Governor: CI-97 voids rebate

By The Associated Press

July 6, 2006

HELENA -- Gov. Brian Schweitzer said a careful reading of a lengthy ballot measure aimed at capping state spending would prevent him from going forward with a plan to give flat $400 rebates to Montana property taxpayers.

Schweitzer announced earlier this week a plan to spend $100 million of the state's surplus by giving the flat rebates to Montana residents who own homes. Corporations and nonresident homeowners would not get a rebate.

But the so-called "Stop Over-Spending" initiative would not let him give a flat payment, Schweitzer said. The initiative is on the November ballot, and in general, aims to cap state spending at no more than the rate of inflation plus population growth.

"If we pass SOS, I can't send $400 back to your home," he said. "If SOS passes, my hands are tied."

Backers of Constitutional Initiative 97, known as SOS, said the governor was only partly right.

Any rebate mandated by the initiative would have to be handed out "pro rata," meaning people would get payments based on how much they paid in taxes.

But the state could send back an additional rebate underneath the spending cap based on flat payments, as long as it all fit under the maximum state budget, said state Sen. Joe Balyeat, R-Bozeman.

Balyeat criticized the governor's planned $400 rebate payments as "handouts" and "vote-buying payments."

Schweitzer, earlier in the day, gave The Associated Press a worksheet showing what the pro rata payments would look like. If the $100 million was sent back in such a way, PPL Inc. would get $1.6 million, while the owner of a $100,000 home would get $123. The out-of-state owner of a $16 million Whitefish trophy home would get $17,000.

Schweitzer's point about the effect the initiative would have on his property tax rebate sets up an intriguing election year showdown on Constitutional Initiative 97.

The rhetoric around the governor's planned tax rebate, part of his "Square Deal with Montana," has already heated up. Republicans have lashed out at it as election-year gamesmanship, saying they had already been talking about a tax rebate before Schweitzer unrolled his plan.

Republicans have also characterized it as a tax shift because everyone would get the same amount, instead of offering rebates based on how much people or corporations paid in taxes.

"The reason that we're even talking about this is that the state has more revenue than it needs, and that's a situation that is going to continue into the future," state Sen. Corey Stapleton, R-Billings, said a day earlier. "We don't need a rebate, we need permanent, long-term reform and relief."

Schweitzer clearly has aimed his proposal at the average voter, excluding corporations and out-of-state owners of multimillion-dollar homes. He also said the GOP plan is not permanent because each legislative session is not bound to the tax rates set in a previous Legislature.

Balyeat said the governor is rolling out his rebate plan to win votes for Democratic legislators. He said it is clearly more fair to make any tax reduction payments based on how much people paid and to also send them to businesses.

CI-97, Schweitzer said, would force him to send any rebates in a way the GOP would prefer.

"The point is, under CI-97, it specifically says you must do what is under the Republican plan," the governor said. "So no wonder that was their plan, because they support SOS."

The governor lined up among the critics of CI-97 before the tax rebate plan, saying it is not needed because Montana is already required to have a balanced budget.