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Governor told to raise taxes-Local agencies beseech Martz

Gov. Judy Martz convened an economic roundtable Wednesday to advise her on the least painful ways to cut $250 million from the state’s budget.

Instead, seven of the 10 service providers and consumer groups advised her to raise taxes, something she said later she would not do.

By ERIC NEWHOUSE
Tribune Projects Editor

She did say, however, that she would propose a visitors’ tax large enough to allow a 10 percent reduction in the state income tax. But it would not raise additional money for the state, she emphasized.

Attributable in part to the economic downturn and to recent tax rollbacks, the governor’s budget office estimates there will be a $250 million shortfall over the next two years.

"Cutting any further is indecent and inhumane," said Joan-Nell Macfadden, chairman of the Great Falls Mental Health Advisory Council.

"It’s like fighting over bones now," said Macfadden. "Clearly, we need a way to increase revenue."

Sharon Odden, executive director of Easter Seals, advocated increasing taxes on things that create additional costs to the state, including tobacco, alcohol and gambling.

"We should not balance the budget on the backs of the poor and vulnerable," said Odden.

Jacqui Garcia of Montana People’s Action urged raising taxes on Montana corporations again.

"We believe strongly, vehemently that the (Children’s Health Insurance Program) program that serves 9,300 children should not be eliminated," Garcia said.

"We believe the taxes on Montana corporations should be increased," she said.

"During your campaign, you proudly proclaimed yourself to have been the lapdog of industry, and you have been that, but people should be your first priority," Garcia said told the governor.

Dr. Susan Effertz, chairwoman of the Montana Medical Association, also advocated a so-called sin tax.

"Why don’t we tax the heck out of tobacco?" she asked. "It does absolutely no good for anyone.

"And let’s tax soda and chips," she said. "Obesity is one of Montana’s greatest medical problems, and the tax might be beneficial.

"Beer tax, sin tax or sales tax — we need it so let’s do it," Effertz added.

Unfortunately, Martz responded, that wouldn’t raise enough money.

"We would have to raise taxes by $258 for each person who currently pays a Montana income tax," the governor said.

"I have said time and time again that I would look at all proposals," she said. "I’m not heartless.

"But the states that have raised taxes also have lower rates of job growth, 4 percent to 4.9 percent, while states that didn’t raise their taxes did better, for example Colorado, which grew by 49 percent," said Martz.

After the meeting, the governor said she would not increase taxes, but she would propose tax reform.

She said imposing a visitors’ tax could allow her to cut income tax rates by 10 percent, and permitting local option taxes could allow communities to reduce local property tax rates.

"And that’s a form of sales tax," she said. "It would allow the 9 million visitors to our state to pay their way, and that would put more money in the pockets of Montanans.

"I think that’s a great idea," she said.

The governor said she couldn’t predict whether she would sign or veto a tax increase if one were approved by the Legislature next year.

"I don’t support a tax increase, but I cannot know what I would do until it actually comes to my desk," she said.

The governor would leave in effect budget cuts enacted this year that would save $66 million.

That means no increased funding for higher education or for state employee pay raises, although two agencies will get a little more funding.

The Corrections Department would receive a $10 million increase instead of the $32 million it said is needed to house a growing prison population.

"My concern is that the prisons and jails are becoming a part of the mental health system," said Macfadden.

"And now that we’re letting untreated prisoners out of prison, it only increases the burden on the mental health system," she said.

And the Department of Public Health and Human Services would get a $4 million increase, but that’s far short of the $70 million requested to meet growing health needs.

Gail Gray, director of the department, had proposed closing the Montana Center for Chemical Dependency in Butte, but announced Wednesday that she had concluded that would be wrong.

However, the state still plans to cut Medicaid eligibility and reduce nursing home reimbursement rates by 4.5 percent.

"We’re going to incur a loss of $1.5 million in 2002 (at the Benefis Skilled Nursing Center)," said Lowell Johnson, interim CEO of Benefis Healthcare.

"And if your budget cuts go through, we anticipate a loss of $4 million," Johnson said.

"There’s no way we can provide the care that is expected of us by the Sisters of Providence on what you’re going to pay us," he said.

Johnson said the hospital’s mental health program will be retained, but that it will also become a loss-leader.

"We do not accept the premise that the citizens of Montana should not pay more for the services they receive," he said.

"We think there should be tax reform that increases revenue or a sales tax or something else that will boost our revenue," he said.

http://www.greatfallstribune.com/news/stories/20021114/localnews/368803.html

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