State EITC Would Add Fairness to Montana's Tax System

By Bob Decker
February 27, 2009

In 1989, one of the best reasons for celebrating Montana’s hundredth birthday was the state’s progressive tax system. It generally expected residents to support public services based on ability to pay, neither oppressing low-income Montanans nor demanding excessively from the wealthy.

Today, after 20 years of legislative generosity to business interests and corporations, the oil and gas industry, and high-income individuals, Montana has much less tax fairness to boast about. The current Legislature may regress even further, but it also has the opportunity to support the most ignored of state taxpayers - low-income workers.

The unmaking of Montana’s once-progressive tax system includes these watershed events:

* In 1989, the Legislature reduced the business equipment tax. Additional reductions since then have cumulatively lowered the equipment tax by about 70 percent. Proposals in the current session would lower it even more.
* In 1999, the Legislature lowered the severance tax for oil and gas production and also enacted a “tax holiday” for new oil and gas wells. Those tax breaks, in effect even when oil surged to more than $100 per barrel in 2008, have decreased revenue to the state general fund and to county governments by an average of $100 million annually over the past six years.
* In 2003, the Legislature lowered individual state income tax rates. Half of the resulting tax reduction went to households with annual incomes of $500,000 or more. In 2006, low-income taxpayers received an average tax reduction from the legislation of less than $50, while the 1,586 wealthiest households in Montana received an average annual tax reduction of $30,500, which was greater than the annual pay for the average Montana job.

Seldom has a tax change in the past 20 years resulted in direct benefit to the average Montanan. One occurrence was the $400 property tax rebate in 2008, a one-time-only tax reduction for homeowners. (However, this rebate failed to benefit many low-income workers who are also renters.)

And rarely have tax changes provided meaningful benefit to low-income Montanans. Such a thing could happen, however, if the current Legislature establishes an “earned income tax credit” for Montana.

The earned income tax credit is a tax credit for low-income workers. When the credit exceeds the amount of taxes owed, it results in a tax refund.

Established by Congress in 1975, the earned income tax credit has become the single most effective federal tax policy for encouraging work and reducing poverty. Because of its success, 24 states have adopted state-based credits that offer a portion – from 3 to 40 percent - of the federal credit.

In Montana, a state earned income tax credit would benefit 75,000 families. Those who could claim the credit include nursing home workers, emergency dispatchers, school bus drivers, and some school teachers. A family of four with an annual income of $25,000 could receive a $450 credit if a Montana credit were enacted at 15 percent of the federal program.

Currently, two bills to create a state earned income tax credit in Montana are alive in the Legislature. Yes, the passage of either would cost money, $18 million annually for a 15 percent state credit. And yes, a source for that money must be found.

Rep. Dave McAlpin (D-Missoula) has proposed to partially rectify the legislative largesse of 2003 by increasing the tax rate on incomes greater than $250,000 per year by 1 percent. His bill would raise $20 million annually.

Sen. Christine Kaufmann (D-Helena) has proposed to partially rectify the legislative largesse of 1999 by increasing taxes on oil and gas producers.

Both approaches would add fairness to Montana’s tax system. Either approach would pay for a tax change to help those who need it most.

Rough Day for Public Rights and a Cleaner Energy Future

By Anne Hedges, Montana Environmental Information Center
February 25, 2009

Today was a rough day in the legislature for those who believe the public should have the right to challenge bad government decisions.

Sadly, HB 483 passed on second reading in the House (tomorrow will be the final House vote). This is one of the bills that makes it much harder to appeal air permits, water permits and other things. We were only able to garner 28 votes against the bill - but the Great Falls delegation stood strong. Voting against the bill from Great Falls were Reps. Boland, Blewett, Wilson, Dickenson, Kottel. They all deserve our thanks – please call and thank them and ask them to stay strong on 3rd reading. We lost some important Democrats on the vote today: Reps Mike Phillips, Mike Jopek, Diane Sands, Theresa Henry, Chuck Hunter, among others. If you can please call them and tell them there is no reason for them to vote to give corporations even more power than they already have over the public.

We did win one important victory today - we beat back HB 566 on a tie vote in the House (50-50). That bill eliminated any consequence for an agency not doing MEPA or not doing MEPA well.

Citizens rights to protect themselves from large energy interests suffered some real blows today. Here’s a list:
• SB 440 (Sen. Gebhardt) passed on second reading by one vote. That is the bill to exempt all air permits from MEPA. All of the Democrats voted against the bill (except Jim Keane from Butte) and two Republicans joined them (Sens. Zinke and Shockley). The third and final vote in the Senate is tomorrow morning.
• SB 417 (Sen. Keane) passed out of the Senate today. That bills prohibits litigation under MEPA. That bill will be heard in the House in March
• SB 387 (Sen. Bales) passed out of the Senate today as well. It essentially eliminates the ability of the public to challenge any air permit.
• SB 257 (Sen. Keane) passed out of the Senate too. The Enron-like accounting fraud that is allowed in this bill wholly undermines Montana’s Renewable Energy Standard, which was supposed to encourage new renewable energy like wind, and instead gives PPL these valuable credits for upgrades at dams it did years ago!

This has been one of the roughest legislative weeks in memory for the environment. It’s truly sad when the legislature forgets they are supposed to protect the little guy from the big corporate vultures that hang around the Capitol disguised as lobbyists.

Sometimes You’re the Bat, Sometimes You’re the Ball

By Bob Decker
February 23, 2009

Near the end of the hearing on SB 258, the bill of Sen. Christine Kaufmann (D-Helena) to suspend Montana’s “holiday” tax discount on oil production when the price of oil exceeds $80 per barrel, Senate Tax Committee Chairman Jeff Essman (R-Billings) summoned Eric Stern, an adviser to Gov. Brian Schweitzer, for questioning. Stern had testified earlier in the hearing in favor of Kaufmann’s proposal.

Sen. Essman recollected that Gov. Schweitzer, upon taking office, had stated in a speech, “Montana was open for business.” Essman asked Stern how that sentiment could be reconciled with the governor’s position of raising taxes on the oil industry.

“It just strikes me that a change in tax policy after four years is like hitting someone in the back of the head with a Louisville Slugger after they’ve walked in your front door,” Essman said.

Stern countered adequately by saying, “It seems to us, at some point you (the oil and gas industry) should be paying your taxes.”

A better response (admittedly l’esprit de l’escalier) would have been to ask Essman in return, “If it’s unfair to the oil and gas industry to change tax policy now and get back just a fraction of their tax windfall, why wasn’t it more unfair to other Montana taxpayers when the industry got the tax break in the first place?”

One could assume that Essman’s response, pondered if perhaps not spoken, might have been that easing tax responsibility on business under any circumstance was the operative principle behind his question. In any event, Essman and the majority of his committee subsequently voted to table Kaufmann’s bill.

But immutable principles are rarely encountered in the dynamic world of politics. A few days after tabling Kaufmann’s bill, Sen. Jerry Black (R-Shelby) presented a bill (SB 353)to the same committee that would end a state tax break given four years ago to refineries and fuel distributors that marketed gasoline blended with ethanol. That tax break, Black said, amounted to $6 million per year, which, when considered as a state match for federal highway funds, was costing the state around $40 million in lost revenue.

But wait a minute, said Dexter Busby, who opposed the bill on behalf of his employer, the Montana Refining Company, based in Great Falls. His company had just completed an investment of nearly $1 million for ethanol-blending equipment that would allow the company to take advantage of the tax break. How can you change the rules now?

One could assume that the committee’s response, pondered if perhaps not spoken, might have been that there was simply too much highway construction money at stake to allow this particular tax break to continue. The committee acted immediately to pass the bill.

Endless Holiday

By Bob Decker
February 17, 2009

The oil and gas industry has enjoyed 30 years of receiving tax breaks from the Montana Legislature (see list of significant bills here). The most generous reduction occurred in 1999, when the Legislature passed and Gov. Marc Racicot signed into law legislation that both reduced basic severance tax rates on oil and gas production and enacted “holiday,” i.e., discounted, tax rates for new wells.

As a result of the 1999 largesse, state and oil- and gas-producing counties in Montana
lost a fortune in tax revenue (translation: other Montana taxpayers ended up covering the loss or public services provided by the state were decreased, or both). According to data produced by the Montana Department of Revenue, state and county tax revenue lost from 2002-2008 totaled more than $600 million.

An oil and gas tax “holiday” is a period of time (currently 12-18 months in Montana) in which tax rates on oil and gas production are discounted from the usual tax rate. The application of the holiday idea is not unique to Montana, nor did it begin in Montana with the 1999 legislation. Research at The Policy Institute found that Montana’s use of the holiday dates to at least 1979, when discount tax rates were given to natural gas wells drilled to depths of 5,000 feet or more, at the time a far stretch of technological capacity.

The rationale for giving tax breaks to the oil and gas industry has been based on the notion of providing incentive to the industry when market prices for oil and gas are low. With that in mind, most holiday and other tax breaks given to the industry in the 1980s and early 1990s were accompanied by price trigger points that, when reached, reverted tax rates to the basic level. Thus, the incentive of lower tax rates was applicable only when market prices were low; when the prices rose to a respectable level, the incentive ended.

The 1999 legislation that enacted new holiday rates dropped the price trigger provision, with the effect the holiday/incentive stayed in place no matter the price. Well, the rest is sad history: after a couple of years of little movement, oil and gas prices started climbing in 2002 and didn’t look down until 2008, about the time the global economic meltdown began in earnest. Even in 2008, when oil averaged $95 per barrel and natural gas $8 per thousand cubic feet, Montana’s tax holiday kept incentivizing the industry.

In this year’s session, Sen. Christine Kaufman (D-Helena) introduced SB 258, which proposes to suspend Montana’s tax holiday when oil reaches $80/bbl (and gas $7.60/MCF). Now, with oil having dropped from its $147/bbl zenith last June to current levels hovering around $40/bbl, and with a decrepit economy crushing demand for fossil fuels, Kaufmann’s bill is not likely to have effect for two, three, or more years. And had her bill been working as law during the past few years, it would have affected oil and gas taxes in one year – 2008.

Modest as Sen. Kaufmann’s SB 258 is, it was roundly opposed by oil and gas industry representatives, as well as big-business lobbies, e.g., Montana Chamber of Commerce, and commissioners from oil-producing counties, on February 12, when the bill was heard before the Senate Tax Committee.

In the House, Rep. Kendall Van Dyk (D-Billings) introduced HB 388, which reflects a proposal by Gov. Brian Schweitzer to add a surtax of $1/bbl and $0.08/MCF on oil and gas, respectively. Van Dyk’s bill proposes to utilize the revenue from the surtax, estimated at $44 million per year, to support the Quality Educator program for Montana schools.

Rep. Van Dyk’s bill was heard on February 13 by the House Education Committee. The bill was supported by the governor’s office, MEA (the state’s large teachers’ union), and The Policy Institute, and opposed by industry, the Montana Chamber of Commerce, and the Montana Taxpayers Association.

Neither the Senate Tax Committee nor the House Education Committee acted on the respective bills.

Flapjack Flops, Democracy Suffers

By Jim Elliot, Former State Senator, Trout Creek
February 17, 2009

Well, the bill that would have designated the “whole wheat huckleberry pancake” as Montana’s official flapjack has flopped. The idea for the bill arose from students at Franklin Elementary in Missoula who wanted to participate in the legislative process. They are not the first and will not be the last to request legislation that really doesn’t seem to fit the lofty nature of making law. Since I live in Trout Creek, the officially designated “Huckleberry Capital of Montana” –you can look it up—I was kind of partial to the little critter. Not everyone was though, and thought the Legislature had more important, pressing issues to attend to. Well, it does, but these little silly bills serve their own purpose; there is now an elementary school class that has a better working knowledge of how laws are made than do 90% of Montana voters. (And 80% of legislators according to a wise guy in Helena whose name will not be made public for his own safety.)

I’m not setting out to recommend that the legislature seek out frothy little feel goods to make into law, but I am going to defend the practice when it happens. Montana is about as close as you will come to direct democracy in the United States, and allowing and encouraging citizen participation in the process is one of the important functions of the government. Too many times citizens see the Montana Legislature as an aloof and lofty body infected with a heavy dose of self importance. Well, try approaching a legislator in California or Pennsylvania with an idea for special legislation. Good luck getting past the receptionist. In Montana, the legislator IS the receptionist.

Over my years in the Montana Legislature I carried a few bills that were suggested to me by one or more of my constituents. I won’t name names, they will know who they are if they read this list, and I remember each one of them: declare December 15th Bill of Rights Day in Montana; create a 10 day fishing license for out of state anglers; require truth in labeling on Huckleberry products; restrict the use of baled used tires (there’s a long story about that one); restrict sounding of train horns at private crossings; allow multi-county museum districts; and allow an increase in ambulance levies with a public vote. As you can see, they vary in degrees of importance in the grand scheme of things, but they were important to the folks who wanted them, and most importantly of all, those folks saw that one person can make a difference.

That’s important because those people now know how the legislative process—and democracy— works. In the past 20 years that I’ve been paying attention there has been a depressing decline in the number of people who know even a little bit about the government that they go down and vote in or out every two years. Here’s a short list of misconceptions folks have about the Montana Legislature: it meets in Washington, DC (I kid you not)—it’s Helena; it meets year round—nope; it meets every year—nope again, 90 days every odd numbered year; legislators get huge paychecks just like Congress—if you consider $9000 bucks for two year’s work big, then they do; and legislators have big expense accounts—they wish. It’s zip, and everything comes out of their own pockets when they aren’t in Helena. The sad part of it is that folks can have some very intense negative feelings towards legislators based on those misperceptions.

There are plenty of places to lay blame for this, but why bother, it won’t change; but as a result, the American people—the folks who just about invented democracy, for heaven’s sake—have been turned into the least informed voters in a major democracy and with the lowest voting turnout, too. Lowest if you don’t count Switzerland, that is. Go figure.

So That Others May Pay

By Bob Decker
February 8, 2009

The question, “What is a conservative?”, is longstanding, allegedly dating to 1819, when Chateaubriand appropriated the word for use in a political context. An intriguing answer to the question was provided in 1953 by (conservative) author Russell Kirk, who described conservatism as “the negation of ideology.”

These days, many so-called liberals out-conserve so-called conservatives in several ways. Liberals conserve land and natural resources better, they conserve energy better, they conserve voting rights better, they conserve individual privacy better, and they conserve the constitutional rights of speech, religion, and (in Montana) a clean and healthful environment better.

But conservatives are truly conservative in issues of spending and taxes, right? Well, maybe, if you focus only on the non-negated ideology of “no new taxes.” But if you look at how conservatives are freer with spending and taxes if they don’t have to pay the bills, the answer clouds up in a hurry.

SB 129, a bill to allow tax credits for “wildfire mitigation conservation easements” on land parcels in the wildland-urban interface, was introduced by Sen. Dave Lewis (R-Helena valley and rural Powell County) and heard before the Senate Tax Committee on February 4. According to the measure’s fiscal note, “This bill creates a new type of conservation easement for wildfire mitigation and allows taxpayers who create such an easement to take a credit against individual income taxes for the value of the easement, with a maximum credit of $100,000.” A parcel must be 160 acres or larger to qualify for the credit.

As a rule, and to add etymological confusion, conservatives don’t like conservation easements. Such easements discourage development, transfer tax responsibility, and suggest that environmental consideration may trump the economic.

In this case, however, Sen. Lewis recognized that the use of a conservation easement was a way to address the issue of fire protection in the wildland-urban interface, a subject he addressed in depth as a member of the Legislature’s Fire Suppression Interim Committee. Lewis knows that the costs of firefighting are increasingly attributable to the protection of suburban residences, not natural resources such as forests, and he knows that the state’s firefighting bills are growing ever larger (the 2007 Legislature appropriated $80 million dollars in the state’s general fund to fight fires in the current biennium).

Sen. Lewis chose the conservation easement approach to minimizing fire risks and lowering the state’s financial burden because, as he emphasized during the committee hearing, he wants a “voluntary, not mandatory” solution to the problem. As a conservative, he doesn’t want the government to establish laws or otherwise regulate how suburban home- and landowners manage their property.

Alas, in matters of taxation, one person’s incentive is another person’s mandate. In this case, giving a tax break to people who build structures or own property in fire-prone areas means that the taxes of others must rise. By not mandating that residents of the wildland-urban interface take old-fashioned conservative responsibility for their own fire protection, Sen. Lewis is mandating that other people pay for it. In fact, in his own modest way, Sen. Lewis may be accused of using the tax system to transfer wealth. Be still, thy conservative heart.

Sen. Lewis contends that by publicly subsidizing fire protection in the wildland-urban interface, the firefighting bills of the state will decrease over time. There’s validity in that argument, but it ignores the question of why the state is paying so much for fire protection of suburban development in the first place.

Further, residents of incorporated towns and cities in Montana, who comprise over half the state’s population, already pay for their own fire protection through their municipalities’ local tax levies (more on this by The Policy Institute here). Now Sen. Lewis is asking them to also underwrite fire protection costs in the wildland-urban interface, albeit with the salve that they’re also buying some environmental protection via conservation easements.

Sen. Lewis isn’t alone in negating the ideology of no new (or transferred) taxes. Of the dozens of bills in the current session that seek tax credits, tax exemptions, tax abatements, or other forms of tax relief, many are sponsored by Republicans, the traditional torchbearers of conservatism. And why not? As long as both parties in the Legislature agree that revenue holes caused by new tax breaks are not filled with new methods of taxation, what’s a little tax shift between friends? It’s an idea much older than conservatism.

Box Pox

By Bob Decker
February 5, 2009

Sen. Christine Kaufmann (D-Helena) is the sponsor of Senate Bill 277, which would enact a gross receipts tax on retail sales greater than $25 million per year from a single store location. The tax would be assessed only on stores that fail to meet a basic threshold for compensating employees. Revenue from the tax would be used to help pay for health insurance benefits for Montana workers and small businesses.

The proliferation of box stores in Montana has created diverse problems in the state. In rural communities, box stores are associated with the “giant sucking sound” of customers and sales being pulled away from small, local businesses to box-populated urban centers. In the urban areas themselves, box stores are often challenged for not paying for the increased demands on public infrastructure that their high-volume, high-traffic operations create.

On a larger scale, box store business decisions can be just as cutthroat as their local discounting practices. Wal-Mart, for example, has created a corporate subsidiary which owns all Wal-Mart buildings and accepts lease payments from the mother ship. Through this arrangement, Wal-Mart is able to write off lease payments on its taxes, while the leasing fees are shipped to the subsidiary in Florence, Italy, in order to minimize taxes for the leasing company in other nations and states, such as, for example, the U.S.A. and Montana, respectively.

Sen. Kaufmann’s bill addresses yet another box store problem: the poor pay and benefits received by employees of some box store operations. Revenue from her proposed tax – from 1 percent of gross receipts above $25 million per year to 2 percent on sales greater than $45 million – would be used to fund public initiatives in Montana that address health insurance and medical challenges for low-income people and small businesses.

The box store tax would only be collected if a large retail operation did not provide a pay-and-benefits package of $23,000 per year or more to its full-time employees (or a proportional amount of that threshold to part-time employees).

How do box store operations treat their employees? Some do well, such as Costco, which offers decent pay and benefits to its workers and wouldn’t be affected by Sen. Kaufmann’s proposed tax. Others do badly. Wal-Mart, the center of the box store solar system and a standard-setter for many other box operations, has been researched more than most companies. Here are some findings related to Wal-Mart’s practices on health care:

- Wal-Mart insurance coverage lags behind national average. Nationally, 64 percent of workers in very large firms (5,000 or more) receive their health benefits from their employer. Wal-Mart covers around 50 percent of its employees. [Employer Health Benefits 2007 Annual Survey, The Kaiser Family Foundation and Health Research and Educational Trust]

- Wal-Mart employees wait twice as long for health care coverage than workers at other retailers. The Wal-Mart average for full-time workers to qualify for benefits is six months, compared to the retail average of three months. Part-time employees must wait a full year before receiving benefits. [Wal-Mart 2008 Associate Benefits Book, pages 10 and 13; Employer Health Benefits 2007 Annual Survey, The Kaiser Family Foundation and Health Research and Educational Trust]

- High out-of-pocket premiums. According to the Center for a Changing Workforce, in 2003, Wal-Mart employees paid 41 percent of insurance premium costs. At the time of the report, Costco employees paid 10 percent of premium costs. Nationally, in 2006, workers paid an average of 16 percent of premiums for single coverage and 27 percent of premiums for family coverage. [Employer Health Benefits 2006 Annual Survey, The Kaiser Family Foundation and Health Research and Educational Trust; “Wal-Mart and Healthcare: Condition Critical,” Center for a Changing Workforce, October 26, 2005]

- Letting workers and families rely on public programs. A memo written by Susan Chambers, Wal-Mart Executive Vice President for Benefits, for the Wal-Mart Board of Directors, said:
“We also have a significant number of Associates and their children who receive health insurance through public-assistance programs. Five percent of our Associates are on Medicaid compared to an average for national employers of 4 percent. Twenty-seven percent of Associates' children are on such programs, compared to a national average of 22 percent (Exhibit 5). In total, 46 percent of Associates' children are either on Medicaid or are uninsured."
Chambers wrote, "Wal-Mart's critics can easily exploit some aspects of our benefits offering to make their case; in other words, our critics are correct in some of their observations. Specifically, our coverage is expensive for low-income families, and Wal-Mart has a significant percentage of associates and their children on public assistance.'' [Susan Chambers Memo to the Wal-Mart Board of Directors; New York Times, 10/26/05]

- Costs to taxpayers. A report by Rep. George Miller (D-CA) in 2004 estimated the costs borne by taxpayers for things like medical insurance and housing assistance for Wal-Mart employees that can’t afford them because of their low wages and benefits. The report shows that taxpayers would have to pick up $420,750 per year for a hypothetical Wal-Mart store employing 200 people. These costs (which will vary based on the number of people employed in any one store) include:
• $36,000 a year for free and reduced lunches for 50 qualifying Wal-Mart families;
• $42,000 a year for Section 8 housing assistance, assuming three percent of the store’s employees qualify for such assistance;
• $125,000 a year for federal tax credits and deductions for low-income families, assuming 50 employees are heads of household with a child and 50 are married with two children;
• $100,000 a year for additional Title I education funds, assuming 50 Wal-Mart families, each with an average of two children, qualify;
• $108,000 a year for children’s health insurance costs, assuming 30 employees, each with an average of two children, qualify for the Children’s Health Insurance Program (CHIP); and
• $9,750 a year for subsidies for energy assistance for low-income families.
[From study done by Rep. George Miller (D-CA), 2004]

Sen. Kaufmann’s bill was heard before the Senate Tax Committee on January 29. It was supported by The Policy Institute and opposed by a handful of business associations and box store representatives. Most of the box store operations, of course, operate on slim margins and cannot afford to either provide better treatment to employees or pay a 1 percent tax. They didn’t discuss the annual salaries of some of their leaders …

Box store CEO compensation (2007)
- CVS (pharmacies) $19 million
- Costco $ 9 million
- Wal-Mart $8.7 million
- J.C. Penney $6.2 million
- Best Buy $49 million
- Staples $20 million
- Target $13 million
[Forbes.com, April 30, 08]

… or the wealth of some of their proprietors …

- Jim Walton (Wal-Mart heir) $23.4 billion
- S. Robson Walton $23.3 billion
- Alice Walton $23.2 billion
- Christy Walton $23.2 billion

The Senate Tax Committee has not yet acted on SB 277.

Accountability and Responsibility - Conservative Values?

By Al Smith, Montana Trial Lawyers
February 5, 2009

The year 2009 is here. And, since it is an odd year, so is the 61st Montana legislature. There are times that I think that the framers of our Montana constitution were at least a bit tongue in cheek when they set up our system of the legislature meeting in odd years, for an odd assortment of characters, issues and dramas it surely is.

Part of my job is to pay close attention to what’s happening in the legislature, alerting members to legislative developments, and lobbying specific bills that harm or help Montanan’s right of access to the civil justice system. The trial lawyers’ basic lobbying position flows from our support of the basic principle that individuals, business entities and governmental entities should be accountable and responsible for their actions or omissions that cause harm to another. This principle is set forth in Article II, Section 16 of our Montana Constitution which provides that “Courts of justice shall be open to every person, and speedy remedy afforded for every injury of person, property or character.”

I always thought that accountability and responsibility were values without a political leaning, being neither liberal nor conservative. Over the past few decades, however, it seems that those labeled as political conservatives have co-opted accountability and responsibility, touting them as solely politically conservative values.

I reject this political characterization, but would agree that accountability and responsibility are conservative values, conservative values that should be supported by both political liberals and political conservatives. Over the years, however, political conservatives have only selectively supported the conservative values of accountability and responsibility when it comes to the civil justice system, as they have unquestioningly adopted the position of corporate interests seeking to lessen their own accountability.

Political conservatives are philosophically dedicated to individual freedom, limited government, and the protection of individual rights. The civil justice system is the embodiment of the ideals of individual rights and personal freedom.

Of all the institutions of government, only one - the judicial system - is dedicated to the individual. In court, every person is not only the equal of their neighbor, but also the equal of the largest corporation, and even the government itself. The role of the courts - and the lawyers who are absolutely necessary for their proper function - is simply to protect our legal rights - including the rights of liberals, conservatives, Republicans, Democrats, consumers and businesses.

There is a cost to protecting our individual rights. That cost is making sure that the legal rights of each of our fellow citizens is also protected, without compromise, without exception. When we start compromising the legal rights of our "less worthy" neighbors, there may be no end until finally our own rights are swept away as well.

Sometimes political conservatives point to a large verdict against a business, as if this demonstrates some problem with the system. But don't conservatives believe that with freedom necessarily comes individual responsibility and accountability? If someone violates your rights shouldn't they be held accountable, whether they are an individual, the government or a business?

And what about those awards of compensatory damages? When the government takes a person’s house to build a freeway through it, conservatives expect to be compensated - and compensated in full, not just in part. So what's the difference when someone costs you an arm or a leg by running a red light? Isn't an award of compensation in that instance just as much to compensate for your loss of property as when you lose your house or wreck your car?

Conservatives agree with James Madison and John Locke that our first right of property is in ourselves, and includes "the safety and liberty of [our] person." When someone takes it from us in violation of our legal rights, compensation for what we have lost is the least that can be expected. And if we are robbed of that which most of us take for granted, a healthy pain-free life, the same principle applies, and probably more so. It is simply unjust to shield the wrongdoer from the consequences of his misconduct at our expense.

Unfortunately, self styled political conservatives in the Montana legislature have already introduced or requested a number of bills that impact your access to the civil justice system. When you hear of bills that limit the liability of, or provide immunity to, individuals, government and businesses for their actions, I hope you will call your legislators and ask that they stand up for conservative values. Ask them to assure that all Montanans are able to seek accountability and responsibility through our civil justice system. Tell them that it is just plain wrong to provide special protections so that some do not have to be accountable and responsible for the harm they cause.

The protection of individual rights, by assuring that accountability and responsibility can be obtained in the civil justice system, is a moral value that we can all support: the public, businesses, trial lawyers, the judiciary, and politicians. But protection of our legal rights comes with a price. That price is making sure everyone else's rights are protected as well. In the end, advocacy for accountability and responsibility is neither politically liberal nor politically conservative, it’s just the right thing to do.

To Dream the Impossible Dream

By Jim Elliot, Former State Senator, Trout Creek
February 3, 2009

Is there a change in taxation in store for Montana’s oil and gas industry? There are a couple of legislators who have introduced bills to either rescind a tax break oil companies got in 1993 or impose a sort of surcharge on production. Governor Schweitzer seems to be enthusiastic about the latter. Best of luck, but my money’s on the big money. In my 16 years in the legislature I can’t remember a time when taxes were increased on oil production, and believe me, I tried. I can, however, remember several times when they have been reduced.

Montana’s oil industry has protected itself well from paying taxes by playing the Montana and North Dakota legislatures for suckers, which seems to be what they are. The oil industries of the respective states raise the specter of the loss of jobs and tax revenues of state A if they don’t bring their oil taxes in line with state B. The threat being that they will move their oil rigs to the other state. I first discovered this in 1991 while I was researching a tax break the Montana oil industry wanted so that we would be on a “par” with North Dakota taxes. I did something apparently few legislators had done and called the North Dakota Department of Mineral Resources which handles this sort of stuff. “Oh, they’re doing that again,” said the fellow I reached, “They’ll be over here next year to get us to lower our taxes to be in line with yours.” This is called a “shell game” in a carnival, but if it works in politics...what the heck.

I have often imagined a mythical “Oilvane”, sort of like a weathervane –an oil rig mounted on a turntable--somewhere in Richland County that points the rig towards whichever state they will be moving to if the tax situation isn’t addressed to their liking. But it only points East or West, and Wyoming, which is by far the largest oil and natural gas producing state in the area, never gets targeted. Why is that? Is it because (what do you call them, Wyomers, Wyomites, Wyomingers?) the folks in Wyoming have the revealed knowledge that if the petroleum industry doesn’t like the taxes in Wyoming they can’t pick up their oil and go home. Wyoming has the distinction of getting a lot of oil tax revenue because they actually collect it, and they do it based on sound economic principles.

In 1999, and again in 2001, the Wyoming Legislature paid for studies on the effects of taxation, environmental control, and freight rates on oil, gas, and coal production in Wyoming. The 2002 study is 218 pages long and was sent to me courtesy of the Equality State Policy Center in Casper, Wyoming. It said, in part, that Wyoming could DOUBLE taxes on oil and gas without having a negative effect on state revenue, in fact, it would increase revenue. Well, Wyoming didn’t do that, but they didn’t lower taxes, either. This is an occurrence of that exceedingly rare phenomenon in a legislative body of favoring fact over fiction. My hat is off to them.

In Montana we have an Oil and Gas Production Holiday which was enacted in Montana in 1993 by Democrats and Republicans alike as an incentive to help the oil industry out in hard times. Oil was chugging along at between 12 to 14 bucks a barrel, and it was allowed that a tax holiday might keep the oilvane pointing towards North Dakota or maybe even spur new investment. It’s interesting to read testimony from the hearing. These guys are good at what they do.

They said that Montana’s oil production tax revenues were declining at a rate of 7% a year, and that the best way to slow that decline was to give a tax incentive, “since the discovery of a new major oil field in Montana was unlikely.” Interestingly, the area they were talking about is the same area that was to become that “major new oil field” just a couple of years later called the Bakken formation. In light of this, one might suspect that our legislature would want to revisit the tax breaks given the oil folks, but the legislature hasn’t gone near it with a ten foot pole, despite the fact that oil prices went up to around $100 a barrel and the Bakken formation is considered one of the largest oil reserves in the world.

In March 2008 I requested information from the Montana Department of Revenue on tax revenues lost due to oil and gas production tax incentives. Combining the amounts lost to the state and oil production counties the loss amounted to $94 million in 2005 and $107 million in 2006. For Montana alone the loss was $51 and $56 million respectively. From 2003 through the third quarter of 2007 the total state and county amount was $332 million. Good luck getting any of it back, but you can always dream.