Bill Summary – FastDemocracy

68th Legislature                                                                                                 HB 212.1
                                                 HOUSE BILL NO. 212
         INTRODUCED BY J. KASSMIER, M. MALONE, T. WELCH, C. KNUDSEN, M. STROMSWOLD, G.
      NIKOLAKAKOS, P. FIELDER, L. BREWSTER, M. BINKLEY, B. LER, E. BUTTREY, R. FITZGERALD, J.
      SMALL, S. FITZPATRICK, R. LYNCH, D. SALOMON, R. TEMPEL, M. LANG, P. GREEN, B. BARKER, J.
                                      ETCHART, R. MINER, B. BEARD, T. SMITH
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   A BILL FOR AN ACT ENTITLED: “AN ACT INCREASING THE CLASS EIGHT BUSINESS EQUIPMENT TAX
   EXEMPTION; PROVIDING A REIMBURSEMENT TO LOCAL GOVERNMENTS AND TAX INCREMENT
   FINANCING DISTRICTS UNDER THE ENTITLEMENT SHARE PROGRAM, TO SCHOOL DISTRICTS
   THROUGH GUARANTEED TAX BASE AID, AND TO THE MONTANA UNIVERSITY SYSTEM FOR THE
   LOSS OF REVENUE; AMENDING SECTIONS 15-1-123, 15-6-138, 15-10-420, AND 20-9-366, MCA;
   AMENDING SECTIONS 12 AND 13, CHAPTER 506, LAWS OF 2021; REPEALING SECTIONS 2, 6, 7, 8, AND
   14, CHAPTER 506, LAWS OF 2021; AND PROVIDING AN APPLICABILITY DATE.”
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   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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              Section 1. Section 15-1-123, MCA, is amended to read:
              " 15-1-123.   (Temporary) Reimbursement for class eight rate reduction and exemption --
   distribution -- appropriations. (1) Except as provided in subsection (2), for the tax rate reductions in 15-6-
   138(3), the increased exemption amount in 15-6-138(4), the effective tax rate reductions on property under 15-
   6-145 because of the rate reductions required by the amendments of 15-6-138 in section 2, Chapter 411, Laws
   of 2011, and section 2, Chapter 396, Laws of 2013, and the effective tax rate reductions on property under 15-
   6-145 because of the increased exemption amount required by the amendment of 15-6-138 in section 2,
   Chapter 396, Laws of 2013, the department shall reimburse each local government, as defined in 15-1-121(5),
   each tax increment financing district, and the 6-mill university levy for the purposes of 15-10-109 the difference
   between property tax collections under 15-6-138 as amended by section 2, Chapter 411, Laws of 2011, and
   section 2, Chapter 396, Laws of 2013, and under 15-6-145 and the property tax revenue that would have been
   collected under 15-6-138 and 15-6-145 if 15-6-138 had not been amended by section 2, Chapter 411, Laws of
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   2011, and section 2, Chapter 396, Laws of 2013. The difference plus the amount calculated in subsection (2) is
   the annual reimbursable amount for each local government, each tax increment financing district, and the 6-mill
   levy for the support of the Montana university system under 15-10-109.
              (2)   For the increased exemption amount in 15-6-138(4) provided for in Chapter 506, Laws of 2021,
   the department shall reimburse each local government, as defined in 15-1-121(5), each tax increment financing
   district, and the 6-mill university levy for the purposes of 15-10-109 the difference between property tax
   collections that would have been collected under 15-6-138 as amended by Chapter 506, Laws of 2021 and the
   property tax revenue that would have been collected under 15-6-138 if it had not been amended by Chapter
   506, Laws of 2021. The difference calculated in this subsection is added to the annual reimbursable amount for
   each local government, each tax increment financing district, and the 6-mill levy for the support of the Montana
   university system under 15-10-109 calculated in subsection (1). The department shall lower the reimbursement
   to compensate for an increase in property tax collections based on section 14, Chapter 506, Laws of 2021,
   during any tax year in which an increase in value occurs by the termination of an exemption due to the
   American Rescue Plan Act, Public Law 117-2, and section 14, Chapter 506, Laws of 2021.
              (3)   The growth rate applied to the reimbursements is:
              (a)   for the reimbursement calculated pursuant to subsection (1), one-half of the average rate of
   inflation for the prior 3 years; and
              (b)   for the reimbursement calculated pursuant to subsection (2), 0%.
              (4)   The department shall distribute the reimbursements calculated in subsections (1) and (2) to local
   governments with the entitlement share payments under 15-1-121(7).
              (5)   The amount determined under subsections (1) and (2) for each tax increment financing district
   must be added to the reimbursement amount for the tax increment financing district as provided in 15-1-
   121(8)(b) if the tax increment financing district is still in existence. If a tax increment financing district that is
   entitled to a reimbursement under this section is not listed under 15-1-121(8)(b), the reimbursement must be
   made to that tax increment financing district at the same time as other districts.
              (6)   (a) The amount determined under subsections (1) and (2) for the 6-mill university levy must be
   added to current collections and reimbursements for the support of the Montana university system as provided
   in 15-10-109.
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              (b)   The department of administration shall transfer the amount determined under this subsection (6)
   from the general fund to the state special revenue fund for the support of the Montana university system as
   provided in 15-10-109. (Terminates December 31, 2025--sec. 13(5), Ch. 506, L. 2021.)
              15-1-123. (Effective January 1, 2026) Reimbursement for class eight rate reduction and
   exemption -- distribution -- appropriations. (1) Except as provided in subsection (2), for the tax rate
   reductions in 15-6-138(3), the increased exemption amount in 15-6-138(4), the effective tax rate reductions on
   property under 15-6-145 because of the rate reductions required by the amendments of 15-6-138 in section 2,
   Chapter 411, Laws of 2011, and section 2, Chapter 396, Laws of 2013, and the effective tax rate reductions on
   property under 15-6-145 because of the increased exemption amount required by the amendment of 15-6-138
   in section 2, Chapter 396, Laws of 2013, the department shall reimburse each local government, as defined in
   15-1-121(5), each tax increment financing district, and the 6-mill university levy for the purposes of 15-10-109
   the difference between property tax collections under 15-6-138 as amended by section 2, Chapter 411, Laws of
   2011, and section 2, Chapter 396, Laws of 2013, and under 15-6-145 and the property tax revenue that would
   have been collected under 15-6-138 and 15-6-145 if 15-6-138 had not been amended by section 2, Chapter
   411, Laws of 2011, and section 2, Chapter 396, Laws of 2013. The difference plus the amount calculated in
   subsection (2) is the annual reimbursable amount for each local government, each tax increment financing
   district, and the 6-mill levy for the support of the Montana university system under 15-10-109.
              (2)      For the increased exemption amount in 15-6-138(4) provided for in Chapter 506, Laws of 2021,
   and [this act], the department shall reimburse each local government, as defined in 15-1-121(5), each tax
   increment financing district, and the 6-mill university levy for the purposes of 15-10-109 the difference between
   property tax collections that would have been collected under 15-6-138 as amended by Chapter 506, Laws of
   2021, and [this act] and the property tax revenue that would have been collected under 15-6-138 if it had not
   been amended by Chapter 506, Laws of 2021. The difference calculated in this subsection is added to the
   annual reimbursable amount for each local government, each tax increment financing district, and the 6-mill
   levy for the support of the Montana university system under 15-10-109 calculated in subsection (1).
              (3)      The growth rate applied to the reimbursements is:
              (a)      for the reimbursement calculated pursuant to subsection (1), one-half of the average rate of
   inflation for the prior 3 years; and
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              (b)      for the reimbursement calculated pursuant to subsection (2), 0%.
              (4)      The department shall distribute the reimbursements calculated in subsections (1) and (2) to
   local governments with the entitlement share payments under 15-1-121(7).
              (5)      The amount determined under subsections (1) and (2) for each tax increment financing district
   must be added to the reimbursement amount for the tax increment financing district as provided in 15-1-
   121(8)(b) if the tax increment financing district is still in existence. If a tax increment financing district that is
   entitled to a reimbursement under this section is not listed under 15-1-121(8)(b), the reimbursement must be
   made to that tax increment financing district at the same time as other districts.
              (6)      (a) The amount determined under subsections (1) and (2) for the 6-mill university levy must be
   added to current collections and reimbursements for the support of the Montana university system as provided
   in 15-10-109.
              (b)      The department of administration shall transfer the amount determined under this subsection
   (6) from the general fund to the state special revenue fund for the support of the Montana university system as
   provided in 15-10-109."
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              Section 2. Section 15-6-138, MCA, is amended to read:
              " 15-6-138.      (Temporary) Class eight property -- description -- taxable percentage. (1) Class eight
   property includes:
              (a)   all agricultural implements and equipment that are not exempt under 15-6-207 or 15-6-220;
              (b)   all mining machinery, fixtures, equipment, tools that are not exempt under 15-6-219, and supplies
   except those included in class five under 15-6-135;
              (c)   for oil and gas production, all:
              (i)   machinery;
              (ii) fixtures;
              (iii) equipment, including flow lines and gathering lines, pumping units, oil field storage tanks, water
   storage tanks, water disposal injection pumps, gas compressor and dehydrator units, communication towers,
   gas metering shacks, treaters, gas separators, water flood units, and gas boosters, together with equipment
   that is skidable, portable, or movable;
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              (iv) tools that are not exempt under 15-6-219; and
              (v)   supplies except those included in class five;
              (d)   all manufacturing machinery, fixtures, equipment, tools, except a certain value of hand-held tools
   and personal property related to space vehicles, ethanol manufacturing, and industrial dairies and milk
   processors as provided in 15-6-220, and supplies except those included in class five;
              (e)   all goods and equipment that are intended for rent or lease, except goods and equipment that are
   specifically included and taxed in another class or that are rented under a purchase incentive rental program as
   defined in 15-6-202(4);
              (f)   special mobile equipment as defined in 61-1-101;
              (g)   furniture, fixtures, and equipment, except that specifically included in another class, used in
   commercial establishments as defined in this section;
              (h)   x-ray and medical and dental equipment;
              (i)   citizens band radios and mobile telephones;
              (j)   radio and television broadcasting and transmitting equipment;
              (k)   cable television systems;
              (l)   coal and ore haulers;
              (m)    theater projectors and sound equipment; and
              (n)   all other property that is not included in any other class in this part, except that property that is
   subject to a fee in lieu of a property tax.
              (2)   As used in this section, the following definitions apply:
              (a)   "Coal and ore haulers" means nonhighway vehicles that exceed 18,000 pounds an axle and that
   are primarily designed and used to transport coal, ore, or other earthen material in a mining or quarrying
   environment.
              (b)   "Commercial establishment" includes any hotel, motel, office, petroleum marketing station, or
   service, wholesale, retail, or food-handling business.
              (c)   "Flow lines and gathering lines" means pipelines used to transport all or part of the oil or gas
   production from an oil or gas well to an interconnection with a common carrier pipeline as defined in 69-13-101,
   a pipeline carrier as defined in 49 U.S.C. 15102(2), or a rate-regulated natural gas transmission or oil
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   transmission pipeline regulated by the public service commission or the federal energy regulatory commission.
              (3)     Except as provided in 15-24-1402, class eight property is taxed at:
              (a)     for the first $6 million of taxable market value in excess of the exemption amount in subsection (4),
   1.5%; and
              (b)     for all taxable market value in excess of $6 million, 3%.
              (4)     The first [$300,000] of market value of class eight property of a person or business entity is
   exempt from taxation.
              (5)     The gas gathering facilities of a stand-alone gas gathering company providing gas gathering
   services to third parties on a contractual basis, owning more than 500 miles of gas gathering lines in Montana,
   and centrally assessed in tax years prior to 2009 must be treated as a natural gas transmission pipeline subject
   to central assessment under 15-23-101. For purposes of this subsection, the gas gathering line ownership of all
   affiliated companies, as defined in section 1504(a) of the Internal Revenue Code, 26 U.S.C. 1504(a), must be
   aggregated for purposes of determining the 500-mile threshold. (Bracketed language is temporarily amended to
   "$100,000" on occurrence of contingency for calendar years 2022, 2023, 2024, and 2025 until July 1, 2025--
   secs. 12(7) and 14, Ch. 506, L. 2021--see compiler's comment.)
              15-6-138. (Effective July 1, 2025) Class eight property -- description -- taxable percentage. (1)
   Class eight property includes:
              (a)        all agricultural implements and equipment that are not exempt under 15-6-207 or 15-6-220;
              (b)        all mining machinery, fixtures, equipment, tools that are not exempt under 15-6-219, and
   supplies except those included in class five under 15-6-135;
              (c)        for oil and gas production, all:
              (i)        machinery;
              (ii)       fixtures;
              (iii)      equipment, including flow lines and gathering lines, pumping units, oil field storage tanks, water
   storage tanks, water disposal injection pumps, gas compressor and dehydrator units, communication towers,
   gas metering shacks, treaters, gas separators, water flood units, and gas boosters, together with equipment
   that is skidable, portable, or movable;
              (iv)       tools that are not exempt under 15-6-219; and
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              (v)   supplies except those included in class five;
              (d)   all manufacturing machinery, fixtures, equipment, tools, except a certain value of hand-held
   tools and personal property related to space vehicles, ethanol manufacturing, and industrial dairies and milk
   processors as provided in 15-6-220, and supplies except those included in class five;
              (e)   all goods and equipment that are intended for rent or lease, except goods and equipment that
   are specifically included and taxed in another class or that are rented under a purchase incentive rental
   program as defined in 15-6-202(4);
              (f)   special mobile equipment as defined in 61-1-101;
              (g)   furniture, fixtures, and equipment, except that specifically included in another class, used in
   commercial establishments as defined in this section;
              (h)   x-ray and medical and dental equipment;
              (i)   citizens band radios and mobile telephones;
              (j)   radio and television broadcasting and transmitting equipment;
              (k)   cable television systems