. This rule change will help reduce hunger for students.

EXECUTIVE ACTIONS

In January, President Biden issued several executive actions that will help relieve hunger and hardship for Montana families.

Change to SNAP: President Biden directed the USDA to increase Pandemic-Electronic Benefits Transfer (P-EBT) benefits by 15 percent.

Who this helps:  The P-EBT program provides families who would normally be receiving free and reduced-price meals at school with the equivalent dollar value ($5.70 a day) when schools are closed.

While schools have mostly re-opened across the state, many families are still facing part-time schedules and occasional school closures. An increase in P-EBT benefits would help reduce the high rates of childhood food insecurity Montana is facing right now.

Unfortunately, Montana has yet to be approved for P-EBT for the 20/21 school year. Montana should act soon to ensure that families who have been struggling with school closures can get the help they need.

Change to SNAP: President Biden directed the USDA to emergency allotments for households who were already receiving the maximum SNAP allotment.

Who this helps: As mentioned earlier, households living on extremely low incomes did not receive any increase in benefits during the first round of SNAP changes. The original stimulus plan failed to support the 37 percent of SNAP households nationwide who were already receiving the maximum allotment. Emergency allotments would help these most vulnerable households.

Change to SNAP: President Biden directed the USDA to revise the Thrifty Food Plan, as directed by the 2018 Farm Bill.

Who this helps: The Thrifty Food Plan is the basis the USDA uses to calculate SNAP benefits.  But the plan is outdated – it assumes that families have more time than they do to prepare food, that affordable food is always available, does not account for special dietary needs, and does not reflect the full cost of a healthy diet. Updating the plan will help provide more accurate benefits to households.

PROPOSED LEGISLATION

Congress is currently considering more relief packages to help aid people struggling with poverty and hunger.

Change to SNAP: President Biden’s proposed American Rescue Plan would extend the 15 percent increase in SNAP benefits through September.

Who this helps: Economic recovery from this crisis will not happen immediately. SNAP is one of our best forms of economic stimulus, by not only helping people put food on their table but by supporting local stores and the agricultural community as well.

SNAP is a vital lifeline for struggling Montanans. If we are to recover from this crisis, we must provide much ensure that everyone has access to affordable food when they need it.

Details Are Important: House Bill 162 Doesn’t Actually Help Most Seniors

Nearly every session a bill comes before the Legislature seeking to exempt social security income from all Montana income taxes, and every session the Montana Budget & Policy Center opposes.

Why?

To start with, Montana already has a good system that has been in place for a long time. We mirror the federal structure, in how we exempt social security income, exempting a greater amount of social security income for those on lower and moderate incomes.

A critical component of our system is that those living on the lowest incomes do not pay any tax on their social security income. So those who need it the most can stretch their checks even farther. In tax year 2015, 75 percent of social security income was exempt from tax.

There are many problems with HB 162. It makes Montana’s regressive tax system worse by providing an additional tax break to those making the most. Over two-thirds of the proposed tax break in HB 162 would go to the richest 20 percent of households.

In addition, this bill is very expensive. It would cost our state $100 million each year. Legislators on the budget committees have already proposed reducing the health and human service budget by nearly $1 billion over the next biennium, threatening critical services that help Montanans with disabilities, Montanans struggling with mental health, and seniors. These are the same programs that bore the brunt of similar cuts in 2017. As we try to restore this funding, we cannot be giving even more tax breaks away to those with the highest incomes.

Let’s be clear. Social security received by Montanans living on lower social security incomes is already exempt.

Montanans have just begun to see the light at the end of the tunnel. HB 162 is not only bad policy but it is also something our state just cannot afford. Cutting state revenue by $100 million a year will hurt the families struggling the most and only prolong our economic recovery.