Speech

Local Option Tax Testimony

Remarks of Governor Judy Martz
State Capitol
3/7/2003

***Check Against Delivery***

Chairman Fuchs, members of the House Taxation Committee... for the record, my name is Judy Martz, Governor of the great state of Montana. Thank you for providing me the opportunity to testify before you in support of House Bill 740, sponsored by Representative McKenney.

The local option tax is a key component of our administration's tax reform package. It's great to see the people here today to speak in support of this bill.

Last year on tax day - April 15 - I announced my Administration's plan for tax reform. In the past ten months, we have received a significant amount of input on the plan.

The local option tax is part of our tax reform proposal, which also includes an income and capital gains reduction, to be replaced with revenue from a limited sales tax.
As you all know, economic development is the cornerstone of our administration, and tax reform is a critical piece of the solution. Communities must have to have the ability to create a competitive business climate. This tax reform legislation will help local communities create the competitive business climate they need for the creation of higher-paying jobs.

I want to thank the three tax advisory councils that I appointed for their very important work.

In particular, I want to thank Representative McKenney, who chaired the local option tax advisory council, for guiding the council members in their efforts to bring forward a recommendation to provide a way for local communities to provide economic development, infrastructure improvements, and property tax relief.

Based on their input and advice, a key component of this bill requires that at least 10%, but potentially all, of the tax collected must be used for property tax relief. Currently, the burden of local government funding falls on property taxpayers. This bill gives communities on option.

In addition, this tax must be approved by local voters before it can be implemented in a community.

It is also critical that it can only be implemented on top of the statewide limited sales tax I am proposing as part of SB407, to ensure that this local option tax not be overly burdensome to businesses.

As you all know, Montana has a short-term budget crisis that we are all working to solve.

This tax reform proposal is a long-term solution, intended to improve our economy, and the economic well-being of our citizens. It is aimed squarely at economic development, and higher-paying jobs for more Montanans. With a ranking of 46th in the nation in per capita income, we simply must focus on long-term job and business growth.

This bill provides opportunities for our citizens and towns to address economic development locally, while also providing the chance for the surrounding region to benefit.

In the crisis of today, we cannot forget about the needs of tomorrow.
Mr. Chairman, members of the committee, we firmly believe this is the right time to implement true tax reform, for the good of Montana's working men and women and their families. We are confident that this is the right proposal to accomplish that reform.

Please join me in supporting economic development for all Montanans over the long term, by supporting this bill.

Revenue Director Alme is here to discuss the specifics of the plan, and to answer any questions you may have.

Thank you.

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