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Bullock vetoes bill creating tax abatement for new high-speed broadband in Montana

Posted: 8:36 PM, May 08, 2019
Updated: 2019-05-08 22:36:44-04

HELENA — Gov. Steve Bullock Wednesday vetoed a bill that would have created a 10-year property-tax abatement for installing new cable for high-speed Internet and cell-phone service, saying it creates a tax break for corporations “to do things they’re already doing in Montana.”

Bullock’s veto essentially kills Senate Bill 239, whose supporters had argued it would encourage installation of high-speed broadband in underserved areas of rural Montana.

Officials at smaller telecom companies that serve parts of rural Montana had testified in favor of the bill and urged Bullock to sign it into law.

Sponsored by Sen. Jason Ellsworth, R-Hamilton, SB239 said any new fiber-optic or coaxial cable installed in Montana after July 1 would be exempt from property taxation for five years.

For the next five years, it would have phased in property taxes on that cable, starting at 20 percent of its value the first year and increasing another 20 percentage points each year until it reaches 100 percent.

The bill also said companies couldn’t qualify for the abatement unless they reinvested the savings in additional fiber installation within two years.

The bill passed the House 67-30 and the Senate 37-13. Most of the “no” votes came from Democratic lawmakers.

Bullock, a Democrat, said in his veto message Wednesday that the state’s “limited budget does not have room for additional tax breaks like these, that only benefit the largest companies.”

A fiscal analysis of the bill by the Bullock administration said it will cost the state treasury about $600,000 within the next two years, and more after that.

Supporters of the bill disputed the analysis, saying it really won’t cost state or local governments any money, because it’s a tax abatement rather than a tax cut. Government wouldn’t collect any taxes unless the cable is installed in the first place, and will eventually get full property-tax revenue on the new cable, they said.

Bullock said Wednesday that most of the tax abatements would go to “large, multistate corporations deploying fiber-optic and coaxial cable in cities.”

Exempting some property from taxation increases the tax burden for remaining taxpayers, including senior citizens, working families and small businesses, the governor said.

“Senate Bill 239 does not promote build-out in rural Montana any more than existing tax-exemption programs do,” Bullock wrote. “The supporters of this bill should use existing tax-abatement programs to assist with the build-out of fiber-optic and coaxial cable projects.”