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.