Posted: July 21, 2014 at 7:41 am

Corporate Tax Protests Have a History of Harming Schools

Unfortunately for Montana’s public school classrooms, big corporations refusing to pay the taxes is apparently  a fairly common practice.

 Pennsylvania Power and Light, a multi-national company worth $17 billion, did the same thing more than ten years ago after acquiring its dams from Montana Power. This was in large measure the reason Great Falls Public Schools had to close down a middle school to make up for the money PP&L owed but refused to pay.

The district was forced to put 6th graders back in elementary schools,  which soon led to overcrowding.  It will surprise no one that the city and the school board became divided over which of the three middle schools they would have to close. Several highly respected school board trustees were voted out of office thereafter, replaced by a group that voted to reverse the previous school board’s decision and close another middle school instead.

Great Falls schools suffered the brunt of PP&L’s actions, but as the Billings Gazette reported, schools in Sanders Count (Thompson Falls), Lewis and Clark County (Helena) and Rosebud County (Colstrip) were also impacted.

All thanks to PP&Ls refusing to pay the its taxes and protesting them instead, 94% of which courts later ruled the company owed and must pay–but by then the damage to these school districts was done.

As Mike Dennison reported in 2004, a lawyer for the state of Montana in the tax appeal case said he had “never seen a taxpayer so blatant in its attempt to avoid being taxed on its fair market value.” 

At the time, PP&L also tried to send unsolicited political donations to state legislative candidates, state Sen. Jim Elliott of Thompson Falls refused to take the money. It would be interesting to see who has been taking political contributions from Charter and Verizon, the corporations the most recent examples of this kind of despicable behavior. 

Posted: July 18, 2014 at 7:35 am

Tax Laws Skewed Against Schools

Montana law favors corporations over schools and local governments when it comes to taxes, and some corporations are exploiting this to the hilt.

Montana just settled with Verizon and Charter–two corporations which together had protested paying more that 70 percent of the funds they owed local governments and schools.

According to the Montana Budget and Policy Center, Verizon and Charter together had protested paying $66 million of their tax bills. That means the money goes into an account but the schools can’t use it.  Even in the rare cases schools are allowed to spend protested taxes, the law requires the schools to pay interest to the corporation on any amount later returned to the company.  But get this. It doesn’t work the other way around –corporations don’t have to pay interest to the schools and counties if the protested taxes are, as is usually the case, found to be legit.

This is a real problem for schools and local governments, who need the money to fight fires, build roads, and help sheriffs protect citizens. In Montana, the law appears to be skewed in favor of corporations who protest their taxes.  As MBPC reports:

Generally speaking, there isn’t much disincentive for a corporation to protest a significant portion of the taxes it was assessed, regardless of how much that company may believe is in question….There is little stopping Charter or Verizon from protesting nearly all of its taxes even if it believes only a small portion is in error. As a result, local economies are in limbo – sometimes for years – for settlements to be reached and funds to flow back into communities.

So basically,  corporations can protest more than they owe as a way to pressure Montana and local schools and governments to granting them a more favorable settlement.  Our laws appear to encourage this practice.

You can read the MBPC’s full post on their Charted Territory Blog here, but prepare to be none too pleased.

 

Posted: July 15, 2014 at 6:34 pm

Responsible Republican Blog

A deliciously silly item to report today.

There is a new blog in Montana, an anonymous one, by the name of MontanaFloodlight.com and written ostensibly by self-proclaimed “responsible Republicans.”  It takes aim at the Tea Party and the extremist faction of Republicans.

The headlines are very amusing as is the content, and as are the targets of the blog’s ire.  “Fiscally Prudent” is the title, for example, of a July 10 post, containing the following paragraph:

Along with our balanced budget and healthy ending fund balance Montana is a shining example of government that works. Thanks in large part to Republicans that fought their own party to make sure pensions were funded!

Funnier still is that the blog apparently will employ a strategy of accusing extremists of being fiscal liberals.  A July 1 entry is entitled “Essmann and Fielder: Big Spenders.”  Fielder is state senator Jennifer Fielder from Sanders County, who works with militia groups, believes all federal land including national parks should be reverted to private status, and is a Cliven Bundy aficionado.  And yet this moderate Republican blog has decided to try to take her down, or weaken her, by accusing her of being a “big spender.”  Interesting choice.

The toughest part of this effort is that the blog finds itself arguing that the state is in solid fiscal health, something that Republicans hate admitting because it means crediting Steve Bullock.  But a May 31 entry is headlined “State Government is NOT Growing” and features plums like this:

The latest falsehood created by Art Wittich and being repeated by the extremists is that the budget blew up three times faster than private sector growth.  Nice fuzzy terms to hide the lies.

So the obvious question is, who is behind this blog?

I’d say there are a few possibilities. First, perhaps the responsible Republican faction in Montana, led by Kalispell Senator Bruce Tutvedt and company.   Perhaps they raised some money and hired an operation.   Lord knows that there’s no sitting Republican official in Montana who could even start a website let alone put together a blog.  Perhaps some money has come from  DC, from a group such as Karl Rove’s American crossroads which sometimes takes the side of establishment Republicans in primaries.

But since it’s anonymous, it tells me that the authors are afraid to admit that they are not extremists.  Might it then be Bowen Greenwood and Will Deschamps, the director and chair of the state GOP?

Posted: July 15, 2014 at 6:05 pm

What You Will Not Read in the Lee Newspapers Story about the House Race Fundraising Numbers

If you read the Lee Newspapers story on who has raised how much in the race for Montana’s only congressional seat, you’ll find that Zinke, who had a hotly contested primary, raised $1.6 million for his entire campaign and has $97,000 in the bank.  But the Missoulian just reported that Zinke also has $83,000 in campaign debts, which leaves him with about $14,000 to spend.  To be sure, this includes $68k that he loaned his own campaign, which he isn’t obligated to pay back, but that’s a lot of money to just give up when his path to victory is anything but clear.

You’ll also read that John Lewis has raised $1.03 million for his entire campaign and that he has about $623,000 remaining in his campaign account.

While there always seem to be a few people talking around the water cooler who think it is important to simply look who has raised the most money, don’t buy it. The more important number to pay attention to is the cash on hand amount–because this shows a candidate’s ability to move voters over to her or his camp.

But what you won’t find in the Lee story is the anything about one of Zinke’s major fundraising apparatuses – the SOFA super-PAC he founded and which from his campaign has benefitted heavily. 

For some reason, the Lee Newspapers chose not to report anything from the super-PAC’s FEC report, which showed the Special Operations for Ryan Zinke America PAC had:

Beginning Cash On Hand $261,304

Ending Cash On Hand$103,535

Net Contributions $461,107

Net Operating Expenditures $496,377

Like Zinke, the SOFA-PAC spent more than it took in and has only about $100,000 left.  Because this PAC has been such a key part of the race so far, it’s unfortunate that no mention of it was made in the Lee story.

Posted: July 15, 2014 at 5:53 am

ANALYSIS: Charter Settlement a Good Deal for Montanans

A look at last months settlement between the state of Montana and Charter shows that the Bullock administration negotiated a settlement that is a pretty good deal for Montanans –especially when it comes to all those local governments and schools districts that have been waiting to receive millions in taxes that Charter had protested paying and couldn’t be spent.

To fully understand the settlement, there are two things we need to know first. (1) the taxes Charter owed,  (2) the taxes Charter had only paid under protest and wanted back.

What Charter Owed

First, Charter owed a significant amount in back taxes for 2007-2009 based on last Dec’s supreme court ruling.  The exact amount the company owed hasn’t been published, so I don’t know what it is, but we can get a pretty good estimate by looking at how much they paid in 2010 public information obtained by the Helena Vigilante.  it is safe to assume that the company’s total taxes for 2007-2009 would be about $21 million ($7m for each 2007, 2008, 2009). The company that used to own Charter, Bresnan Communications, actually paid $4.4 million of those taxes, so if you subtract these you can see that the company still owed about $15 million.

What Charter Wanted Back

Now lets talk about the taxes they had paid under protest–money that local schools weren’t allowed to spend because Charter was demanding it be returned to them. For 2010-2013, Charter paid a total of $43 million, but about $34 million of that has been sitting in tax protest escrow accounts.  This means that Charter was arguing that it should get ALL of this $34 million back.

Finally, the Supreme Court ruled in a separate ruling that Montana Department of Revenue was incorrectly valuing a portion of Charter’s property, called intangible personal property. The Department of Revenue was re-valuing other the telecoms’ property too, and it just announced its settlement with Verizon.) If you consider how much Verizon is receiving back, the intangible personal property may have been about 30% of the amount Charter was currently protesting.

All in All

So taking all this into consideration, the amount actually owed by Charter would have been about $10-12 million.  And the amount that it was entitled to receive back was probably about $10-13 million.

Now let’s look at what the deal Bullock’s administration negotiated.  Charter has to pay $8.3 million, and Charter will receive back $9 million.

The remaining $25 million in protest funds will be released to local governments and the state.

So Charter nets about $700,000.  Total.  That’s it. I’d call that a pretty good deal for Montana.

Especially when you compare that with what the Office of Budget and Project Planning (OBPP) estimated Charter would receive under the proposed ballot initiative: $65 million in back taxes they would get out of paying, and about $7 million future taxes they wouldn’t have to pay.

It’s also noteworthy that Charter spent over $425,000 on its signature gathering and other expenses related to the ballot initiative.

And, as Montana Budget and Policy Center points out, the company will continue to pay its fair share going forward, as a centrally assessed telecommunications company

Now, let’s answer one final question you may have heard from the Twitter conversation around this settlement, which is why did Charter take this settlement which is so obviously a win for Montana? Word on the street is that that Charter may have had the signatures to qualify I-172.  If that’s the case, why didn’t the company move forward with the initiative?

First, the MEA-MFT made it clear that it would pursue a legal challenge if the initiative qualified, and that legal challenge had a good chance in the courts.  While the Montana Supreme Court showed deference to the Attorney General’s decision to let the ballot initiative move forward, the Court made it clear that it was not ruling on the substantive legal challenges the measure faced.

And those substantive legal issues were significant.  As readers here know, public opinion was also turning on Charter.  The Billings Gazette actually issued two strong editorials opposing I-172.  And thanks to good organizing, social media, creative Montanans and readers here getting the word out, people were starting to hear what I-172 was actually about, and Charter customers were none too pleased.