Does the state Legislature need a special session to spend down the budget surplus?

Arren Kimbel-Sannit

Montana Free Press

Republican legislators are divided on calls to assemble in a special session and pass income and property tax rebates, the latest proposal to spend down a substantial state budget surplus.

Two separate pushes for a special session, a comparatively rare phenomenon in Montana politics, have emerged. Each faces the hurdle of either getting the governor on board or gathering majority support among legislators. And while Republicans hold more than enough legislative seats to make the latter path a possibility, some factional flare-ups mean not every member of the majority caucus is aligned behind the effort.

Rep. Brad Tschida, R-Missoula, and Republican legislative candidate Lyn Hellegaard, who is running to succeed Tschida in his House seat, ignited the effort late last month with an op-ed in the Missoulian proposing to return a maximum of $3,000 in state income taxes to people who filed in Montana in the 2021 and 2020 tax years. 

That call was followed in mid-August by one from Sen. Greg Hertz, R-Polson, who proposed to disburse the surplus with $1,000 rebates for Montana homeowners who paid property taxes in the last two years, rebates of up to $1,250 for individuals and $2,500 for couples who paid resident income taxes during those two years, and $100 million to pay down state debt. 

At play is between $1 billion and $1.4 billion in state revenues beyond the baseline in the current biennial budget, according to legislative fiscal analysts. That surplus is a product of higher-than-predicted tax collections.

The two pushes are ostensibly separate. Only Hertz, along with nine other legislators, has initiated the process to call the Legislature into a special session by requesting that the secretary of state’s office poll the Legislature to determine if a majority supports a special session. 

“When an overpayment of this magnitude occurs, it’s logically expected by the people of

Montana and fiscally responsible for the state government to return the overpayment in an efficient manner and on a timely schedule,” Hertz wrote in his letter requesting the polling.

That request was submitted to the secretary of state Aug. 12. Lawmakers have 30 days to respond; non-responses are counted as votes against. 

Republicans hold 67 of 100 state House seats and 31 of 50 Senate seats — more than enough to achieve the simple bicameral majority needed to approve a special session. 

But some prominent voices in the party have spoken out against the proposals, most notably Rep. Llew Jones, R-Conrad, chair of the House Appropriations Committee and de facto leader of a sub-caucus of comparatively moderate Republicans who regularly find themselves at odds with hard-line conservative lawmakers like Tschida. 

Jones and his allies have opposed a number of special session proposals so far this interim: to restrict abortion in the fallout of the U.S. Supreme Court’s Dobbs decision, for example, or to pass election integrity measures, or to draw new Public Service Commission maps. 

Jones said the current special session proposal would rush a relatively rare opportunity to invest a large surplus to benefit taxpayers in the long run — an opportunity he said is better suited to the regular session, where passing a budget is the Legislature’s only constitutional duty. 

In his own July op-ed, Jones called for using the money to bolster the struggling state hospital at Warm Springs, top off the state’s wildfire and emergency funds, pass temporary property tax reductions and more.

Democrats, meanwhile, have proposed investing $1 billion of surplus funds into affordable housing, childcare, property tax relief and mental health care services. 

“It takes away a discussion,” Jones told Montana Free Press last week of the special session proposal. “Can we do something for mental health? Can we do simple things, like $500 or $600 million to unfunded pension liabilities? At least, a conversation ought to be held. It takes away our ability to consider those investments that will benefit future taxpayers.”

Over the weekend, another comparative moderate and Jones ally, Rep. Frank Garner, R-Kalispell, wrote his own op-ed questioning why certain legislators would want to gather the Legislature in special session just over three months before the scheduled meeting of the regular session. 

Special sessions, he noted, have historically been called to attend to immediate emergencies. 

“The current proposal is to address approximately $1.5 billion in approximately two days,” Garner wrote. “As I consider my weighty decision on this session call, my first concern is if this proposal is driven by an imminent emergency or by those wanting to write checks to voters because their emergency is merely an imminent election.”

If it is convened, the special session would likely occur right before ballots are mailed out in October, he added. Tschida, for one, is running for an open Senate seat in a competitive Missoula district against current Democratic Rep. Willis Curdy. 

“Had we been able to do this earlier when we wanted to call a special session a month ago, it would not have bumped up against the election,” Tschida said in response to Garner’s suggestion Monday. 

Tschida also said there are good reasons not to wait. 

“In my estimation, why would we wait to give taxpayers their money back during session when two things are working against it: We have new legislators who don’t understand the process and how it works, and by the time a decision is made those taxpayers probably won’t get their money back until June, July or August next year,” Tschida said.

Republican leadership is also split on the idea. House Majority Leader Sue Vinton and Senate Majority Leader Cary Smith, both of Billings, were both among the signatories to Hertz’s letter, and have called on constituents to ask their representatives to support a special session. 

Senate President Mark Blasdel, meanwhile, agreed with the concept of returning money to taxpayers, but was non-committal on the specifics. 

“Legislative Republicans are excited to return excess tax money back to the taxpayers who paid it,” Blasdel said in a statement. “The timing of a legislative session to accomplish that and the exact mechanisms for returning the money are points of ongoing discussion among legislators.”

Those pushing for a special session have found no support among Democrats. House Minority Leader Kim Abbott, D-Helena, told MTFP her caucus is unified against the idea, noting the tens of thousands of dollars required to run a special session with questionable benefit. 

“We put out a pretty comprehensive plan on how we feel some of the income balance should be spent this session,” she said. “We see this as a pretty expensive-for-the-taxpayers election game.”