The 2007 Legislature was a strange journey. It was contentious, confused, cantankerous and inconclusive. After 90 days of argument and acrimony, it adjourned without adopting a budget or agreeing on a tax reform plan.
The Governor has called the Legislature back to Helena May 10th for a special session to finish the work that was not done in the time allotted by law. The call for the special session will be limited to the state budget, tax reform, school finance and energy policy, and there is always hope that the Legislature can come to town, execute the deal on the table and adjourn without doing any further damage to the principles of representative democracy.
This Legislature considered 1,418 bills. It rejected nearly 40% of these measures. This kill rate established a new standard for negativity that worked both for and against municipal interests. Very few of the bills supported by cities were adopted, but almost all of the measures opposed by the League were tabled in committees, voted down on the floor of the House or Senate or procedurally exterminated by the passage of deadlines.
The following is the butcher's bill from the bloody battle of 2007.
Taxation and Finance
The state will complete the current two-year funding cycle at the end of next month with a budget surplus in excess of $1-billion. The Montana economy is booming. More people are working at better wages, commodity prices are generally favorable, resource industries are flourishing and all of this good news shows up in state tax collections. The Legislature had a wondrous opportunity to write a budget that would have provided better government services while sending some of the money back to where it was collected. There was general agreement on the big question of tax relief, and many suggestions on how to make it happen. The factions in the House and Senate could not reconcile the seemingly small differences over the mechanics of returning money to the taxpayers, which, in the end, monkey wrenched the2007 Legislature.
Municipal Finance
SB-320 and HB-685 would have allowed cities and counties to collect taxes on goods and services geared to the tourist economy with the approval of local voters. These local option tax measures got lost in the general acrimony over finance issues. There was no credible opposition to these bills beyond the worn out routines about irregular tax patterns, competitive issues and unintended consequences which is the most common and convenient reason to do nothing.
HB-128 eliminates review and approval by the Attorney General of general obligation bonds issued by local governments. This requirement, which was enacted during the bank scare in the early days of the Depression, added time and expense to bond proceedings while offering no real protection.
HB-131 was introduced to actuarially stabilize the Public Employee Retirement Systems. Under the bill, the base adjustment in retirement payments for employees hired after July 1 of this year will be reduced from 3% to 1.5%. The employer contribution will be increased, which will cost cities and counties about $500,000 in each of the next two fiscal years. These changes will not apply to the police and fire pension programs.
HB-192 was introduced to remove indemnification provisions in state loans to local governments. The bill was tabled at the request of the sponsor when the state agreed to make the changes through administrative rules.
HB-473 eliminates the fee assessed on all water rights holders in 2005 to cover the costs of the statewide adjudication program. The measure will save cities and other rights holders about $25-million over the next 10 years.
HB-510 allows street light costs to be assessed on a per lot basis. The bill was requested by the Town of Fort Peck.
HB-512 funds the Treasure State Endowment Program for the next two years. This bill is an example of how the factions in the House disagreed over the nuances of common purpose. Republicans wanted to fund the entire list of 56 TSEP applications, but the money was not included in the executive budget. The funding package was stalled for three months, but an agreement was finally reached that will cover all projects at the time they are ready to begin work.
HB-529 would have exempted the first $80,000 in the value of business equipment from property taxes. The bill included several important provisions for local government: (1) reimbursements would have been under the Entitlement Program and increased each year by the growth factor; (2) reimbursements that were promised but not made for a business tax cut in 2005 would have been included; and (3) deleted property would not have been deducted from new construction to protect levy authority.
This bill is likely to be considered in the special session, and cities will work to assure that the exemption in this bill is a true tax cut and not a transfer to other properties through higher mill levies.
HB-798 would have distributed about $10-million annually through a grant program to cities and counties to manage the impacts of the large scale energy development that is expected to occur in the coming years. The impact account would have been funded with federal mineral royalty payments. The Governor vetoed HB-798 on May 8th.
HB-823 would have provided grant assistance for roads and bridges in energy producing counties. The Governor vetoed this bill.
HB-832 would have clarified tax increment financing laws, which have been the subject of continuing suspicion among legislators and state department administrators for many years. The bill was written to assure that future TIF districts followed the intent of the original law which was to finance the public facilities necessary to support economic expansion. The bill was tabled in the House Taxation Committee, and probably will not be reconsidered during the special session.
HB-836 was a dark horse bill that started late, ran hard and came up short of the finish line. The bill would have set up a $40-million program to fund city and county public works over the next two years. It got lost in all of the confusion over the budget and the amount of money available for tax relief, education, corrections, human services and the other interests at the top of the priority index.
SB-169 adjusted entitlement payments for counties that had requested an audit to determine the amount of public defender costs that have been assumed by the state. The bill did not change the $1.77 per capita formula that is applied to cities and towns to support the indigent defense program.
SB-215 would have allowed local government to boost mill levies by the full rate of inflation instead of the 50% of the Consumer Price Index allowed by current law. The bill passed the Senate by a 2-1 margin but was tabled by the House Taxation Committee which apparently still believes that local governments should operate under higher standards of financial accountability.
SB-245 raised the debt limit for local government general obligation bonds from 1.51% of assessed value to 2.5%. The Legislature agreed that the 2.5% limit was necessary to account for the increase in construction costs since the ceiling was last adjusted.
SB-464 - would have authorized a local option realty transfer tax. The bill was hit with a barrage of opposition from real estate agents and bankers. It was tabled in the Senate Taxation Committee.
SB-554 would have referred a general, statewide sales tax to voters for approval. The measure would have used sales tax revenues to replace a portion of city, county and school mill levies. The bill died peacefully and the few mourners did not include any of those who allegedly support "comprehensive tax reform" as an alternative to local option authority.
Land Use
In recent years, land use policy and regulation has been the deadliest front in the global war to defend local control from the relentless invasion of state authority. Cities have fought off incessant attempts to limit their power to regulate land use. This was a prominent issue in 2007, but the number of bills and lobbying pressure from property rights advocates did not reach the usual level of intensity and aggression.
HB-425 made minor and reasonable changes in the subdivision laws. It includes a provision requiring an agent of the developer to meet with local governments prior to the submission of an application.
HB-590 would have revised the requirements for the adoption of growth policies by including provisions to recognize private property rights. The bill had few practical benefits, and would have done nothing more than add steps to an already complicated procedure. It was tabled in the Senate Local Government Committee.
HB-831 represents important progress in the difficult work to protect Montana water resources. The bill tightens standards for groundwater permits in closed basins and clearly provides that the "municipal exemption" is available only to incorporated cities and towns.
SB-41 was the most objectionable in a sequence of measures to revise eminent domain laws in Montana in response to a U.S. Supreme Court decision in a recent case from Connecticut. This bill prohibits cities from selling or leasing property condemned under the urban renewal statutes. SB-693 tightens up the definition of "blight" for purposes of condemnation under urban renewal. SB-536 prohibits local governments from condemning utility property. It does not affect the rights of utilities to condemn property.
Eminent domain became a focus issue of property rights advocacy groups following the Connecticut decision. Ironically, this case had no relevance in Montana and most of the bills that were considered in 2007 were unnecessary or nothing more than a restatement of existing codes and precedents.
SB-110 was the latest in a long line of revisions to the planning and zoning laws that the Legislature seems to consider every time it convenes. This bill was tabled in the House Judiciary Committee for no reason other than to give cities and counties time to adapt to the changes that were made in the planning and zoning laws in 2005.
SB-199 would have revised the protest provisions for the creation of a sewer district. The bill was tabled in the Senate Local Government Committee.
SB-201 is another revision of planning, zoning and subdivision laws. The requirements of the bill are permissive, and it does allow participating local governments to collect planning fees.
SB-339 establishes conditions under which a city can annex property in an adjoining county. The city limits of Helena lie along the northern border of Jefferson County. The bill as amended will allow properties across the county line to annex into the city under an interlocal agreement that sets up joint planning and "jurisdictional equality".
Police, Fire and General Operations
The bills in this category are generally introduced at the request of cities to clarify the laws that apply to the routine operations of local governments. These are not monumental issues but sometimes small changes pay big dividends.
HB-27 expands and enhances the 911 system to provide coverage for wireless phones. The new system will be financed by a surcharge on phones. The bill was signed by the Governor.
HB-163 would have prohibited the expenditure of public funds for lobbying and denied public employees the right to participate in legislative decisions. The bill was tabled in the House State Administration Committee.
HB-340 would have removed restrictions on the use of firearms for self defense. The gun rights lobby made a hard push to get this bill passed, but it was turned away by some very good work by representatives of law enforcement agencies. The bill was tabled in the Senate Judiciary Committee.
HB-524 reduces the density requirement for the incorporation of a new town. The bill also requires a post office as a condition of incorporation. The bill was supported by the two places that are likely to incorporate in the next few years --- Big Sky and Seeley Lake.
HB-596 extends the time for the payment of sidewalk assessments from 12 to 20 years. The bill was requested by Missoula.
HB-690 allows a suspended firefighter to waive a hearing before the city council that is mandatory under current law. The bill is the result of a compromise between firefighters and the chiefs over suspension procedures.
SB-264 would have allowed cities and towns the discretion to provide special water and sewer rates for low income residents. The bill, requested by Helena, was tabled in the House Local Government Committee.
SB-352 would have allowed third-class cities and towns to hire paid firefighters above the age of 35. The age requirement makes it difficult for smaller cities and towns to recruit firefighters, but the bill was rejected by a tie vote on the floor of the Senate.
SB-414 clarifies that a Certificate of Public Necessity and Convenience is not required to haul garbage in the commercial areas of towns of under 500 in population. The bill is a clarification and correction of existing law.
SB-451 would have allowed cities to place a lien on the debris removal portion of an insurance policy to cover the demolition and clean up costs of certain buildings destroyed by fire. The insurance lobby was strongly opposed to this bill, and while they continually talked about negotiating a compromise, they put on a stall that ran out the clock on the bill.
