(navigation image)
Home American Libraries | Canadian Libraries | Universal Library | Community Texts | Project Gutenberg | Children's Library | Biodiversity Heritage Library | Additional Collections
Search: Advanced Search
Anonymous User (login or join us)
Upload
See other formats

Full text of "Voter information pamphlet"

3 0864 1004 3865 7 

VOTER INFORMATION PAMPHLET ^i , , 

n f..FOR THE JUNE 8TH SPECIAL ELECTION ^^i^ J:!iK IJ;.;; WTt 



/tA rpN legislative referendum 111 






V..- 



i t 



Argument FOR Legislative Referendum 111' 

True tax reform for Montanans must provide significant reform of our income 
tax system and significant relief of both residential and personal property 
taxes. Referendum 1 1 1 provides real tax reform by reducing income and 
property taxes, stimulating Montana's economy, and providing jobs. 

Montana must move away from its historic reliance on excessive property 
taxes, anti-competitive business taxes, and income taxes that continue to 
escalate. Montanans who create new businesses and new jobs are penalized 
under our current tax system. Referendum 111 is about jobs growth, 
expanded business activity, and an equitable tax system for Montana. 

Referendum 111 is a less punitive and more progressive income tax proposal 
which provides for a single rate (6%) income tax structure with generous 
personal exemptions and standard deductions. A significant number of low- 
income families will no longer pay Montana income taxes. This simplified 
tax system eliminates many of the complexities that everyone presently faces 
when preparing their personal tax returns. 

Homeowners will gain a $20,000 exemption on their property taxes. A credit 
on the Montana income tax return, equal to the property tax paid on the first 
$20,000 of market value on an owner-occupied residence, provides an average 
property lax savings of $217. In addition, an average of 35 local education 
mills will be eliminated, resuhing in a further 10% reduction in property 
taxes. Property tax relief for renters is provided through a $150 renter's 
credit claimed on the Montana individual income tax return. 

A reduction in the anti-competitive tax on equipment from 9% to 4.5% will 



allow small Montana businesses to expand and add jobs. The drain of 
Montana businesses and Montana jobs to surrounding slates will stop. 

Referendum 1 1 1 uses a 4% sales tax to provide much needed tax relief and 
reform. Exemptions from the sales tax include: groceries, prescription items, 
medical services, wages and salaries, utilities, insurance premiums, interest 
and dividends, motor fuels, mineral interest, occasional sales (including 
garage sales and fundraisers for charitable groups), advertising services, 
transportation, day care services, private school tuition, and construction 
services. The cost of administering Referendum 111 is about 2% of the 
revenue collected - an extremely efficient and cost effective tax collection 
system. 

A low-income sales tax credit of $90 per individual is available for each 
member of a household when total income is below $1.^.()()(). The $150 
renter's credit provides additional low-income relief. These credits are 
payable even if the individual pays no Montana income tax. 

Referendum III is not a mechanism for new government programs or 
spending. The sales tax is capped at 4% and cannot be increased without 
another vote of the people. Referendum 1 1 1 provides a long-term solution 
to the present imbalance of Montana's fiscal structure and will enable 
Montana to fund necessary governmental services. 

The PROPONENTS' argument and rebuttal were prepared by State 
Senator Bruce Crippen, State Representative Chase Hibbard, and State 
Senator Harry Fritz. 



Argument AGAINST Legislative Referendum 111 

Montanans believe taxes should be based on a person's ability to pay 
and that corporations should shoulder their fair share of taxes to pay for the 
privilege of using the state's resources to make a profit. In the past 13 years, 
the Legislature has turned our tax policy upside-down, with low and middle- 
income taxpayers subsidizing huge tax breaks for corporations. 

* Montana lost $141,400,000 of stale revenue in the 1992-93 
biennium alone (Legislative Fiscal Analyst), from tax loopholes 
promoted over the years by big business lobbyists. 

* Through the last 12 years, these subsidies cost Montanans over 
$500,000.0001 Most Montanans want to close these loopholes instead 
of shouldering another burdensome tax. 

The proposed sales tax makes a bad situation worse, replacing 
$125,000,000 in property taxes with sales taxes paid by Montana consumers. 
Although some property tax relief goes to homeowners and some renters, 
TWO-THIRDS OF THE BONANZA GOES TO BIG BUSINESSES, 
CORPORATIONS AND MAJOR LANDHOLDERS. 

Individuals and families would pay for the bulk of these corporate tax 
cuts. The sales tax would raise your total state taxes ABOVE the amount you 
now pay for all taxes, including the new 6.7% flat income tax. 

* Wealthiest families' taxes stay at 5.3% of their total income. 

* Middle-income families' tdxes jump from 7.9% to 8.9% of their 
total income. 

* Poorer Montana families' taxes rise from 7.5% to 8.5% of their 
total income. 

IS THE SALES TAX ACTUALLY TAX REFORM? NO! It does nothing 
to close existing tax loop holes or make taxes more fair. 

WILL THE SALES TAX REDUCE TAXES? NO! It amounts to a 55% net 



increase in tax collections! $331,700,000 in new taxes! Furthermore, income 
and property taxes are deductible from federal taxes. Sales taxes are not. 
Under the sales tax, a family of four with an income of $35,000 would see 
their total tax burden rise by 23%! 

WILL THE SALES TAX STOP TAX INCREASES? NO! A cap on tax 

increases lasts until the first day of the next Legislature. When revenue is 
needed, sales tax exemptions will be eliminated one by one. The sales tax 
would also repeal 1-105, the property tax limitation law, allowing increases 
in property taxes. 

WILL THE SALES TAX HELP OUR SCHOOLS? NO! It provides no 
additional money for schools. It just replaces permissive levies for debt 
service, retirement, and transportation. 

WILL THE SALES TAX HELP FAMILY FARMS AND RANCHES? 

NO! It would increase taxes on ranchers and farmers for all equipment, parts, 
and repairs. 

WILL TOURISTS PAY A LARGE SHARE OF THE SALES TAX? NO! 

Sales taxes from tourists would barely cover the costs of administering the 
tax. Tourists would pay about 7% of sales tax revenue, while Montana 
consumers and businesses would pay 93%. 

WILL THE SALES TAX HELP SOCIAL PROGRAMS? NO! Not a dime 
of sales tax money would go to help Montanans with physical or mental 
health problems, or to abused children. 

The sales tax is opposed by small business owners, family farmers, 
labor, and consumers. 

Join us June 8. Reject the 4% sales. 

The OPPONENTS' argument and rebuttal were prepared by State 
Senator Bill Yellowtail, State Representative Bill Strizich, and 
Superintendent of Public Instruction Nancy Keenan. 



PROPONENTS' rebuttal of argument opposing Legislative Referendum 111 



The opponents of Referendum 1 1 1 want you to ignore the facts. They want 
you to buy worn-out arguments that have kept you and our children from 
good job opportunities right here at home. 

THE FACT IS: R-111 reduces overall income taxes for everyone. Total 
income taxes for all Montana households would be reduced by about $82 
million a year. 

THE FACT IS: The sales tax, capped by law at 4%, applies to less than 
half your purchases. For every four dollars raised, three will give you income 
and property tax relief and the fourth dollar will be used to pay for such 
things as education and human services. 

THE FACT IS: Over $50 million a year in sales tax revenue will come 
from out-of-state travelers and out-of-state businesses. 



THE FACT IS: Montana's businesses will not receive "huge" tax breaks. 
There are no "loopholes." Businesses will, in fact, pay more taxes under R- 
111. 



THE FACT IS: 

and education. 



Tax reform is supported by small business, family farmers 



THE MOST IMPORTANT FACT IS: R- 1 1 1 balances Montana's entire tax 

system. Property taxes will no longer be driven to levels that punish your 
family and destroy jobs. Instead, R- 1 1 1 gives us a broad-based stable tax 
system that is fair to all and encourages the creation of new jobs for all of us, 
young and old. 

Without tax reform, we will continue to export our future, our children, 
control of our state, and jobs to other places. 



OPPONENTS' rebuttal of argument supporting Legislative Referendum 111 



Let's compare the bottom lines. 

• While the sales tax plan contains some short-term tax relief in property and 
income taxes, in truth, the total tax bill for families would be higher under 
this plan. Middle-income Montanans would see the biggest increase. 

• The sales tax is not tax reform, but a direct tax shift, cutting property 
taxes for big businesses; replacing them with a sales tax on families. 
Railroads and airlines would receive a $7,280,000 property tax break, nearly 
$5,000,000 for Burlington-Northern alone. 

For years, big business lobbyists have claimed, with each additional corporate 
tax-break, that a stimulated economy and new jobs would result. After 
hundreds of millions of dollars in tax giveaways to big business since 1981, 
where are those jobs? 



• The only jobs a sales tax would be sure to bring to Montana are the 148 
new tax collectors required to administer the sales tax. 

• This tax scheme reduces county property tax mills, replacing them with 
state-controlled sales taxes. Therefore, it reduces incentives for schools to 
control costs. It gives no help to schools or local government, increasing 
pressure to raise local property taxes. 

9 The sales tax contains many loopholes for special interests. Besides much- 
advertised exemptions for groceries and medical services, it also contains less 
well-known exemptions for the advertising industry, large mining 
companies, banks and the insurance industry. 

• Referendum III is regressive tax policy. It is unfair, long-term relief for 
corporations at the expense of Montana families. 



HOW THE ISSUE WILL APPEAR ON THE JUNE 8TH BALLOT 

LEGISLATIVE REFERENDUM NO. Ill 



AN ACT REFERRED BY THE LEGISLATURE 

AN ACT GENERALLY REVISING TAXATION; ENACTING A 4 PERCENT SALES AND USE TAX; ALLOWING EXEMPTIONS FROM THE SALES TAX AND USE 
TAX EXEMPTING CERTAIN PROPERTY FROM TAXATION; REVISING DEBT LIMITS FOR LOCAL GOVERNMENTS AND SCHOOLS; REVISING INDIVIDUAL 
INCOME TAXES AND PROPERTY TAXES; ALLOWING CREDITS AGAINST INDIVIDUAL INCOME TAX LIABILITY; PROVIDING FOR DISTRIBUTION OF SALES 
TAX AND USE TAX REVENUE; PROVIDING STATE SUPPORT FOR CERTAIN SCHOOL FUNDING; PROVIDING THAT THIS ACT BE SUBMITTED TO THE 
QUALIFIED ELECTORS OFTHE STATE AT A SPECIAL ELECTION; AMENDING SECTIONS 7-1-21 1 1, 7-3-1321, 7-6-221 1, 7-6-4121, 7-6-4254, 7-7-107,7-7-108.7-7-2101. 
7-7-'>203 7-7-4201 7-7-4'>n2 7-1 3-4103. 7-14-236. 7-14-2524. 7-14-2525. 7-14-4402. 7-16-2327. 7-16-4104. 7-31-106. 7-31-107. 7-34-2131. 15-I-III. I5-6-I33. 15-6-138. 15-6- 

141 15-6-144 IS-6-207 l'i-8-20'i. 15-23-703. 15-24-301, 15-30-101. 15-30-103, 15-30-105, 15-30-1 1 1, 15-30-1 12, 15-30-1 17, 15-30-122. 15-30-126. 15-30-131. 15-30-137. 15-30- 

142 15-30-177 15-30-323, 15-31-131, 15-32-303. 15-36-112. 15-51-101, 16-1-306, 16-1-411, 16-2-301, 17-3-213, 19-11-503, 19-11-504.20-3-205.20-6-702,20-9-331,20-9-333, 
10-9-343 ->0-9-344 ''0-9-346 20-9-347 20-9-35 1 , 20-9-366, 20-9-367. 20-9-368. 20-9-369, 20-9-406. 20-9-407. 20-9-439. 20-9-501, 20-10-104, 20-10-141, 20-10-142, 20-10-144, 
20-10-145 20-15-311 33-7-410 61-3-303. 61-3-317. 61-3-502. 61-3-504, 61-3-506, 61-3-509. 61-3-701, AND 61-4-1 12. MCA; REPEALING SECTIONS 15-10-401. 15-10-402. 
15-10-406, 15-10-411. 15-10-412. 15.30-121, 15-30-156. 15-30-157, 15-30-159, 15-30-160. AND 20-10-146. MCA; AND PROVIDING AN EFFECTIVE DATE AND 
APPLICABILITY DATES. 



This proposal, subniilled by the Legislalure for a vole, would reduce income and property taxes and enact a 4% general sales and use tax. Exemptions include: groceries, 
prescriplions. medical services, tuition, wages, housing payments, ulililies, daycare, Iransporlation, and financial services; and exemptions for agriculture, mining, manufacturing. 
and non-profit organi/alions. It would set a 6% income lax rate and increase personal exemptions and standard deductions. Property tax reductions include: a $20,(XX) homeowner 
exemption, business and utility tax reductions, and reduced levies for school funding. Low-income households and renters would receive refundable tax credits. It would repeal 
1-105, the property tax freeze. 



FISCAL STATEMENT 
The proposal would: 



Impose a 4% general sales lax 
Reduce individual income taxes 
Reduce corporation income taxes 
Reduce property taxes 
Increase slale support of school funding 
Increase electrical energy tax revenue 

Net available to reduce stale deficit 



1994-95 biennium 
impact (in millions) 

$310 

(124) 

(3) 

(125) 

(48) 

75 

$85 



n FOR imposing a 4% sales tax and use tax as part of comprehensive tax reform. 

D AGAINST imposing a 4% sales tax and use lax as pari of comprehensive tax reform. 



SECRETARY OF STATE'S NOTE: THE FOLLOWING IS THE COMPLETE TEXT OF LEGISLATIVE REFERENDUM 1 1 L THE ACT'S COORDINATING 
INSTRUCTIONS, IN SECTION 187. REFERENCE SEVERAL BILLS CONSIDERED BY THE FIFTY -THIRD LEGISLATURE. THE STATUS OF THESE BILLS 
IS AS FOLLOWS; HOUSE BILL NO. 3, PASSED; SENATE BILL NO. 32, NOT PASSED; SENATE BILL NO. 168, PASSED; AND HOUSE BILL NO 671 
PASSED. IF YOU WOULD LIKE TO REVIEW THESE BILLS, YOUR COUNTY ELECTION ADMINISTRATOR HAS COPIES OF THESE BILLS AVAILABLE. 



THE COMPLETE TEXT OF LEGISLATIVE REFERENDUM 111 



AN ACT GENERALLY REVISING TAXATION; 
ENACTING A 4 PERCENT SALES AND USE 
TAX; ALLOWING EXEMPTIONS FROM THE 
SALES TAX AND USE TAX; EXEMPTING 
CERTAIN PROPERTY FROM TAXATION; 
REVISING DEBT LIMITS FOR LOCAL 
GOVERNMENTS AND SCHOOLS; REVISING 
INDIVIDUAL INCOME TAXES AND PROPERTY 
TAXES; ALLOWING CREDITS AGAINST 
INDIVIDUAL INCOME TAX LIABILITY; 
PROVIDING FOR DISTRIBUTION OF SALES 
TAX AND USE TAX REVENUE; PROVIDING 
STATE SUPPORT FOR CERTAIN SCHOOL 
FUNDING; PROVIDING THAT THIS ACT BE 
SUBMITTED TO THE QUALIFIED ELECTORS 
OF THE STATE AT A SPECIAL ELECTION; 
AMENDING SECTIONS 7-1-2111, 7-3-1321, 7-6- 
2211, 7-6-4121, 7-6-4254, 7-7-107, 7-7-108, 7-7- 
2101, 7-7-2203, 7-7-4201, 7-7-4202, 7-13-4103, 7- 
14-236, 7-14-2524, 7-14-2525, 7-14-4402, 7-16- 
2327,7-16-4104,7-31-106,7-31-107,7-34-2131, 15- 
1-111, 15-6-133, 15-6-138, 15-6-141, 15-6-144, 15- 
6-207, 15-8-205, 15-23-703, 15-24-301, 15-30-101, 
15-30-103, 15-30-105, 15-30-111, 15-30-112, 15-30- 
117, 15-30-122, 15-30-126, 15-30-131, 15-30-137, 
15-30-142, 15-30-177, 15-30-323, 15-31-131, 15-32- 
303, 15-36-112, 15-51-101, 16-1-306, 16-1-411, 16- 
2-301, 17-3-213, 19-11-503, 19-11-504, 20-3-205, 
20-6-702, 20-9-331, 20-9-333, 20-9-343, 20-9-344, 
20-9-346, 20-9-347, 20-9-351, 20-9-366, 20-9-367, 
20-9-368. 20-9-369, 20-9-406, 20-9-407, 20-9-439, 
20-9-501, 20-10-104, 20-10-141, 20-10-142, 20-10- 
144, 20-10-145, 20-15-31 1, 33-7-410, 61-3-303, 61- 
3-317, 61-3-502, 61-3-504, 61-3-506, 61-3-509, 61- 
3-701, AND 61-4-112, MCA; REPEALING 
SECTIONS 15-10-401, 15-10-402, 15-10-406, 15- 
10-411, 15-10-412, 15-30-121, 15-30-156, 15-30- 
157, 15-30-159, 15-30-160, AND 20-10-146, MCA; 
AND PROVIDING AN EFFECTIVE DATE AND 
APPLICABILITY DATES. 



STATEMENT OF INTENT 

In consideration of the legislative action on 
the sales tax, it is the intent of the legislature to 
provide a comprehensive sales tax reform package 
that brings balance to the Montana tax structure and 
makes Montana competitive with other states. 

In recognition of the uncertainty of the fiscal 
impact of a 4% sales tax, it is the intent of the 
legislature that all funds in excess of estimates 
pursuant to 5-18-107 be used exclusively for 
reductions in property and income taxes. 

The priority for use of any excess funds will 
be: 

( 1 ) reduction of mill levies used for school 
equalization; and 

(2) reduction of income taxes. 

A statement of intent is required for this bill 
because the department of revenue is granted 
authority to adopt rules for the administration and 
enforcement of the sales tax and use tax. The rules 



are intended to provide for an efficient process for 
the collection of the taxes, with minimum expense to 
both the taxpayer and the state. 

The legislature contemplates that rules 
adopted by the department should, at a minimum, 
address the following: 

(1) the registration and issuance of permits 
to persons engaging in the business of retail sales 
and services; 

(2) the reporting form for the payment of 
the taxes, along with the requirements for the 
retention by the taxpayers of the necessary records; 

(3) the required security and the acceptable 
forms of security for those taxpayers required to 
give security for payment of the taxes; 

(4) the use of the nontaxable transaction 
certificate and clarification of any exemption from 
the taxes, including nontaxable sales; 

(5) the necessary forms and the required 
procedures for reporting the taxes; 

(6) the definition of terms and 
establishment of procedures as appropriate for 
efficient administration of the sales tax and use tax; 

(7) procedures for the timely and efficient 
transfer of revenue to local governments and schools 
as replacement revenue for the reduced property tax 
base and property tax revenue; and 

(8) procedures for payment of the sales tax 
and use tax based on bracket amounts rather than 
using a rounding method. 



BE IT ENACTED BY THE LEGISLATURE OF 
THE STATE OF MONTANA: 

Section 1. Definitions. For purposes of 
[sections 1 through 71], unless the context requires 
otherwise, the following definitions apply: 

( 1 ) " Arboretums and botanical or zoological 
gardens" means establishments that are created for 
the exhibition of plants or animals and that are not 
operated for profit. 

(2) "Construction services" means the 
services performed by various trades engaged in the 
construction of dwellings, commercial buildings, 
farm buildings, and similar structures. The term 
includes but is not limited to carpentry, plumbing, 
the installation of heating systems and air 
conditioning, electrical work, masonry, excavating, 
and concrete work. The term does not include 
indirect services, such as accounting, architectural 
design, engineering, drafting, leasing of construction 
equipment, and surveying services. 

(3) "Department" means the department of 
revenue. 

(4) "Engaging in business" means carrying 
on or causing to be carried on any activity with the 
purpose of direct or indirect benefit. 

(5) "Food product for human consumption": 
(a) means food for domestic home 

consumption as defined in 7 U.S.C. 2012(g), as 
amended, for purposes of the federal food .stamp 
program as defined in 7 U.S.C. 2012(h), as 
amended; and 



(b) does not mean or include: 

(i) medicine or preparations, in liquid, 
powdered, granular, bottled, capsule, lozenge, or pill 
form, sold as a dietary supplement or adjunct not 
prescribed by a licensed physician; 

(ii) carbonated water or soft drinks marketed 
in containers; 

(iii) chewing gum; 

(iv) candies or confectioneries; or 

(v) seeds and plants to grow foods. 

(6) "Lease", "leasing", or "rental" means an 
arrangement in which, for consideration, property is 
used for or by a person other than the owner of the 
property. 

(7) (a) "Manufactured home" means a 
structure that: 

(i) is not an improvement to real property; 

(ii) is transportable in one or more sections; 

(iii) when erected on site is 320 square feet 
or more; 

(iv) is designed to be used as a dwelling 
with a permanent foundation when connected to the 
required utilities; and 

(v) contains plumbing, heating, and 
electrical systems. 

(b) The term also includes structures that: 

(i) do not meet the size requirements of 
subsection (7)(a)(iii) but for which the manufacturer 
voluntarily filed the certification required by the 
secretary of housing and urban development; and 

(ii) comply with the standards required 
under 42 U.S.C. 5401, et seq. 

(8) "Manufacturing" means combining or 
processing components or materials, including the 
processing for ores in a mill, smelter, refinery, or 
reduction facility, to increase their value for sale in 
the ordinary course of business. The term does not 
include construction. 

(9) "Medical services" means a service: 

(a) performed by a person licensed to 
practice a health care profession or health care 
occupation licensed under Title 37 or licensed as a 
mental health professional or certified under Title 
53, chapter 24, as a chemical dependency counselor 
as a regular part of the person's business activities; 
and 

(b) applied externally or internally to the 
human body or mind for the diagnosis, cure, 
mitigation, treatment, or prevention of disease. 

(10) "Medicine" or "drug" means and 
includes any substance or preparation that is: 

(a) intended for use by external or internal 
application to the human body or mind in the 
diagnosis, cure, mitigation, treatment, or prevention 
of disease; and 

(b) required by law or regulation to be 
prescribed by a person licensed to prescribe the 
medicine or drug. 

(11) (a) "Membership organization" means 
an organization that operates on a membership basis, 
that requires the payment of dues to hold 
membership, and that is not operated for profit. The 
term includes but is not limited to an organization: 



(i) that is engaged in promoting the 
business interests of its members, including an 
association that is owned by its members and that is 
organized to perform a specific business function; 

(ii) that is composed of professional persons; 

(iii) that is composed of workers organized 
for the purpose of improvement of wages and 
working conditions; 

(iv) that is engaged in civic, social, or 
fraternal activities; 

(v) that is established to promote the 
interests of a national, state, or local political party 
or candidate, including a group organized to raise 
funds for a political party or candidate; and 

(vi) that is operated for worship, religious 
training or study, or government or administration of 
an organized religion or for promotion of religious 
activities. 

(b) The term does not include an 
organization that provides sporting or recreational 
services to its members, such as a country club or a 
golf or tennis club. 

(12) "Museums and art galleries" means 
establishments that are created for the exhibition of 
curiosities or works of art and that are not operated 
for profit. 

(13) "Permit" means a seller's permit as 
described in (section 48]. 

(14) "Person" means; 

(a) an individual, estate, trust, receiver, 
cooperative association, club, corporation, company, 
firm, partnership, joint venture, syndicate, or other 
entity, including any gas, water, or electric utility 
owned or operated by a county, municipality, or 
other political subdivision of the state; or 

(b) the United States or any agency or 
instrumentality of the United States or the state of 
Montana or any political subdivision of the state. 

(15) "Sale", "selling", or "buying" means the 
transfer of property for consideration or the 
performance of a service for consideration. 

(16) (a) "Sales price", in addition to the 
other meanings provided in this subsection (16), 
means the total amount of money or the value of 
other consideration, except trade-in property of like 
kind, received from selling property in Montana, 
from leasing property used in Montana, or from 
performing .services in Montana. The term includes 
all consideration from the sale of property handled 
on consignment but excludes cash discounts allowed 
and taken and any type of time-price differential. 

(b) In an exchange in which the money or 
other consideration received does not represent the 
value of the property or service exchanged, sales 
price means the reasonable value of the property or 
service exchanged. 

(c) (i) Except as provided in [section 55), 
when the sale of property or services is made under 
any type of charge or conditional or time-sales 
contract or the leasing of property is made under a 
leasing contract, the seller or lessor shall treat the 
sales price, excluding any type of time-price 
differential, under the contract as the sales price at 
the time of the sale. 

(ii) If the seller or lessor transfers an interest 
in a contract referred lo in subsection (16)(c)(i) to a 
third person, the third person or lessee shall pay the 
sales tax or use lax upon the full sale or leasing 
contract amount, excluding any type of time-price 
differential. 

(d) Sales price includes the total 
commissions or fees derived from (he business of 
buying, selling, or promoting the purchase, sale, or 
lease, as an agent or broker on a commission or fee 
basis, of any property, service, stock, bond, or 
security. 

(e) Sales price includes all amounts paid by 
members of a cooperative association or similar 
organization for sales or leases of personal property 
or performance of services by the organization. 



(17) "Sales tax" and "use tax" mean the 
applicable tax imposed by [section 2]. 

(18) (a) "Service" means an activity that is 
engaged in for another person for consideration and 
that is distinguished from the sale or lease of 
property. The term includes; 

(i) activities performed by a person for its 
members or shareholders; and 

(ii) construction activities and all tangible 
personal property that will become an ingredient or 
component part of a construction project. 

(b) In determining what a service is, the 
intended use, principal objective, or ultimate 
objective of the contracting parties is irrelevant. 

(19) "Service address" means the location of 
telecommunications equipment from which 
telecommunications services are originated or at 
which telecommunications services are received by 
a taxpayer. In the event that the service address is 
not a specific location, as in the case of mobile 
phones, paging systems, maritime systems, air-to- 
ground systems, and similar systems, service address 
means the location of a taxpayer's primary use of 
telecommunications equipment as determined by a 
telephone number, authorization code, or location in 
Montana where the taxpayer's telecommunications 
services bills are sent. 

(20) "Social or family services 
organizations" means establishments that provide 
social or family services and rehabilitation services 
to persons with social or personal problems or to 
handicapped or disadvantaged persons and that are 
not operated for profit. These services include but 
are not limited to counseling services, senior citizen 
centers, youth centers, job counseling and training 
services, vocational rehabilitation services, and 
homes for physically and mentally handicapped 
persons. 

(21) "Therapeutic and prosthetic devices" 
includes but is not limited to prescription eyeglasses, 
contact lenses, dentures, hearing aids, wheelchairs, 
crutches, or artificial limbs, prescribed, ordered, or 
dispensed by a person licensed to perform medical 
services. 

(22) "Transportation services" means the 
transportation of persons or property by air, ground, 
or water. The term includes any reasonably 
necessary associated services for the transportation 
of persons or property. 

(23) "Use" or "using" includes use, 
consumption, or storage, other than storage for resale 
or for use solely outside this state, in the ordinary 
course of business. 

Section 2. Imposition and rate of sales tax 
and use tax — exceptions. ( 1 ) Except as provided in 
subsections (5) and (6), a sales tax of 4% is imposed 
on all sales of property or services. The tax is 
imposed on the purchaser and must be collected by 
the seller and paid to the department by the seller. 
The seller holds all taxes collected in trust for the 
state. The tax must be applied to the sales price. 

(2) For the privilege of using property in 
this state, there is imposed on the person using 
property a use tax equal to 4% of the value of the 
property that was; 

(a) manufactured by the person using the 
property in this state; 

(b) acquired outside this state as the result 
of a tran.saction that would have been subject to the 
sales tax had it occurred within this state; 

(c) acquired within the exterior boundaries 
of an Indian reservation within this state as a result 
of a transaction thai would have been subject to the 
sales tax had it occurred outside of the exterior 
boundaries of an Indian reservation within this state; 
or 

(d) acquired as the result of a transaction 
that was not initially subject to the sales tax imposed 
by subsection (1) or the use tax imposed by 
subsection (2)(b) or (2)(c) but which transaction. 



because of the buyer's subsequent use of the 
property, is subject to the sales tax or use tax. 

(3) For the privilege of using services in 
this state, there is imposed on the person using 
services a use tax equal to 4% of the value of the 
services at the time at which they were rendered. 
Services taxable under this section must have been 
rendered as the result of a transaction that was not 
initially subject to the sales tax or use tax but that 
because of the buyer's subsequent use of the service, 
is subject to the sales tax or use tax. 

(4) For purposes of this section, the value 
of property must be determined as of the time of 
acquisition, introduction into this state, or conversion 
to use, whichever is latest. 

(5) (a) The sales tax or use tax on a motor 
vehicle is imposed by 61-3-502 and 61-3-504(4). 
The sale or use of a vehicle subject to the tax 
imposed under 61-3-502 or 61-3-504(4) is exempt 
from the sales tax and use tax imposed under this 
section. 

(b) The sale of property or services exempt 
or nontaxable under [sections 1 through 71] is 
exempt from the tax imposed in subsections (1) 
through (3). 

(6) (a) A sales tax of 2.5% is imposed uf)on 
the sales of all new or used mobile homes, as 
defined in 15-1-101, and on all manufactured homes, 
as defined in [section 1], that are not an 
improvement to real property. The tax is imposed on 
the purchaser and must be collected by the seller and 
paid to the department by the seller. The tax must be 
applied to the sales price. The seller holds all taxes 
collected in trust for the state. 

(b) For the privilege of using a new or used 
mobile home or manufactured home in this state, 
there is imposed on the person using the property a 
use lax equal to 2.5% of the value of a home that 
was: 

(i) acquired outside this state as the result 
of a transaction that would have been subject to the 
sales tax had it occurred within this state; 

(ii) acquired within the exterior boundaries 
of an Indian reservation within this state as a result 
of a transaction that would have been subject to the 
sales tax had it occurred outside of the exterior 
boundaries of an Indian reservation within this state; 
or 

(iii) acquired as the result of a transaction 
that was not initially subject to the sales tax imposed 
by subsection (6)(a) or the use tax imposed by 
subsection (6)(b)(i) but which transaction, because of 
the buyer's subsequent use of the property, is subject 
to the sales tax or use tax. 

(c) The provisions of [sections I through 
71] apply to this subsection except as specifically 
provided in this subsection. 

Section 3. Presumption of taxability — 
value — rules. ( I ) In order to prevent evasion of the 
sales tax or use tax and to aid in its administration, 
it is presumed that: 

(a) all sales by a person engaging in 
business are subject to the sales tax or use tax; and 

(b) all property bought or sold by any 
person for delivery into this state is bought or sold 
for a taxable use in this state. 

(2) In determining the amount of tax due on 
the use of property or services, it is presumed, in the 
absence of preponderant evidence of another value, 
that value means the total amount of property or the 
reasonable value of other consideration paid for the 
use of the property or service, exclusive of any type 
of time-price differential. However, in an exchange 
in which the amount of money paid does not 
represent the value of the property or service 
purchased, the use tax must be imposed on the 
reasonable value of the property or service 
purchased. 

(3) The department shall adopt rules 
providing for the payment of the sales tax and use 



tax based on a bracket amount method rather than a 
rounding method or other method. 

Section 4. Separate statement of tax — no 
advertising to absorb or refund tax. (1) If any 

person collects a tax in excess of the tax imposed by 
[section 2), both the tax and the excess lax must be 
remitted to the department. 

(2) The sales tax must be stated separately 
for all sales, except for sales from coin-operated or 
currency-operated machines. 

(3) A person may not advertise, hold out, or 
state to the public or to any customer that the tax 
imposed by [sections 1 through 7 1 ] will be absorbed 
or refunded. 

Section 5. Liability of user for payment of 
sales tax or use tax. (1) A person in this state who 
buys or uses property or services is liable to the 
state for payment of the sales tax or use tax if a tax 
is payable on the sales price or value of the property 
or services but has not been paid. 

(2) The liability imposed by this section is 
discharged if the buyer has paid the sales tax or use 
tax to the seller for payment to the department. 

Section 6. Collection of sales tax and use 
tax — listing of business locations and agents — 
severability. (1) A person engaged in the business 
of selling property or services subject to taxation 
under [sections I through 71 [ shall collect the sales 
tax from the purchaser and pay the tax collected to 
the department. 

(2) (a) A person who solicits or exploits the 
consumer market in this state by regularly and 
systematically performing an activity within this 
state and whose sales are not subject to the sales tax 
shall collect the use tax from the purchaser and pay 
the tax collected to the department. 

(b) "Activity", for the purposes of this 
section, includes but is not limited to engaging in 
any of the following in this state: 

(i) maintaining an office or other place of 
business that solicits orders through employees or 
indep>endent contractors; 

(ii) canvassing; 

(iii) demonstrating; 

(iv) collecting money; 

(v) warehousing or storing merchandise; 

(vi) delivering or distributing products as a 
consequence of an advertising or other sales program 
directed at potential customers; 

(vii) soliciting orders for property or services 
by means of telecommunication or a television 
shopping system or by providing telecommunication 
services that use toll or toll-free numbers and that 
are intended to be broadcast by cable television or 
other means to consumers in this state; 

(viii) soliciting orders, pursuant to a contract 
with a broadcaster or publisher located within this 
state, for property or services by means of 
advertising disseminated primarily to consumers 
located in this state and only secondarily to 
bordering jurisdictions; 

(ix) soliciting orders for property or services 
by mail, through the distribution of catalogs, 
periodicals, advertising flyers, or other advertising; 

(x) soliciting orders, pursuant to a contract 
with a cable television operator located in this state, 
for tangible property or services by means of 
advertising transmitted or distributed over a cable 
television system in this state; 

(xi) any act that benefits from any banking, 
financing, debt collection, telecommuracation, or 
marketing activities occurring in this state or that 
benefits from the location in this state of authorized 
installation, servicing, or repair facilities; or 

(xii) the acceptance by a for-profit entity of 
hazardous waste, as defined in 75-10-403, or 
infectious waste, as defined in 75-10-1003, for 
treatment, disposal, or incineration. 

(3) As used in [sections 1 through 7I[, 
"maintaining an office or other place of business" 



means: 

(a) any person having or maintaining within 
this slate, directly or by a subsidiary, an office, 
distribution house, sales house, warehou.se, or place 
of business; or 

(b) any agent operating within this state 
under the authority of the person or its subsidiary, 
whether the place of business or agent is located in 
the state permanently or temporarily or whether or 
not the person or subsidiary is authorized to do 
business within this state. 

(4) A person engaging in business in this 
state shall, before making any sales, obtain a seller's 
permit as provided in [section 48] and at the time of 
making a sale, whether within or outside of the state, 
collect the tax imposed by [section 2] from the 
purchaser and give to the purchaser a receipt, in the 
manner and form prescribed by rule, for the tax 
paid. 

(5) The department may authorize the 
collection of the tax imposed by [section 2] by any 
retailer who does not maintain a place of business 
within this state but who, to the satisfaction of the 
department, is in compliance with the law. When 
authorized, the person shall collect the lax upon all 
properly and services that, to the person's 
knowledge, are for use within this state and subject 
to taxation under (sections I through 7I|. 

(6) All sales lax and use lax required to be 
collected and all sales tax and use tax collected by 
any person under [sections I through 71] constitute 
a debt owed to this state by the person required to 
collect the lax. 

(7) A person selling property or services to 
residents of this state, when the property is delivered 
to a location within this stale or when the use of the 
service occurs within this slate, shall, upon request 
by the department, provide a list of all sales to the 
department. The list must include the name and 
address of each purchaser and the amount of each 
sale. The department may pay to any person 
furnishing a list of sales or purchasers the reasonable 
costs of reproducing the list. 

(8) A person engaging in business in this 
state shall provide to the department: 

(a) the name and address of all the person's 
agents operating in this stale; and 

(b) the location of each of the person's 
distribution houses or offices, sales houses or 
offices, and other places of business in this state. 

(9) If any application of this section is held 
invalid, the application to other situations or persons 
is not affected. 

(10) Publishers who contract for newspaper 
delivery services shall include the sales tax in the 
newspaper subscription price and shall collect and 
pay the tax to the department. The contract carrier is 
not responsible for collection of the sales lax and 
payment to the department. 

Section 7. Nontaxable transaction 
certificate — requirements. (I) A nontaxable 
transaction certificate executed by a buyer or lessee 
must be in the possession of the seller or lessor at 
the time a nontaxable transaction occurs. 

(2) A nontaxable transaction certificate 
must contain the information and be in the form 
prescribed by the department. 

(3) Only a buyer or lessee who has 
registered with the department and whose seller's 
permit is valid may execute a nontaxable transaction 
certificate. 

(4) If the seller or lessor accepts a 
nontaxable transaction certificate within the required 
lime and believes in good faith that the buyer or 
lessee will employ the properly or service transferred 
in a nontaxable manner, the properly executed 
nontaxable transaction certificate is considered 
conclusive evidence that the sale is nontaxable. 

Section 8. Nontaxable transaction 
certificate — form. ( 1 ) The department shall provide 



for a uniform nontaxable transaction certificate. A 
purchaser shall use the certificate when purchasing 
goods or services for resale or for other nontaxable 
transactions. 

(2) At a minimum, the certificate must 
provide: 

(a) the number of the seller's permit issued 
to the purchaser as provided in [section 48); 

(b) the general character of property or 
service sold by the purchaser in the regular course of 
business or the category of nonprofit organization of 
the purchaser; 

(c) the property or service purchased; 

(d) the name and address of the purchaser; 
and 

(e) a signature line for the purchaser. 

(3) The department shall adopt rules to 
provide procedures for application for and provision 
of a nontaxable transaction certificate prior to [the 
applicability date of this section). The rules adopted 
by the department should ensure that each eligible 
person who has applied in a timely fashion is issued 
a nontaxable transaction certificate prior to [the 
applicability date of this section). 

Section 9. Exemption — government 
agencies. All sales by, sales to, or uses by the 
United Stales, an agency or instrumentality of the 
United States or of this state, a political subdivision 
of this state, an Indian tribe, or a foreign government 
are exempt from the sales tax and use tax. 

Section 10. Exemption — utility services. 
( 1 ) The sale of natural gas, water, electricity, 
telephone communications services, refuse collection 
and disposal, or other utility services is exempt from 
the sales tax and use lax. 

(2) For purposes of this section, the term 
"utility services" does not include .services provided 
by a cable television system as that term is defined 
in 35-18-102. 

Section 1 1 . Exemption — food products. 
(1) Except as provided in subsection (2), the sale or 
u.se of food products for human consumption is 
exempt from the sales tax and use tax. 

(2) The sale of food products sold in the 
following manner is subject to the sales tax: 

(a) food products served as meals on or off 
the premises of the retailer; 

(b) milk or cream sold as beverages 
commonly referred to as milkshakes, malted milks, 
or any similar beverage; 

(c) food products furnished, prepared, or 
served for consumption at tables, chairs, or counters 
or from trays, glasses, dishes, or other tableware, 
whether provided by the retailer or by a person with 
whom the retailer contracts to furnish, prepare, or 
serve food products to others; 

(d) food products sold for immediate 
consumption, even though the products are sold on 
a "takeout", "to go", or "U-bake" order and are 
actually packaged or wrapped and taken from the 
premises of the retailer; 

(e) food products sold for consumption 
within a place that charges an admission fee; or 

(f) food or drink vended by or through 
machines on behalf of a vendor. 

(3) The sale of food or a food service 
offered or delivered as part of a residential living 
arrangement and consumed by a person who is party 
to the arrangement is exempt from the sales tax and 
use tax. 

Section 12. Exemption — special 
supplemental food program for women, infants, 
and children. The sale of food purchased under the 
special supplemental food program for women, 
infants, and children (WIC) as specified in 42 U.S.C. 
1786, as amended, is exempt from the sales tax and 
use tax. 

Section 13. Exemption — nursing homes. 
All sales to or uses by a nursing facility subject to 
the utilization fee for bed days in nursing facilities 



provided for in 15-60-102 are exempt from the sales 
tax and use tax. 

Section 14. Exemption - prescribed 
medicine, drugs, and certain devices — medical 
services. (1 ) Medicine, drugs, insulin, contraceptives, 
and therapeutic and prosthetic devices are exempt 
from the sales tax and use tax. 

(2) The following are exempt from the sales 
tax and use lax: 

(a) medical services; 

(b) any service reasonably related to the 
delivery of a medical service: 

(i) by or at a health care facility as defined 
in 50-5-101; or 

(ii) by or at the office of a physician, a 
mental health professional, or a dentist. 

Section 1 5 . Exemption — wages. Except as 
provided in [sections I through 71], wages, salaries, 
commissions, and any other form of remuneration 
for personal services are exempt from the sales tax 
if paid by an employer to an employee. 

Section 16. Exemption — agricultural 
products - livestock feeding. (I) (a) The sale of 
livestock, live poultry, unprocessed agricultural 
products, hides, or pelts by a grower, producer, 
trapper, or nonprofit marketing association is exempt 
from the sales tax. 

(b) A person engaged in the business of 
buying and selling wool or mohair or of buying and 
selling livestock on the person's own account and 
without the services of a broker, auctioneer, or other 
agent is considered a producer for the purposes of 
subsection (l)(a). 

(2) Sales from feeding, pasturing, penning, 
or handling or training livestock prior to sale are 
exempt from the sales tax. 

Section 17. Exemption - gambling and 
amusement services. All gambling or amusement 
services, including live games, video games, 
horseracing, and lotteries, which are licensed 
pursuant to Title 23, chapter 4, 5, or 7, are exempt 
from the sales tax and use tax. 

Section 18. Exemption ~ insurance 
premiums. The premiums of an insurance company, 
a health service corporation, or a fraternal benefit 
society or of an agent of the company, corporation, 
or society are exempt from the sales tax. 

Section 19. Exemption - dividends, 
commissions and interest. The following are 
exempt from the sales tax: 

( 1 ) interest on money loaned or deposited; 

(2) dividends or interest from stocks, bonds, 
or securities; 

(3) proceeds from the sale of stocks, bonds, 
or securities; and 

(4) commissions or fees, derived from the 
business of buying, selling, or promoting any stock, 
bond, security, or contract of insurance. 

Section 20. Exemption - fuel. The sale 
and use of gasoline, ethanol blended for fuel, and 
special fuel, including natural gas or propane, upon 
which tax has been paid or will be paid under Title 
15, chapter 70, is exempt from the sales tax and use 
tax. 

Section 21. Exemption -- isolated or 
occasional sale or lease of property or services. 
The isolated or occasional sale or lease of property, 
other than a vehicle, or the performance of a service 
by a person who is not regularly engaged in or who 
does not claim to be engaged in the business of 
selling or leasing the same or a similar property or 
service is exempt from the sales tax and use tax. 
Occasional sales include sales that are occasional but 
not continuous and that are made for the purpose of 
fundraising by nonprofit organizations, including but 
not limited to youth clubs, service clubs, and 
fraternal organizations. 

Section 22. Exemption - oil, gas, and 
mineral interests. The sale or lease of interests in 
minerals, as defined in 15-38-103, is exempt from 



the sales tax and use tax. 

Section 23. Exemption — minerals. (1) 
Except as provided in subsection (2), the sale or use 
by a miner or by a producer of a mineral or by a 
broker acting on behalf of a miner or producer of a 
mineral, as defined in 15-38-103, is exempt from the 
sales tax and use tax. 

(2) Minerals that are used for producing 
energy or that are used for conversion into energy 
are subject to the sales tax and use tax unless the 
energy is produced or converted for resale as a form 
of energy. 

(3) Minerals used by the producer of the 
minerals for purposes of exploring for, producing, or 
transporting minerals are exempt from the sales tax 
and use tax except that the exemption does not 
include refined petroleum products. 

Section 24. Exemption — personal effects. 
The use by an individual of personal or household 
effects brought into the state for the establishment 
by the individual of an initial residence in this state 
and the use of property brought into the state by a 
noiiresident for the nonresident's own nonbusiness 
use while temporarily within this state is exempt 
from the use tax. 

Section 25. Exemption — advertising 
services. The sale or use of advertising services, 
including the actual creation or development of the 
advertising, is exempt from the sales tax and use tax. 
For purposes of this section, "advertising services" 
includes but is not limited to all advertising by: 

( 1 ) newspaper, magazine, or other 
publication; 

(2) radio or television; 

(3) billboard, banner, sign, placard, or the 
like; 

(4) handbill; or 

(5) any other advertising means, media, or 
method. 

Section 26. Exemption — day-care 
services. The sale or use of day-care services is 
exempt from the sales tax and use tax. 

Section 27. Exemption — feed, fertilizers, 
and agricultural services. (1) The sale or use of 
feed for livestock, fish raised for human 
consumption, poultry, or animals raised for their 
hides or pelts; semen, ova, or embryos used in 
animal husbandry; seeds; Christmas trees; roots; 
bulbs; soil conditioners; fertilizers; insecticides; 
insects used to control the population of other 
insects; fungicides; weedicides; herbicides; or 
irrigation water for the production of agricultural 
products in commercial quantities is exempt from 
sales tax and use tax. 

(2) The sale or use of an agricultural 
service is exempt from the sales tax and use tax. 

Section 28. Exemption ~ certain 
chemicals, reagents, and substances. (I) The sale 
or use by any person of any chemical, reagent, or 
other substance that is normally used or consumed in 
the processing of ores or hydrocarbons at the 
extraction site; in a mill, smelter, refinery, or 
reduction facility; or in acidizing oil wells is exempt 
from the sales tax and use tax. 

(2) The sale or use of explosives, blasting 
material, or dynamite is not exempt under this 
section. 

Section 29. Exemption — sale of certain 
services of mining or manufacturing. The sale or 
use of the service of mining, manufacturing, 
combining, or processing components or materials, 
including minerals, is exempt from the sales tax and 
use tax. 

Section 30. Exemption — transportation 
services. The sale or use of transportation services 
is exempt from the sales tax and use tax. 

Section 31. Exemption — private school 
tuition. Tuition charged for attending a private 
educational institution that is exempt from taxation 
under section 501(c)(3) of the Internal Revenue 



Code is exempt from the sales tax and use lax. 

Section 32. Exemption — construction 
services. The sale or use of construction services for 
the construction, fabrication, or remodeling of 
residential or commercial buildings is exempt from 
the sales tax and use tax. 

Section 33. Exemption — rehabilitation 
services. The sale or use of rehabilitation services, 
as defined in 39-71-1011(6), to or by a disabled 
worker is exempt from the sales tax and use tax. 

Section 34. Exemption — sales by social 
or family services organizations. The sale of 
property and services by a social or family services 
organization is exempt from the sales tax and use 
tax. 

Section 35. Exemption — sales by 
museum, art gallery, arboretum, or botanical or 
zoological garden. The sale of property and services 
by museums and art galleries and by arboretums and 
botanical or zoological gardens is exempt from the 
sales tax and use tax. 

Section 36. Exemption — sales by 
membership organization. The sale of property and 
services by a membership organization is exempt 
from the sales tax and use tax. 

Section 37. Nontaxability — certain 
nonprofit organizations. ( 1 ) All sales to or uses by 
an organization not operated for gain or profit and 
which may have property exempt from property 
taxation under 15-6-201 are nontaxable. 

(2) In the case of a sale, the buyer must 
deliver a nontaxable transaction certificate. 

Section 38. Nontaxability — sale of 
property for resale. The sale of property is 
nontaxable if: 

( 1 ) the sale is made to a buyer who delivers 
a nontaxable transaction certificate to the seller; and 

(2) the buyer resells the property either by 
itself or in combination with other property in the 
ordinary course of business and the property will be 
subject to the sales tax. 

Section 39. Nontaxability — sale of service 
for resale. (1) The sale of a service for resale is 
nontaxable if: 

(a) the sale is made to a person who 
delivers a nontaxable transaction certificate; 

(b) except as provided in subsection (2), the 
buyer resells the service and separately states the 
value of the service purchased in the charge for the 
service in the subsequent sale; and 

(c) the subsequent sale is in the ordinary 
course of business and subject to the sales tax. 

(2) The requirement in subsection (I)(b) to 
separately state the value of the service purchased 
for resale does not apply to the sale of telephone 
services. 

Section 40. Nontaxability — sale to miner 
or manufacturer. (1) The sale of property to a 
buyer engaged in the business of mining or 
manufacturing is nontaxable if: 

(a) the buyer delivers a nontaxable 
transaction certificate to the seller; and 

(b) the buyer incorporates the property as 
an ingredient or component part of the product in 
the business of mining or manufacturing. 

(2) For the purposes of this section, 
electrical energy or electricity used or consumed by 
electrolytic reduction used in the reduction or 
refinement of ores is considered a component part of 
the product. 

Section 41. Nontaxability — sale of 
tangible personal property for leasing. The sale of 
property, other than coin-operated or currency- 
operated machines, and mobile homes purchased in 
this state is nontaxable if: 

( 1 ) the sale is made to a buyer who delivers 
a nontaxable transaction certificate to the seller; 

(2) the buyer is engaged in a business 
deriving more than 50% of its receipts from leasing 
property of the type sold; and 



(3) the buyer does not use the property in 
any manner other than holding it for lease or sale or 
leasing or selling it, either by itself or In 
combination with other property, in the ordinary 
course of business. 

Section 42. Lease for subsequent lease. ( I ) 
The lease of property, other than furniture or 
appliances, and the rental or lease of property, other 
than coin-operated or currency-operated machines, 
and mobile homes, is nontaxable if: 

(a) the lease is made to a lessee who 
delivers a nontaxable transaction certificate; and 

(b) the lessee does not use the property in 
any manner other than for subsequent lease in the 
ordinary course of business. 

(2) For the purposes of this section, the 
rental or lease by a person of a motion picture or a 
motion picture trailer for display on theater premises 
is considered a lease for subsequent lease. 

Section 43. Nontaxability — sale or lease 
of real property and lease of mobile homes. ( I ) (a) 
The sale or lease of real property or improvements 
is nontaxable. 

(b) The lease or rental of a mobile home 
for a period of 1 month or more is nontaxable. 

(2) The inclusion of furniture or appliances 
furnished by the landlord or lessor as part of a 
leased or rented dwelling, house, mobile home, 
cabin, condominium, or apartment is nontaxable. 

Section 44. Nontaxability - transactions 
in interstate commerce — certain property used in 
interstate commerce — exception. (1) A transaction 
in interstate commerce is nontaxable to the extent 
that the imposition of the sales tax or use tax would 
be unlawful under the United States constitution. 

(2) The following are also nontaxable: 

(a) iransmittmg messages or conversations 
by radio when the transmissions originate from a 
point outside this state and are received at a point 
within this state; and 

(b) the sale of radio or television broadcast 
time if the advertising message is supplied by or on 
behalf of a national or regional seller or an 
advertiser that does not have its principal place of 
business in this state or that is not incorporated 
under the laws of this state. 

(3) The sale or lease of a vehicle with a 
gross vehicle weight in excess of 46,000 pounds 
used primarily in interstate commerce and registered 
under 61-3-721 is nontaxable. 

Section 45. Nontaxability — sale of certain 
services to out-of-state buyer. (I) Except as 
provided in subsection (3), sales of a service are not 
taxable if the sale is made to a buyer who delivers 
to the seller either a nontaxable transaction 
certificate or other evidence acceptable to the 
department that the transaction and the person who 
delivers the nontaxable transaction certificate or 
other evidence acceptable to the department meet the 
conditions set out in subsection (2). 

(2) Sales of a service are not taxable if the 
buyer of the service, any of the buyer's employees, 
or any person in privity with the buyer: 

(a) does not make initial use of the product 
or the service in this state; 

(b) does not take delivery of the product or 
the service in this state; or 

(c) concurrent with the performance of the 
service, does not have a regular place of work in this 
state or spend more than brief and occasional 
periods of time in this state and: 

(i) does not have any communication in this 
state related in any way to the subject matter, 
performance, or administration of the service with 
the person performing the service; or 

(ii) does not personally perform work in this 
state related to the subject matter of the service. 

(3) Architectural, engineering, surveying, or 
graphic design services are nontaxable if the product 
resulting from the service or the service is used or 



applied exclusively outside of Montana. For the 
purposes of this subsection, the provisions of 
subsection (2) do not apply. 

(4) Services that initially were nontaxable 
under this section but that no longer meet the criteria 
in subsection (2) are nontaxable only for the period 
prior to the disqualification and are, after 
disqualification, taxable. 

Section 46. Nontaxability — use of 
property for leasing. The value of leased property 
is not considered in computing the use tax due if the 
person holding the property for lease: 

(1) is engaged in a business that derives a 
substantial portion of its receipts from leasing or 
selling property of the type leased; 

(2) does not use the property in any manner 
other than holding it for lease or sale or leasing or 
selling it either by itself or in combination with 
other tangible personal property in the ordinary 
course of business; and 

(3) does not use the property in a manner 
incidental to the performance of a service. 

Section 47. Credit — out-of-state taxes. If 
a sales, use, or similar tax has been levied by 
another state or a political subdivision of another 
state on property that was bought outside this state 
but that will be used or consumed in this state and 
the tax was paid by the current user, the amount of 
tax paid may be credited against any use lax due this 
state on the same property. The credit may not 
exceed the sales tax or use tax due this state. 

Section 48. Seller's permit. (I) A person 
wishing to engage in business in this state shall 
obtain a seller's permit before engaging in business 
in this state. 

(2) Upon an applicant's compliance with 
[sections 1 through 7 1 ], the department shall issue to 
the applicant a separate, numbered seller's permit for 
each place of business within Montana. A permit is 
valid until revoked or suspended but is not 
assignable. A permit is valid only for the person in 
whose name it is issued and for the transaction of 
business at the place designated. The permit must be 
conspicuously displayed at all times at the place for 
which it is issued. 

(3) The department shall adopt rules to 
provide procedures for application for and provision 
of a seller's permit to a person engaging in business 
in this state prior to [the applicability date of this 
section]. The rules adopted by the department should 
ensure that each person engaging in business in this 
slate prior to [the applicability date of this section] 
is issued a seller's permit prior to [the applicability 
date of this section]. 

Section 49. Permit application 
requirements — place of business — form. ( I ) (a) 
A person desiring to engage in the business of 
making retail sales or providing services in Montana 
shall file with the department an application for a 
permit. If the person has more than one place of 
business, an application may include multiple 
locations. 

(b) A vending machine operator who has 
more than one vending machine location is 
considered to have only one place of business for 
purposes of this section. 

(c) An applicant who does not have a 
regular place of business and who moves from place 
to place is considered to have only one place of 
business and shall attach the permit to the 
applicant's cart, stand, truck, or other merchandising 
device. 

(2) Each person or class of persons 
obligated to file a return under [sections I through 
71] is required to file an application for a permit. 

(3) Each application for a permit must be 
on a form prescribed by the department and must set 
forth the name under which the applicant intends to 
transact business, the location of the applicant's 
place or places of business, and other information 



that the department may require. The application 
must be filed by the owner if the owner is a natural 
person, by a member or partner if the owner is an 
association or partnership, or by a person authorized 
to sign the application if the owner Is a corporation. 
Section 50. Revocation or suspension of 
permit — hearing — notice — appeal. ( 1 ) Subject to 
the provisions of subsection (2), the department may, 
for reasonable cause, revoke or suspend any permit 
held by a person who fails to comply with the 
provisions of [sections I through 7 1 ). 

(2) The department shall provide written 
notice and an opportunity for a hearing on a 
proposed revocation or suspension. The hearing must 
be conducted informally and is not subject to the 
Montana Administrative Procedure Act. 

(3) If a permit is revoked, the department 
may not issue a new permit except upon application 
accompanied by reasonable evidence of the intention 
of the applicant to comply with the provisions of 
[sections I through 71]. The department may require 
security In addition to that authorized by (section 59] 
in an amount reasonably necessary to ensure 
compliance with (sections I through 71] as a 
condition for the Issuance of a new permit to the 
applicant. 

(4) A person aggrieved by the department's 
final decision to revoke a permit as provided In 
subsection (I) may appeal the decision lo the state 
tax appeal board wilhln 30 days following the date 
on which the department issued its final decision. 

(5) A decision of the state lax appeal board 
may be appealed to the district court. 

Section 51. Improper use of subject of 
purchase obtained with nontaxable transaction 
certincate — penalty. ( I ) If a purchaser who uses a 
nontaxable transaction certificate uses the subject of 
the purchase for a purpose other than one allowed as 
nontaxable under [sections I through 7 1 ], the u.se is 
considered a taxable sale as of the time of first use 
by the purchaser and the sales price is the price the 
purchaser paid. If the sole nonexempt use is rental 
while holding for sale, the purcha.ser shall include In 
the sales price the amount of the rental charged. 
Upon subsequent sale of the property, the seller shall 
include the entire amount of the sales price, without 
deduction of amounts previously received as rentals. 

(2) A person who uses a certificate for 
property that will be used for purposes other than 
the purpose claimed is subject to a penalty, payable 
to the department, of $100 for each transaction in 
which an improper use of a certificate has occurred. 

(3) Upon a showing of good cause, the 
department may abate or waive the penalty or a 
portion of the penalty. 

Section 52. Commingling nontaxable 
certificate goods. If a purchaser uses a nontaxable 
transaction certificate with respect to the purchase of 
fungible goods and commingles these goods with 
fungible goods that were not purchased with a 
nontaxable transaction certificate but that are of such 
similarity that the identity of the goods in the 
commingled mass cannot be determined, sales from 
the mass of commingled goods are considered to be 
sales of the goods purchased with the certificate 
until the quantity of commingled goods sold equals 
the quantity of goods originally purchased under the 
certificate. 

Section 53. Liability for payment of tax — 
security for retailer without place of business — 
penalty. ( I ) Liability for the payment of the sales 
tax and use tax is not extinguished until the taxes 
have been paid to the department. 

(2) A retailer who does not maintain a 
place of business in this state is liable for the sales 
tax or use tax in accordance with [sections I through 
7 1 ] and may be required to furnish adequate security 
as provided in [section 59] to ensure collection and 
payment of the taxes. When authorized and except 
as otherwise provided in [sections I through 7 1 ], the 



retailer is liable for the taxes upon all property sold 
and services provided in this state in the same 
manner as a retailer who maintains a place of 
business within this state. The seller's permit 
provided for in [section 48] may be canceled at any 
time if the department considers the security 
inadequate or believes that the taxes can be collected 
more effectively in another manner. 

(3) An agent, canvasser, or employee of a 
retailer doing business in this state who does not 
possess a seller's permit issued by the department 
may not sell, solicit orders for, or deliver any 
property or services in Montana. If an agent, 
canvasser, or employee violates the provisions of 
[sections 1 through 71], the person is subject to a 
fine of not more than $100 for each separate 
transaction or event. 

Section 54. Interstate and intrastate 
carriers as retailers. A person engaged in the 
business of intrastate or interstate transportation of 
property or passengers shall register as a retailer and 
pay the taxes imposed by [sections I through 71). 

Section SS. Application for permission to 
report on accrual basis. (I) A person who has a 
seller's permit may apply to the department for 
permission to report and pay the sales tax or use tax 
on an accrual basis. 

(2) The application must be made on a 
form prescribed by the department that contains 
information that the department may require. 

(3) A person may not report or pay the 
sales tax or use tax on an accrual basis unless the 
person has received written permission from the 
department. 

Section 56. Returns — payment — 
authority of department ( 1 ) Except as provided in 
subsection (2), on or before the 15th day of each 
month in which the tax imposed by [sections I 
through 71] is payable, a return, on a form provided 
by the department, and payment of the tax for the 
preceding month must be filed with the department. 
Every person engaged in business in this state or 
using property in this state that is subject to tax 
under [sections I through 71] shall file a return. A 
person making retail sales at two or more places of 
business shall file a separate return for each separate 
place of business, 

(2) A person who has a tax liability that 
averages less than $100 per month may report and 
pay the tax imposed by (sections 1 through 7 1 ] on a 
quarterly basis and shall file a return with payment 
on or before the 15th day of the month following the 
end of the quarter. 

(3) (a) For the purposes of the sales tax or 
use tax, a return must be filed by: 

(i) a retailer required to collect the tax; and 
(ii) a person who: 

(A) purchases any items the storage, use, or 
other consumption of which is subject to the sales 
tax or use tax; and 

(B) has not paid the tax to a retailer 
required to pay the tax. 

(b) Each return must be authenticated by 
the person filing the return or by the person's agent 
authorized in writing to file the return. 

(4) (a) A person required to collect and pay 
to the department (he taxes imposed by [sections 1 
through 71] shall keep records, render statements, 
make returns, and comply with the provisions of 
(sections I through 71] and the rules prescribed by 
the department. Each return or statement must 
include the information required by the rules of the 
department. 

(b) For the purpose of determining 
compliance with the provisions of [sections I 
through 7 1 ], the department is authorized to examine 
or cause to be examined any books, papers, records, 
or memorandums relevant to making a determination 
of the amount of tax due, whether the books, papers, 
records, or memorandums are the property of or in 



the possession of the person filing the return or 
another person. In determining compliance, the 
department may use statistical sampling and other 
sampling techniques consistent with generally 
accepted auditing standards. The department may 
also: 

(i) require the attendance of a person 
having knowledge or information relevant to a 
return; 

(ii) compel the production of books, papers, 
records, or memorandums by the person required to 
attend; 

(iii) implement the provisions of 15-1-703 if 
the department determines that the collection of the 
tax is or may be jeopardized because of delay; 

(iv) take testimony on matters material to 
the determination; and 

(v) administer oaths or affirmations. 

(5) Pursuant to rules established by the 
department, returns may be computer-generated and 
electronically filed. 

Section 57. Credit for taxes paid on 
worthless accounts — taxes paid if account 
collected. ( 1 ) Sales taxes paid on an accrual basis by 
a person filing a return under [section 56] on sales 
represented by accounts found to be worthless and 
actually deducted by the person as a bad debt for 
federal income tax purposes may be credited on a 
subsequent payment of the tax. 

(2) If the accounts are subsequently 
collected, the sales tax must be paid on the amount 
collected. 

Section 58. Vendor allowance. (I) (a) 
Beginning April I, 1994, and ending March 31, 
1995, a person filing a return under [section 56] may 
claim a monthly vendor allowance for each 
permitted location in the amount of 4% of the tax 
determined to be payable to the state or $100 per 
month, whichever is less. 

(b) A person filing a quarterly return may 
claim 4% of the tax determined to be payable to the 
state or $300 per quarter, whichever is less. 

(c) The allowance may be deducted on the 
return. 

(2) (a) Beginning April 1, 1995, and 
thereafter, a person filing a return under [section 56] 
may claim a monthly vendor allowance for each 
permitted location in the amount of 2.5% of the tax 
determined to be payable to the state or $100 per 
month, whichever is less. 

(b) A person filing a quarterly return may 
claim 2.5% of the tax determined to be payable to 
the state or $300 per quarter, whichever is less. 

(c) The allowance may be deducted on the 
return. 

Section 59. Security — limitations — sale 
of security deposit at auction — bond. (1) The 
department may require a retailer to deposit, with the 
department, security in a form and amount that the 
department determines is appropriate. The deposit 
may not be more than twice the estimated average 
liability for the period for which the return is 
required to be filed or $10,000, whichever is less. 
The amount of security may be increased or 
decreased by the department, subject to the 
limitations provided in this section. 

(2) (a) If necessary, the department may 
sell, at public auction, property deposited as .security 
to recover any sales tax or use tax amount required 
to be collected, including interest and penalties. 

(b) Notice of the sale must be served 
personally upon or sent by certified mail to the 
person who deposited the security. 

(c) After the sale, any surplus above the 
amount due that is not required as security under 
this section must be returned to the person who 
deposited the security. 

(3) In lieu of security, the department may 
require a retailer to file a bond, issued by a surety 
company authorized to transact business in this state. 



to guarantee solvency and responsibility. 

(4) In addition to the other requirements of 
this section, the department may require the 
corporate officers, directors, or shareholders of a 
corporation to provide a personal guaranty and 
assumption of liability for the payment of the tax 
due under [sections 1 through 71]. 

Section 60. Examination of return — 
adjustments — delivery of notices and demands. 
( 1 ) If the department determines that the amount of 
tax due is different from the amount reported, the 
amount of tax computed on the basis of the 
examination conducted pursuant to [section 56] 
constitutes the tax to be paid. 

(2) If the tax due exceeds the amount of tax 
reported as due on the taxpayer's return, the excess 
must be paid to the department within 30 days after 
notice of the amount and demand for payment is 
mailed or delivered to the person making the return, 
unless the taxpayer files a timely objection as 
provided in 15-1-211. If the amount of the tax found 
due by the department is less than that reported as 
due on the return and has been paid, the excess must 
be credited or, if no tax liability exists or is likely to 
exist, refunded to the person making the return. 

(3) The notice and demand provided for in 
this section must contain a statement of the 
computation of the tax and interest and must be: 

(a) sent by mail to the taxpayer at the 
address given in the taxpayer's return, if any, or to 
the taxpayer's last-known address; or 

(b) served personally upon the taxpayer. 

(4) A taxpayer filing an objection to the 
demand for payment is subject to and governed by 
the uniform tax review procedure provided in 15-1- 
211. 

Section 61. Penalties and interest for 
violation. (1) (a) If a person, without purposely or 
knowingly violating any requirement imposed by 
[sections 1 through 71], fails to file a return and pay 
the tax on or before the due date, there must be 
imposed a penalty of 5% of the balance of debt 
unpaid with respect to the return as of the date due, 
but in no event may the penalty for failure to file a 
return by its due date be less than $20. The 
department may abate the penalty if the person 
establishes that the failure to file on time was due to 
reasonable cause and was not due to neglect by the 
taxpayer. 

(b) If a person, without purposely or 
knowingly violating any requirement imposed by 
[sections I through 71], fails to pay a debt on or 
before its due date, there must be added to the debt 
a penalty of 10% of the debt, but not less than $20, 
and interest must accrue on the debt at a rate of 1 % 
per month or fraction of a month for the entire 
period the debt remains unpaid. The department may 
abate the penalty if the person establishes that the 
failure to pay was due to reasonable cause and was 
not due to neglect by the taxpayer. The department 
shall adopt rules that define reasonable cause. 

(2) If a person purposely or knowingly 
violates any requirement imposed by [sections 1 
through 71] by failing to file a return or to pay a 
debt, there must be added to the debt an additional 
amount equal to 25% of the debt, but not less than 
$50, and interest at 1 % for each month or fraction of 
a month during which the debt remains unpaid. 

Section 62. Authority to collect delinquent 
taxes. (1) (a) The department shall collect taxes that 
are delinquent as determined under [sections I 
through 71]. 

(b) If a tax imposed by [sections 1 through 
7 1 ] or any portion of the tax is not paid when due, 
the department may issue a warrant for distraint as 
provided in Title 15, chapter 1, part 7. 

(2) In addition to any other remedy, in 
order to collect delinquent taxes after the time for 
appeal has expired, the department may direct the 
offset of tax refunds or other funds due the taxpayer 



from the stale, except wages subject to the 
provisions of 25-13-614 and retirement beneflls. 

(3) As provided in 15-1-705, the taxpayer 
has the right to a review on the tax liability prior to 
any offset by the department. 

(4) The department may file a claim for 
state funds on behalf of the taxpayer if a claim is 
required before funds are available for offset. 

Section 63. Interest on deficiency — 
penalty. (1) Interest accrues on unpaid or delinquent 
taxes at the rate of 1 % for each month or fraction of 
a month during which the taxes remain unpaid. The 
interest must be computed from the date the return 
and tax were originally due. 

(2) If the payment of a tax deficiency is not 
made within 30 days after it is due and payable and 
if the deficiency is due to negligence on the part of 
the taxpayer but without fraud, there must be added 
to the amount of the deficiency a penalty of 10% of 
the tax, but in no case less than $25. 

Section 64. Limitations. (1) Except in the 
case of a person who purposely or knowingly, as 
those terms are defined in 45-2-101, files a false or 
fraudulent return violating the provisions of [sections 
1 through 71], a deficiency may not be assessed or 
collected with respect to a month or quarter for 
which a return is filed unless the notice of additional 
tax proposed to be assessed is mailed to or 
personally served upon the taxpayer within 5 years 
from the date the return was filed. For purposes of 
this section, a return filed before the last day 
prescribed for filing is considered to be filed on the 
last day. 

(2) If, before the expiration of the 5-year 
period prescribed in subsection (1) for assessment of 
the tax, the taxpayer consents in writing to an 
assessment after expiration of the 5-year period, a 
deficiency may be assessed at any time prior to the 
expiration of the period consented to. 

(3) The limitations prescribed for giving 
notice of a proposed assessment of additional tax 
under subsection (1) do not apply if: 

(a) the taxpayer has by written agreement 
suspended the federal statute, of limitations for 
collection of federal tax, provided the suspension of 
the limitation set forth in this section lasts: 

(i) only as long as the suspension of the 
federal statute of limitations; or 

(ii) until 1 year after any changes in the 
person's federal tax have become final or any 
amended federal return is filed as a result of a 
suspension of the federal statute, whichever occurs 
later; or 

(b) a taxpayer has failed to file a report of 
changes in federal taxable income or an amended 
return as required by 15-30-146 or 15-31-506 until 
5 years after the federal changes become final or the 
amended federal return was filed, whichever the case 
may be. 

Section 65. Refunds — interest 
limitations. ( 1 ) A claim for a refund or credit as a 
result of overpayment of taxes collected under 
[sections 1 through 71] must be filed within 5 years 
of the date the return was due, without regard to any 
extension of time for filing. 

(2) (a) Interest on an overpayment must be 
paid or credited at the same rate as the rate charged 
on delinquent taxes in [section 63]. 

(b) Except as provided in subsection (2)(c), 
interest must be paid from the date the return was 
due or the date of overpayment, whichever is later. 
Interest does not accrue during any perioid in which 
the processing of a claim is delayed more than 30 
days because the taxpayer has not furnished 
necessary information. 

(c) The department is not required to pay 
interest if: 

(i) the overpayment is credited or refunded 
within 6 months of the date a claim was filed; or 
(ii) tlie amount of overpayment and interest 



does not exceed $1. 

Section 66. Administration — rules. The 
department shall: 

( 1 ) administer and enforce the provisions of 
[sections 1 through 71]; 

(2) cause to be prepared and distributed 
forms and information that may be necessary to 
administer the provisions of [sections 1 through 71]; 
and 

(3) adopt rules that may be necessary or 
appropriate to administer and enforce the provisions 
of [sections 1 through 71]. 

Section 67. Revocation of corporate 
license — hearing authorized — appeal. (1) If a 
corporation authorized to do business in this state 
and required to pay the taxes imposed under 
(sections 1 through 7 1 ] fails to comply with any of 
the provisions of (sections 1 through 7 1 ] or any rule 
of the department, the department may, for 
reasonable cause, certify to the secretary of state a 
copy of an order finding that the corporation has 
failed to comply with specific statutory provisions or 
rules. 

(2) The secretary of state shall, upon receipt 
of the certification, revoke the certificate authorizing 
the corporation to do business in this state and may 
issue a new certificate only when the corporation has 
obtained from the department an order finding that 
the corporation has complied with its obligations 
under [sections 1 through 71]. 

(3) An order authorized in this section may 
not be made until the corporation is given an 
opportunity to be heard before the department. A 
hearing conducted under this section is informal. 

(4) A final decision of the department may 
be appealed to the state tax appeal board. 

Section 68. Taxpayer quitting business — 
liability of successor. (1) (a) All taxes payable 
under [sections 1 through 71] are due and payable 
immediately whenever a taxpayer quits business or 
sells out, exchanges, or otherwise disposes of the 
business or disposes of the stock of goods. 

(b) The taxpayer shall make a return and 
pay the taxes due within 10 days after the taxpayer 
quits business or sells out, exchanges, or otherwise 
disposes of the business or disposes of the stock of 
goods. 

(2) Except as provided in subsection (4), a 
person who becomes a successor is liable for the full 
amount of the tax and shall withhold from the sales 
price payable to the taxpayer a sum sufficient to pay 
any tax due until the taxpayer produces either a 
receipt from the department showing payment in full 
of any tax due or a statement from the department 
that tax is not due. 

(3) If a tax is due but has not been paid as 
provided in subsection (l)(b), the successor is liable 
for the payment of the full amount of tax. The 
payment of the tax by the successor is considered to 
be a payment upon the sales price and, if the 
payment is greater in amount than the sales price, 
the amount of the difference becomes a debt due to 
the successor from the taxpayer owing the tax under 
subsection (1). 

(4) (a) A successor is not liable for any tax 
due from the person from whom the successor 
acquired a business or stock of goods if: 

(i) the successor gives written notice to the 
department of the acquisition; and 

(ii) an assessment is not issued by the 
department against the former operator of the 
business within 6 months of receipt of the notice 
from the successor. 

(b) If an assessment is issued by the 
department as provided in subsection (4)(a)(ii), a 
copy of the assessment must also be mailed to the 
successor, or if an assessment is not mailed to the 
successor, the successor is not liable for the tax due. 

Section 69. Tax as debt (I) The tax 
imposed by [sections 1 through 71] and related 



interest and penalties become a personal debt of the 
person required to file a return from the time the 
liability arises, regardless of when the time for 
payment of the liability occurs. 

(2) The debt of the personal representative 
of the estate of a decedent or a fiduciary is limited 
to the person's official or fiduciary capacity. 
However, if the person has voluntarily distributed 
the assets held in that capacity without reserving 
sufficient assets to pay the taxes, interest, and 
penalties, the person is personally liable for any 
deficiency. 

(3) The officer or employee of a 
corporation whose duty it is to collect, truthfully 
account for, and pay to the state the amounts 
imposed by (sections 1 through 7 1 ] and who fails to 
pay the tax is liable to the slate for the amounts 
imposed by [sections 1 through 71] and the penalty 
and interest due on the amounts. 

Section 70. Information — confidentiality 
— agreements with another state. ( 1 ) (a) Except as 
provided in subsections (2) and (3), it is unlawful for 
an employee of the department or any other public 
official or public employee to divulge or otherwise 
make known information that is disclosed in a report 
or return required to be filed under [sections 1 
through 7 1 ] or information that concerns the affairs 
of the person making the return and that is acquired 
from the person's records, officers, or employees in 
an examination or audit. 

(b) This section may not be construed to 
prohibit the department from publishing statistics if 
they are classified in a way that does not disclose 
the identity and content of any particular return or 
report. A person violating the provisions of this 
section is subject to the penalty provided in 15-30- 
303 for violating the confidentiality of individual 
income tax information. 

(2) (a) The department may enter into an 
agreement with the taxing officials of another state 
for the interpretation and administration of the laws 
of their state that provide for the collection of a 
sales tax or use tax in order to promote fair and 
equitable administration of the laws and to eliminate 
double taxation. 

(b) In order to implement the provisions of 
[sections 1 through 71], the department may furnish 
information on a reciprocal basis to the taxing 
officials of another state, provided that the 
information remains confidential under statutes in 
the state receiving the information that are similar to 
this section. 

(3) In order to facilitate processing of 
returns and payment of taxes required by [sections 1 
through 71], the department may contract with 
vendors and may disclose data to the vendors. The 
data disclosed must be administered by the vendor in 
a manner consistent with this section. 

Section 7 1 . Sales tax and use tax account. 
( 1 ) There is within the state special revenue fund a 
sales tax and use tax account. 

(2) All money collected under (sections 1 
through 7 1 ] must be paid by the department into the 
sales tax and use lax account. 

(3) There must be retained in the sales tax 
and use tax account the amounts necessary under 
(sections 1 through 7 1 ] to repay overpayments, pay 
any erroneous receipts illegally assessed or collected 
or that are excessive in amount, and pay any other 
refunds otherwise required. 

Section 72. Disposition of sales tax and 
use tax revenue. ( 1 ) Sales tax and use tax revenue 
deposited in the sales tax and u.se tax account 
established in (section 71] must be distributed 
according to the provisions of subsection (2) and is 
allocated as follows: 

(a) the amount determined under 15-1- 
111(5) through (7) and (13) and (section 125] to 
provide property tax replacement revenue for each 
taxing jurisdiction; 



(b) the amount appropriated to the 
department of revenue in (House Bill No. 2] for the 
purpose of administering (this act]; and 

(c) the amount of sales lax and use tax 
revenue remaining after the allocations in 
subsections (l)(a) and (l)(b) is allocated in the same 
manner as income tax revenue is allocated under 15- 
1-501(2). 

(2) (a) Except as provided in subsection 
( 1 )(c), distribution of sales tax and use tax revenue 
must be made according to the provisions of the 
statute governing allocation of the tax in effect on 
the last day of the tax period in which the activity, 
enterprise, or product being taxed was engaged in, 
took place, was assembled, or was produced. 

(b) All taxes collected pursuant to audit or 
collected after the date the tax is payable must be 
distributed according to the statute governing 
allocation of the tax in effect on the date the taxes 
are collected. 

(c) For the fiscal year ending June 30, 
1994, only $57 million, plus vendor allowances and 
administrative costs, may be distributed from the 
sales tax and use tax account, and for the fiscal year 
ending June 30, 1995, only $250 million, plus 
vendor allowances and administrative costs, may be 
distributed from the sales tax and use lax account. 
Any amount in excess of those amounts for each 
fiscal year must remain in the account to be used by 
the 54ih legislature for the reduction of mill levies 
used for school equalization and the reduction of 
income taxes. 

Section 73. Renters' property tax credit - 

- deFinitions. As used in (sections 73 through 80], 
the following definitions apply: 

( 1 ) "Claimant" means an individual natural 
person who is eligible under (section 74] to file a 
claim. 

(2) "Claim period" means the tax year for 
individuals required to file Montana individual 
income tax returns and the calendar year for 
individuals not required to file returns. 

(3) "Gross rent" means the total rent in cash 
or its equivalent actually paid during the claim 
period by the renter or lessee for the right of 
occupancy of the homestead pursuant to an arm's- 
length transaction with the landlord. 

(4) "Homestead" means a single-family 
dwelling or unit of a multiple-unit dwelling that is 
subject to ad valorem taxes in Montana and as much 
of (he surrounding land, but not in excess of 1 acre, 
as is reasonably necessary for its use as a dwelling. 

(5) "Household" means an association of 
individuals who live in the same dwelling and who 
share its furnishings, facilities, accommodations, and 
expenses. The term does not include bona fide 
lessees, tenants, or roomers and boarders on contract. 

(6) "Rent equivalent" means a rental 
payment paid by a governmental agency to a lessor 
or landlord. 

Section 74. Renters' property tax credit - 

- eligibility. (I) In order to be eligible to make a 
claim under (sections 73 through 80], an individual: 

(a) must have resided in Montana for at 
least 9 months of the period for which the claim is 
made; and 

(b) except as provided in (section 78[, must 
have occupied one or more dwellings in Montana as 
a renter or lessee for at least 6 months of the claim 
period. 

(2) An individual is not disqualified as a 
claimant because of a change of residence during the 
claim period, provided thai Ihe claimant occupies 
one or more dwellings in Montana as a renter or 
lessee for al least 6 months during Ihe claim period. 

Section 75. Renters' property tax credit - 

- Tiling date. ( I ) Except as provided in subsection 
(2), a claim must be submitted al the same time that 
the claimant's individual income tax return is due. 
For a claimant not required to file a lax return, the 



claim must be submitted on or before April 15 of 
the year following Ihe year for which relief is 
sought. 

(2) The department may grant a reasonable 
extension for filing a claim whenever, in its 
judgment, good cause exists. The department shall 
keep a record of each extension and the reason for 
granting the extension. 

(3) If an individual who would have a 
claim under (sections 73 through 80] dies before 
filing Ihe claim, Ihe personal representative of the 
estate of the decedent may file the claim. 

Section 76. Renters' property tax credit - 

- form of relief. (1) The credit under [sections 73 
through 80] is a credit against the claimant's 
Montana individual income tax liability for the claim 
period. 

(2) (a) If Ihe amount of credit exceeds the 
claimant's lax liability under this chapter by $1 or 
more, the amount of the excess must be refunded to 
the claimant. If the excess is less than $1, the 
department may not make a refund. 

(b) The credit may be claimed even though 
Ihe claimant does not have income taxable under this 
chapter. 

Section 77. Renters' property tax credit. 
(I) The amount of the tax credit granted under the 
provisions of (sections 73 through 80] is the amount 
of gross rent paid during Ihe claim period or $150, 
whichever is less. 

(2) In the case of a claimant who owned 
and rented Ihe homestead during the claim period, 
the credit is prorated by dividing the amount of lime 
the homestead was rented by the claimant by the 
number of months in the period for which a claim is 
made and then multiplying the quotient by the 
amount of credit allowed to the claimant under 
subsection ( I ). 

(3) (a) For tax year 1994, the amount of 
credit allowed under this section is equal to Ihe 
amount allowed under subsection (1), prorated by 
Ihe number of months during the claim period that 
the sales tax and use tax were in effect. 

(b) Except as provided in subsection (2), for 
tax years beginning after December 31, 1994, the 
amount of credit allowed under this section is equal 
to the full amount allowed under subsection ( I ). 

Section 78. Renters' property tax credit - 

- limitations. (I) Only one claimant per household 
is entitled to a credit in a claim period. 

(2) A claim may not be allowed for any 
portion of rent, lease, or rent equivalent paid that is 
derived from a public rent or tax subsidy program. 

(3) A claim may not be allowed on rented 
lands or rented dwellings that were not subject to ad 
valorem taxes in Montana during the claim period. 

(4) A claimant who receives a residential 
property tax credit for the elderly under 15-30-171 
through 15-30-179 is not entitled to receive the 
renters' property tax credit under [sections 73 
through 80] for the same tax year. 

Section 79. Renters' property tax credit - 

- proof of claim. A receipt showing gross rent paid 
for the claim period must be filed with each claim. 
In addition, each claimant shall, at the request of the 
department, supply all additional information 
necessary to support the claim. 

Section 80. Renters' property tax credit - 

- denial of claim — penalty — interest. If a false or 
fraudulent claim has been paid, the amount paid may 
be recovered as any other debt owed the state. An 
additional 10% may be added to the amount due as 
a penalty. The unpaid debt bears interest, at the rate 
of 1 % a month or fraction of a month, from the date 
of the original payment of the claim until paid. 

Section 81. Homeowners' tax credit — 
definitions. As used in (sections 81 through 88], the 
following definitions apply: 

(I) "Claimant" means an individual natural 
person who is eligible under (section 82] to file a 



claim. 

(2) "Claim period" means the tax year for 
individuals required to file Montana individual 
income tax returns and the calendar year for 
individuals not required to file returns. 

(3) "Homestead" means a single-family 
residence owned on the last day of the claim period 
by a Montana resident or being purchased under a 
contract for deed by a Montana resident. The 
residence may not have been leased or rented by the 
owner or purchaser for more than 3 months. 

(4) "Household" means an association of 
individuals who live in Ihe same dwelling and who 
share its furnishings, facilities, accommodations, and 
expenses. "Rie term does not include bona fide 
lessees, tenants, or roomers and boarders on contract. 

Section 82. Homeowners' tax credit — 
eligibility. In order to be eligible to make a claim 
under (sections 81 through 88], an individual: 

(1) must have resided in Montana for at 
least 6 months of the period for which the claim is 
made; and 

(2) must have occupied the homestead as 
the owner or contractor for deed for at least 6 
months of the claim period. 

Section 83. Homeowners' tax credit — 
filing date. (1) Except as provided in subsection (2), 
a claim must be submitted at the same time that the 
claimant's individual income tax return is due. For 
a claimant not required to file a tax return, the claim 
must be submitted on or before April 15 of the year 
following the year for which the credit is claimed. 

(2) The department may grant a reasonable 
extension for filing a claim whenever, in its 
judgment, good cause exists. The department shall 
keep a record of each extension and the reason for 
granting the extension. 

(3) If an individual who would have a 
claim under [sections 81 through 88] dies before 
filing the claim, the personal representative of the 
estate of the decedent may file the claim. 

Section 84. Homeowners' tax credit — 
form of relief. (I) The credit under (sections 81 
through 88] is a credit against the claimant's 
Montana individual income tax liability for the claim 
period. 

(2) (a) If the amount of credit exceeds the 
claimant's tax liability under this chapter by $1 or 
more, the amount of the excess must be refunded to 
the claimant. If the excess is less than $1, the 
department may not make a refund. 

(b) The credit may be claimed even though 
the claimant does not have income taxable under this 
chapter. 

Section 85. Homeowners' tax credit. (1) 
The amount of the tax credit granted under the 
provisions of (sections 81 through 88] is the amount 
that results from multiplying the lesser of the market 
value of the homestead or $20,000 by the tax rate 
applicable to property described in 15-6-134(l)(b), 
and by multiplying the resulting product by the total 
mill levy applied to the homestead, as shown on the 
November tax statement for the claim period. 

(2) For tax year 1994, the amount of credit 
allowed under this section is equal to the amount 
allowed under subsection (1), prorated by the 
number of months during the claim period that the 
sales tax and use tax were in effect. 

(3) For tax years beginning after December 
31, 1994, the amount of credit allowed under this 
section is equal to the full amount under subsection 

(I). 

Section 86. Homeowners' tax credit — 
limitations. ( 1 ) Only one claimant per household is 
entitled to a credit in a claim period. 

(2) A claim is not allowed for a homestead 
that is not subject to ad valorem taxes in Montana 
during the claim period. 

(3) A claimant who receives a residential 
property tax credit for the elderly under 15-30-171 



10 



through 15-30-179 is not entitled to receive the 
homeowners' tax credit under [sections 81 through 
88] for the same tax year. 

Section 87. Homeowners' credit — proof 
of claim. A copy of the November tax statement for 
the claim period must be filed with each claim. In 
addition, each claimant shall, at the request of the 
department, supply all additional information 
necessary to support the claim. 

Section 88. Homeowners' tax credit — 
denial of claim — penalty — interest. If a false or 
fraudulent claim has been paid, the amount paid may 
be recovered as any other debt owed the state. An 
additional 10% may be added to the amount due as 
a penalty. The unpaid debt bears interest, at the rate 
of 1% a month or fraction of a month, from the date 
of the original payment of the claim until paid. 

Section 89. Credit for sales tax and use 
tax — definitions. As used in [sections 89 through 
93], the following definitions apply: 

(1) "Claimant" means an individual natural 
person who is eligible under [section 90] to file a 
claim. 

(2) "Gross household income" means all 
monetary benefits of any kind received by each 
individual member of the household, without regard 
to losses of any kind and without regard to whether 
the benefits are taxable income under state or federal 
income tax laws. Gross household income includes 
but is not limited to the following: 

(a) 100% of the gains on all sales; 

(b) alimony, child support, or any other 
type of maintenance payments; 

(c) cash public assistance and relief, 
excluding the face value of all food stamps received; 

(d) life insurance and endowment contracts; 

(e) social security and the gross amount of 
any pension or annuity, including railroad retirement 
benefits and veterans' disability benefits; 

(f) unemployment and workers' 
compensation benefits; 

(g) all tax refunds; and 

(h) any monetary benefits defined as 
income in the Internal Revenue Code or by this 
chapter. 

(3) "Household" means an association of 
individuals who live in the same dwelling and who 
share its furnishings, facilities, accommodations, and 
expenses. The term does not include bona fide 
lessees, tenants, or roomers and boarders on contract. 

Section 90. Credit for sales tax and use 
tax. (1) Except as provided in subsection (2), there 
is allowed a credit, as provided in subsections (3) 
through (5), against tax liability for each resident or 
part-year resident who files an individual Montana 
income tax return under this chapter. The credit may 
be claimed even though the resident does not have 
taxable income under this chapter. 

(2) A claim for the tax credit provided in 
this section may not be filed by a resident who: 

(a) is an inmate of a public institution for 
more than 6 months during the tax year for which 
the tax credit is claimed; 

(b) is not physically present in Montana for 
at least 6 months during the tax year for which the 
tax credit is claimed; or 

(c) has gross household income in excess of 
$13,000. 

(3) A credit is allowed in the amount of 
$90 per exemption for each exemption claimed 
under 15-30-1 12(2) and (5). 

(4) If the amount of credit allowed in this 
section exceeds the claimant's tax liability under this 
chapter by $1 or more, the department shall refund 
the amount. If the excess is less than $1, the 
department may not make a refund. 

(5) (a) For tax year 1994, the amount of 
credit allowed under this section is equal to the 
amount determined under subsection (3), multiplied 
by the number of months during the tax year that the 



sales tax and use tax were in effect, and divided by 
12. 

(b) For lax years beginning after December 
31, 1994, the amount of credit allowed under this 
section is equal to the full amount determined under 
subsection (3). 

Section 91. Credit for sales tax and use 
tax — Tiling date — extension. ( I ) Except as 
provided in subsection (2), a claim for a credit must 
be submitted at the same time that the claimant's 
individual income tax return is due. For a claimant 
not required to file a tax return, a claim must be 
submitted on or before April 15 of the year 
following the year for which the credit is claimed. 
The claimant shall provide the social security 
number for each exemption, except dependent 
children under 1 year of age, for which the credit is 
claimed. 

(2) The department may grant a reasonable 
extension for filing a claim whenever in its judgment 
good cau.se exists. The department shall keep a 
record of each extension and the reason for granting 
the extension. 

(3) If an individual who would have a 
claim under [sections 89 through 93] dies before 
filing the claim, the personal representative of the 
estate of the decedent may file the claim. 

Section 92. Examination of credit claims - 
- adjustments — delivery of notices and demands. 
( 1 ) The department may examine a claim for a credit 
and may make an investigation of the records and 
accounts of a claimant if the department considers it 
necessary to determine the accuracy of the claim. 

(2) If the department determines that the 
amount of the credit due is different from the 
amount reported, the amount of credit computed on 
the basis of the examination conducted pursuant to 
subsection (1) constitutes the amount of credit due. 

(3) If the credit due is less than the amount 
claimed as due by the claimant, the excess must be 
paid to the department within 60 days after notice 
and demand for payment is mailed to the claimant. 

(4) The notice and demand provided for in 
this section must contain a statement of the 
computation of the credit and must be; 

(a) sent to the claimant at the address given 
on the claim, if any, or to the claimant's last-known 
address; or 

(b) served personally upon the claimant. 
Section 93. Penalties for violation. (1) If 

a claimant, without purposely or knowingly, as those 
terms are defined in 45-2-101, violating the 
provisions of [section 90 or 91 ], receives a credit for 
which the claimant is not entitled, there must be 
added a penalty of 10% of the amount of excess, but 
the penalty may not be less than $20. Interest in the 
amount of 1 % per month or fraction of a month on 
the amount of excess must be added to the penalty 
until the debt is satisfied. 

(2) If a claimant purposely or knowingly 
violates the provisions of [sections 91 or 92], future 
claims for credits may be denied by the department. 

Section 94. Section 33-7-410, MCA, is 
amended to read: 

"33-7-410. Taxation. iJi A society 
organized or licensed under this chapter is a 
charitable and benevolent institution, and all of its 
funds are exempt from all state, county, district, 
municipal, and school taxes other than taxes on real 
estate and office equipment and sales taxes and use 
taxes as provided in subsection (2) . 

(2) (a) To the extent that sales are 
generated from ongoing business operations of the 
society, the sales of a society organized or licensed 
under this chapter are subject to the sales lax and 
use tax pursuant to jseclions I through 711. to a 
resort tax imposed under 7-6-4464. and to a resort 
area tax imposed under 7-6-4468. 

(b) Dues paid by members of the society 
and isolated or occasional sales, as described in 



[section 211. of the society are exempt from 
taxation. " 

Section 95. Section 7-1-2111. MCA, is 
amended to read: 

"7-1-2111. ClassiFication of counties. (1) 
For the purpose of regulating the compensation and 
salaries of all county officers, not otherwise provided 
for, and for fixing the penalties of officers' bonds, 
the counties of this state must be classified 
according to that percentage of the true and full 
valuation of the property in the counties upon which 
the tax levy is made, except for vehicles subject to 
taxation under 61-3-504(2), as follows: 

(a) first class-all counties having a taxable 
valuation of $50 million or over; 

(b) second class— all counties having a 
taxable valuation of more than $30 million and less 
than $50 million; 

(c) third class--all counties having a taxable 
valuation of more than $20 million and less than $30 
million; 

(d) fourth class— all counties having a 
taxable valuation of more than $15 million and less 
than $20 million; 

(e) fifth class-all counties having a taxable 
valuation of more than $10 million and less than $15 
million; 

(0 sixth class-all counties having a taxable 
valuation of more than $5 million and less than $10 
million; 

(g) seventh class-all counties having a 
taxable valuation of less than $5 million. 

(2) As used in this section, taxable 
valuation means the taxable value of taxable 
property in the county as of the time of 
determination plus: 

(a) that portion of the taxable value of the 
county on December 31, 1981. attributable to 
automobiles and trucks having a rated capacity of 
three-quarters of a ton or less; 

(b) that portion of the taxable value of the 
county on December 31. 1989, attributable to 
automobiles and trucks having a rated capacity of 
more than three-quarters of a ton but less than or 
equal to I ton; 

(c) the amount of interim production and 
new production taxes levied, as provided in 15-23- 
607, divided by the appropriate tax rates described 
in l5-23-607(2)(a) or (2)(b) and multiplied by 60%; 

(d) the amount of value represented by new 
production exempted from tax as provided in 15-23- 
612 multiplied by 60%, plus the value of any other 
production occurring after December 31, 1988, 
multiplied by 60%; and 

(e) 6% 7.3% of the taxable value of the 
county on January I of each tax year beginning after 
December 31, 1993 ." 

Section 96. Section 7-3-1321, MCA, is 
amended to read: 

"7-3-1321. Authorization to incur 
indebtedness ~ limitation. (I) The consolidated 
municipality may borrow money or i.ssue bonds for 
any municipal purpose to the extent and in the 
manner provided by the constitution and laws of 
Montana for the borrowing of money or issuing of 
bonds by counties and cities and towns. 

(2) The municipality may not become 
indebted in any manner or for any purpose to an 
amount, including existing indebtedness, in the 
aggregate exceeding 3S% 34% of the taxable value 
of the taxable property therein, as ascertained by the 
last assessment for state and county taxes prior to 
incurring such indebtedness. All warrants, bonds, or 
obligations in excess of such amount given by or on 
behalf of the municipality shall be void." 

Section 97. Section 7-6-2211, MCA, is 
amended to read: 

"7-6-2211. Authorization to conduct 
county business on a cash basis. (I) In case the 
total indebtedness of a county, lawful when incurred. 



exceeds the debt limit of 23% established in 7-7- 
2101 by reason of great diminution of taxable value, 
the county may conduct its business affairs on a 
cash basis and pay the reasonable and necessary 
current expenses of the county out of the cash in the 
county treasury derived from its current revenue and 
under such restrictions and regulations as may be 
imposed by the board of county commissioners of 
the county by a resolution duly adopted and included 
in the minutes of the board. 

(2) Nothing in this section restricts the right 
of the board to make the necessary tax levies for 
interest and sinking fund purposes, and nothing in 
this section affects the right of any creditor of the 
county to pursue any remedy now given bif» the 
creditor by law to obtain payment of his a claim 
made by the creditor ." 

Section 98. Section 7-6-4121, MCA, is 
amended to read: 

"7-6-4121. Authorization to conduct 
municipal business on a cash basis. ( 1 ) In case the 
total indebtedness of a city or town has reached +^?% 
20.5% of the total taxable value of the property of 
the city or town subject to taxation, as ascertained 
by the last assessment for state and county taxes, the 
city or town may conduct its affairs and business on 
a cash basis as provided by subsection (2). 

(2) (a) Whenever a city or town is 
conducting its business affairs on a cash basis, the 
reasonable and necessary current expenses of the 
city or town may be paid out of the cash in the city 
or town treasury and derived from its current 
revenues, under such restrictions and regulations as 
the city or town council may by ordinance prescribe. 

(b) In the event that payment is made in 
advance, the city or town may require a cash deposit 
as collateral security and indemnity, equal in amount 
to such payment, and may hold the same as a special 
deposit with the city treasurer or town clerk, in 
package form, as a pledge for the fulfillment and 
performance of the contract or obligation for which 
the advance is made. 

(c) Before the payment of the current 
expenses mentioned above, the city or town council 
shall first .set apart sufficient money to pay the 
interest upon its legal, valid, and outstanding bonded 
indebtedness and any sinking funds therein provided 
for and shall be authorized to pay all valid claims 
against funds raised by tax especially authorized by 
law for the purpose of paying such claims." 

Section 99. Section 7-6-4254, MCA, is 
amended to read: 

"7-6-4254. Limitation on amount of 
emergency budgets and appropriations. ( I ) The 
total of all emergency budgets and appropriations 
made therein in any one year and to be paid from 
any city fund may not exceed 38% 46.5% of the 
total amount which could be produced for such cily 
fund by a maximum levy authorized by law to be 
made for such fund, as shown by the last completed 
assessment roll of the county. 

(2) The term "taxable property", as used 
herein, means the percentage of the value at which 
such property is assessed and which percentage is 
used for the purposes of computing taxes and does 
not mean the assessed value of such property as (he 
same appears on the assessment roll." 

Section 100. Section 7-7-107. MCA, is 
amended to read: 

" 7-7-107. Limitation on amount of bonds 
for city-county consolidated units. ( 1 ) Except as 
provided in 7-7-108, no cily-county consolidated 
local government may issue bonds for any purpose 
which, with all outstanding indebtedness, may 
exceed 39% 47.5% of the taxable value of the 
property therein subject lo taxation as ascertained by 
the last assessment for slate and county taxes. 

(2) The issuing of bonds for the purpose of 
funding or refunding outstanding warrants or bonds 
is not the incurring of a new or additional 



indebtedness but is merely the changing of the 
evidence of outstanding indebtedness." 

Section 101. Section 7-7-108, MCA, is 
amended to read: 

"7-7-108. Authorization for additional 
indebtedness for water or sewer systems. ( I ) For 
the purpose of constructing a sewer .system or 
procuring a water supply or constructing or 
acquiring a water system for a city-county 
consolidated government which shall own and 
control such water supply and water system and 
devote the revenues therefrom to the payment of the 
debt, a city-county consolidated government may 
incur an additional indebtedness by borrowing 
money or issuing bonds. 

(2) The additional indebtedness which may 
be incurred by borrowing money or issuing bonds 
for the construction of a sewer system or for the 
procurement of a water supply or for both such 
purposes may not in the aggregate exceed 10% over 
and above the 39% bond limit referred to in 7-7-107 
of the taxable value of the property therein subject 
to taxation as ascertained by the last assessment for 
state and county taxes." 

Section 102. Section 7-7-2101, MCA, is 
amended to read: 

"7-7-2101. Limitation on amount of 
county indebtedness. (1) No county may become 
indebted in any manner or for any purpose to an 
amount, including existing indebtedness, in the 
aggregate exceeding 33% 28% of the total of the 
taxable value of the property therein subject to 
taxation, plus the amount of interim production and 
new production taxes levied divided by the 
appropriate tax rates described in 15-23-607(2)(a) or 
(2)(b) and multiplied by 60%, plus the amount of 
value represented by new production exempted from 
tax as provided in 15-23-612 multiplied by 60%, 
plus the value of any other production occurring 
after December 31, 1988, multiplied by 60%, as 
ascertained by the last assessment for state and 
county taxes previous to the incurring of the 
indebtedness. 

(2) No county may incur indebtedness or 
liability for any single purpose to an amount 
exceeding $500,000 without the approval of a 
majority of the electors thereof voting at an election 
to be provided by law, except as provided in 7-21- 
3413 and 7-21-3414. 

(3) Nothing in this section shall apply to 
the acquisition of conservation easements as set forth 
in Title 76, chapter 6." 

Section 103. Section 7-7-2203, MCA, is 
amended to read: 

"7-7-2203. Limitation on amount of 
bonded indebtedness. (1) Except as provided in 
subsections (2) through (4), no county may issue 
general obligation bonds for any purpose which, 
with all outstanding bonds and warrants except 
county high school bonds and emergency bonds, will 
exceed 11.25% 13.5% of the total of the taxable 
value of the property therein, plus the amount of 
interim production and new production taxes levied 
divided by the appropriate tax rates described in 15- 
23-607(2)(a) or (2)(b) and multiplied by 60%, plus 
the amount of value represented by new production 
exempted from tax as provided in 15-23-612 
multiplied by 60%, plus the value of any other 
production occurring after December 31, 1988, 
multiplied by 60%, to be ascertained by the last 
assessment for slate and county taxes prior to the 
proposed issuance of bonds. 

(2) In addition to the bonds allowed by 
subsection (1), a county may issue bonds which, 
with all outstanding bonds and warrants, will not 
exceed 27.75% 34% of the total of the taxable value 
of the property in the county subject to taxation, plus 
the amount of interim production and new 
production taxes levied divided by the appropriate 
tax rates described in 15-23-607{2){a) or (2)(b) and 



multiplied by 60%, plus the amount of value 
represented by new production exempted from tax as 
provided in 15-23-612 multiplied by 60%, when 
necessary to do so, plus the value of any other 
production occurring after December 31, 1988, 
multiplied by 60% for the purpose of acquiring land 
for a site for county high school buildings and for 
erecting or acquiring buildings thereon and 
furnishing and equipping the same for county high 
school purposes. 

(3) In addition to the bonds allowed by 
subsections (1) and (2), a county may issue bonds 
for the construction or improvement of a jail which 
will not exceed 12.5% 15% of the taxable value of 
the propertyin the county subject lo taxation. 

(4) The limitation in subsection ( I ) does not 
apply to refunding bonds issued for the purpose of 
paying or retiring county bonds lawfully issued prior 
to January 1, 1932, or to bonds issued for the 
repayment of tax protests lost by the county." 

Section 104. Section 7-7^201, MCA, is 
amended to read: 

"7-7-4201. Limitation on amount of 
bonded indebtedness. (I) Except as otherwise 
provided, no city or town may issue bonds or incur 
other indebtedness for any purpose in an amount 
which with all outstanding and unpaid indebtedness 
will exceed 38% 34% of the taxable value of the 
property therein subject to taxation, to be ascertained 
by the last assessment for state juid county taxes. 

(2) The issuing of bonds for the purpose of 
funding or refunding outstanding warrants or bonds 
is not the incurring of a new or additional 
indebtedness but is merely the changing of the 
evidence of outstanding indebtedness. 

(3) The limitation in subsection ( I ) does not 
apply to bonds issued for the repayment of tax 
protests lost by the city or town." 

Section 105. Section 7-7^202, MCA, is 
amended to read: 

"7-7-4202. Special provisions relating to 
water and sewer systems. (I) Notwithstanding the 
provisions of 7-7-4201, for the purpose of 
constructing a sewer system, procuring a water 
supply, or constructing or acquiring a water system 
for a city or town which owns and controls the 
water supply and water system and devotes the 
revenues therefrom to the payment of the debt, a city 
or town may incur an additional indebtedness by 
borrowing money or issuing bonds. 

(2) The additional total indebtedness that 
may be incurred by borrowing money or issuing 
bonds for the construction of a sewer system, for the 
procurement of a water supply, or for both such 
purposes, including all indebtedness theretofore 
contracted which is unpaid or outstanding, may not 
in the aggregate exceed 55% over and above the 
38%T debt limit referred to in 7-7-4201, of the 
taxable value of the property therein subject to 
taxation as ascertained by the last assessment for 
stale and county taxes." 

Section 106. Section 7-13-4103. MCA, is 
amended to read: 

"7-13-4103. Limitation on indebtedness 
for acquisition of natural gas system. The total 
amount of indebtedness authorized to be contracted 
in any form, including the then-existing 
indebtedness, must not at any time exceed +?% 
20.5% of the total taxable value of the property of 
the city or town subject lo taxation as ascertained by 
the last assessment for stale and county taxes." 

Section 107. SecUon 7-14-236, MCA, is 
amended to read: 

"7-14-236. Limitation on bonded 
indebtedness. The amount of bonds issued to 
provide funds for the district and outstanding at any 
time shall not exceed 38% 34% of the taxable value 
of taxable property therein as ascertained by the last 
assessment for state and county taxes previous to the 
issuance of such bonds." 



12 



Section 108. Section 7-14-2524, MCA, is 
amended to read: 

"7-14-2524. Limitation on amount of 
bonds issued — excess void. ( 1 ) Except as otherwise 
provided hereafter and in 7-7-2203 and 7-7-2204, a 
county may not issue bonds which, with all 
outstanding bonds and warrants except county high 
school bonds and emergency bonds, will exceed 
11.25% 13.5% of the total of the taxable value of 
the property therein, plus the amount of interim 
production and new production taxes levied divided 
by the appropriate tax rates described in 15-23- 
607(2)(a) or (2)(b) and multiplied by 60%, plus the 
amount of value represented by new production 
exempted from tax as provided in 15-23-612 
multiplied by 60%, plus the value of any other 
production occurring after December 31, 1988, 
multiplied by 60%. The taxable property and the 
amount of interim production and new production 
taxes levied must be ascertained by the last 
assessment for state and county taxes prior to the 
issuance of the bonds. 

(2) A county may issue bonds which, with 
all outstanding bonds and warrants except county 
high school bonds, will exceed 1 1.25% 13.5% but 
will not exceed 22.5% 27.5% of the total of the 
taxable value of such property, plus the amount of 
interim production and new production taxes levied 
divided by the appropriate tax rates described in 15- 
23-607(2)(a) or (2)(b) and multiplied by 60%, plus 
the amount of value represented by new production 
exempted from tax as provided in 15-23-612, plus 
the value of any other production occurring after 
December 31, 1988, multiplied by 60% when 
necessary for the purpose of replacing, rebuilding, or 
repairing county buildings, bridges, or highways 
which have been destroyed or damaged by an act of 
God, disaster, catastrophe, or accident. 

(3) The value of the bonds issued and all 
other outstanding indebtedness of the county, except 
county high school bonds, shall not exceed 22.5% 
27.5% of the total of the taxable value of the 
property within the county, plus the amount of 
interim production and new production taxes levied 
divided by the appropriate tax rates described in 15- 
23-607(2)(a) or (2)(b) and multiplied by 60%, plus 
the amount of value represented by new production 
exempted from tax as provided in 15-23-612, plus 
the value of any other production occurring after 
December 31, 1988, multiplied by 60%, as 
ascertained by the last preceding general 
assessment." 

Section 109. Section 7-14-2525, MCA, is 
amended to read: 

"7-14-2525. Refunding agreements and 
refunding bonds authorized. ( 1 ) Whenever the total 
indebtedness of a county exceeds 22.5% 27.5% of 
the total of the taxable value of the property therein, 
plus the amount of interim production and new 
production taxes levied divided by the appropriate 
tax rates described in l5-23-607(2)(a) or (2)(b) and 
multiplied by 60%, plus the amount of value 
represented by new production exempted from tax as 
provided in 15-23-612 multiplied by 60%, plus the 
value of any other production occurring after 
December 31, 1988, multiplied by 60%, and the 
board determines that the county is unable to pay the 
indebtedness in full, the board may: 

(a) negotiate with the bondholders for an 
agreement whereby the bondholders agree to accept 
less than the full amount of the bonds and the 
accrued unpaid interest thereon in satisfaction 
thereof; 

(b) enter into such agreement; 

(c) issue refunding bonds for the amount 
agreed upon. 

(2) These bonds may be issued in more 
than one series, and each series may be either 
amortization or serial bonds. 

(3) The plan agreed upon between the 



board and the bondholders shall be embodied in full 
in the resolution providing for the issue of the 
bonds." 

Section 110. Section 7-14-4402, MCA, is 
amended to read: 

"7-14-4402. Limit on indebtedness to 
provide bus service. The total amount of 
indebtedness authorized under 7-14-4401(1) to be 
contracted in any form, including the then-exi.sting 
indebtedness, may not at any time exceed 38% 34% 
of the total taxable value of the property of the city 
or town subject to taxation as ascertained by the last 
assessment for state and county taxes. No money 
may be borrowed or bonds issued for the purposes 
specified in 7-14-4401(1) until the proposition has 
been submitted to the vote of the taxpayers of the 
city or town and the majority vote cast in its favor." 

Section 111. Section 7-16-2327, MCA, is 
amended to read: 

"7-16-2327. Indebtedness for park 
purposes. (1) Subject to the provisions of subsection 
(2), a county park board, in addition to powers and 
duties now given under law, has the power and duty 
to contract an indebtedness in behalf of a county, 
upon the credit thereof, for the purposes of 7-16- 
2321(1) and (2). 

(2) (a) The total amount of indebtedness 
authorized to be contracted in any form, including 
the then-existing indebtedness, must not at any time 
exceed +3% 16% of the total of the taxable value of 
the taxable property in the county, plus the amount 
of interim production and new production taxes 
levied divided by the appropriate tax rates described 
in 15-23-607(2)(a) or (2)(b) and multiplied by 60%, 
plus the amount of value represented by new 
production exempted from tax as provided in 15-23- 
612, plus the value of any other production 
occurring after December 31, 1988, multiplied by 
60%, ascertained by the last assessment for state and 
county taxes previous to the incurring of the 
indebtedness. 

(b) No money may be borrowed on bonds 
issued for the purchase of lands and improving same 
for any such purpose until the proposition has been 
submitted to the vote of those qualified under the 
provisions of the state constitution to vote at such 
election in the county affected thereby and a 
majority vote is cast in favor thereof." 

Section 112. Section 7-16-4104, MCA, is 
amended to read: 

"7-16-4104. Authorization for municipal 
indebtedness for various cultural, social, and 
recreational purposes. ( 1 ) A city or town council or 
commission may contract an indebtedness on behalf 
of the city or town, upon the credit thereof, by 
borrowing money or issuing bonds: 

(a) for the purpose of purchasing and 
improving lands for public parks and grounds; 

(b) for procuring by purchase, construction, 
or otherwise swimming pools, athletic fields, skating 
rinks, playgrounds, museums, a golf course, a site 
and building for a civic center, a youth center, or 
combination thereof; and 

(c) for furnishing and equipping the same. 
(2) The total amount of indebtedness 

authorized to be contracted in any form, including 
the then-existing indebtedness, may not at any time 
exceed 16.5% 20% of the taxable value of the 
taxable property of the city or town as ascertained 
by the last assessment for state and county taxes 
previous to the incurring of such indebtedness. No 
money may be borrowed on bonds issued for the 
purchase of lands and improving the same for any 
such purp>ose until the proposition has been 
submitted to the vote of the qualified electors of the 
city or town and a majority vote is cast in favor 
thereof." 

Section 113. Section 7-31-106, MCA. is 
amended to read: 

'7-31-106. Authorization for county to 



issue bonds - election required. (1) If the petition 
is presented to the board of county commissioners, 
it shall be the duty of the board, for the purpose of 
raising money to meet the payments under the terms 
and conditions of said contract and other necessary 
and proper expenses in and about the same and for 
the approval or disapproval thereof: 

(a) to ascertain, within 30 days after 
submission of the petition, the existing indebtedness 
of the county in the aggregate; and 

(b) to submit, within 60 days after 
ascertaining the .same, to the electors of such county 
the proposition to approve or disapprove the contract 
and the issuance of bonds neces.sary to carry out the 
same. 

(2) The amount of the bonds authorized by 
this section may not exceed 22.5% 27.5% of the 
taxable value of the taxable property therein, 
inclusive of the existing indebtedness thereof, to be 
ascertained by the last assessment for slate and 
county taxes previous to the issuance of said bonds 
and incurring of said indebtedness." 

Section 114. Section 7-31-107, MCA, is 
amended to read: 

"7-31-107. Authorization for municipality 
to issue bonds ~ election required. ( 1 ) If said 
petition is presented to the council of any 
incorporated city or town, the council, for the 
purpose of raising money to meet the payments 
under the terms and conditions of said contract and 
Other necessary and proper expenses in and about 
the same and for the approval or disapproval thereof: 

(a) shall ascertain, within 30 days after 
submission of the petition, the aggregate 
indebtedness of such city or town; and 

(b) shall submit, within 60 days after 
ascertaining the same, to the electors of such city or 
town the proposition to approve or disapprove said 
contract and the issuance of bonds necessary to carry 
out the same. 

(2) The amount of the bonds authorized by 
this section may not exceed 16.5% 20% of the 
taxable value of the taxable property therein, 
inclusive of the existing indebtedness thereof, to be 
ascertained in the manner provided in this part." 

Section 115. Section 7-34-2131, MCA, is 
amended to read: 

"7-34-2131. Hospital district bonds and 
notes authorized. ( I ) (a) A hospital district may 
borrow money by the issuance of its bonds to 
provide funds for payment of part or all of the co.st 
of acquisition, furnishing, equipment, improvement, 
extension, and betterment of hospital facilities and to 
provide an adequate working capital for a new 
hospital. 

(b) The amount of bonds issued for such 
purpose and outstanding at any time may not exceed 
22.5% 27.5% of the taxable value of the property 
therein as ascertained by the last assessment for state 
and county taxes previous to the issuance of such 
bonds. 

(c) Such bonds shall be authorized, sold, 
and issued and provisions made for their payment in 
the manner and subject to the conditions and 
limitations prescribed for bonds of school districts 
by Title 20, chapter 9, part 4. 

(2) (a) A hospital district may borrow 
money by the issuance of notes to provide funds to 
finance the costs described in subsection (1) and to 
finance the working capital requirements of the 
district. The notes must be authorized and in a form 
and terms prescribed by a resolution adopted by the 
board of trustees. The notes must mature over a term 
not to exceed 15 years. 

(b) The principal and interest on the notes 
must be paid from the taxes levied pursuant to 7-34- 
2133 and 7-34-2134, exclusive of the taxes levied to 
pay bonds issued in accordance with subsection (I), 
and all other revenue of the district. The annual 
amount of principal and interest payable on notes in 



13 



any fiscal year must be included in the district's 
budget for that year. 

(c) The notes may be secured by a 
mortgage of or a security interest in all or part of the 
district's assets and by a pledge of the taxes and 
revenue of the district, or either of them. 

(d) Notes may not be issued unless the 
projected annual revenue of the district, including 
the taxes levied pursuant to 7-34-2133 and 7-34- 
2134 but exclusive of the taxes levied to pay bonds, 
is at least equal to the sum of the cost of operating 
and maintaining the hospital district plus the 
maximum amount of principal and interest due in 
any future fiscal year on the notes proposed to be 
issued and all notes outstanding upon the issuance of 
the proposed notes. 

(3) Nothing herein shall be construed to 
preclude the provisions of Title 50, chapter 6, part I, 
allowing the state to apply for and accept federal 
funds." 

Section 116. Section 19-11-503, MCA, is 
amended to read; 

"19-11-503. Special tax levy for fund 
required. ( 1 ) The purpose of this section is to 
provide a means by which each disability and 
pension fund may be maintained at a level equal to 
4% 4.9% of the taxable valuation of all taxable 
property within the limits of the city or town. 

(2) Whenever the fund contains less than 
4* 4.9% of the taxable valuation of all taxable 
property within the limits of the city or town, the 
governing body of the city or town shall, at the time 
of the levy of the annual tax, levy a special tax as 
provided in 19-11-504. The special tax must be 
collected as other taxes are collected and, when so 
collected, must be paid into the disability and 
pension fund. 

(3) If a special tax for the disability and 
pension fund is levied by a third-class city or town 
using the all-purpose mill levy, the special tax levy 
must be made in addition to the all-purpose levy." 

Section 117. Section 19-11-504, MCA, is 
amended to read: 

"19-11-504. Amount of special tax levy. 
Whenever the fund contains an amount which is less 
than 4% 4.9%< of the taxable valuation of all taxable 
property in the city or town, the city council shall 
levy an annual special tax of not less than I mill and 
not more than 4 mills on each dollar of taxable 
valuation of all taxable property within the city or 
town." 

Section 118. Section 20-9-406, MCA, is 
amended to read: 

"20-9-406. Limitations on amount of 
bond issue. {I)(a) The Except as provided in 
subsection ( l)(c), the maximum amount for which an 
elementary district or a high school district may 
become indebted by the issuance of bonds, including 
all indebtedness represented by outstanding bonds of 
previous issues and registered warrants, is 4 5% 55% 
of the taxable value of the property subject to 
taxation as ascertained by the ' last completed 
as.sessment for state, county, and school taxes 
previous to the incurring of the indebtedness; 
including: 

(i) th e taxabl e valu e of coal gro s s proceeds 
as d e termined for county bond i ng purpos e s in 15 23 
703(2): 

(ii) th e taxabl e valu e of oi l and gas n e t 
proc ee d s as det e rmin ed for county bonding purpo se s 
i n 15 23 607(3); and 

(iii) th e amount of th e valu e of any other o i l 
and ga s production occ u rring aft e r D e c e mb e r 31, 
1 9 88 . multiplied by 60% ' , including the taxable value 
of oil and gas net proceeds as determined for county 
bonding purposes in 15-23-607(3) . 

(b) The Except as provided in subsection 
(l)(c), the maximum amount for which a K-12 
school district, as formed pursuant to 20-6-701, may 
become indebted by the issuance of bonds, including 



all indebtedness represented by outstanding bonds of 
previous issues and registered warrants, is up to 90% 
of the taxable value of the property subject to 
taxation as ascertained by the last-completed 
assessment for state, county, and school taxes 
previous to the incurring of the indebtedness. The 
total indebtedness of the high school district with an 
attached elementary district as r e pr e s e nt e d by th e 
issuanc e of bonds must be limited to the sum of 
4$% 55% of the taxable value of the property for 
elementary school program purposes and 4$% 55% 
of the taxable value of the property for high school 
program purposes. 

(c) The maximum amount for which an 
elementary district or a high school district that 
qualifies for guaranteed tax base aid under the 
provisions of 20-9-367 may become indebted by the 
issuance of bonds, including all indebtedness 
represented by outstanding bonds of previous issues 
and registered warrants, is 55% of the corresponding 
statewide mill value per ANB times 1,000 times the 
ANB of the district. For a K-12 district, the 
maximum amount for which the district may become 
indebted is 55% of the sum of the statewide mill 
value per elementary ANB times 1,000 times the 
elementary ANB of the district and the statewide 
mill value per high school ANB times 1,000 times 
the high school ANB of the district. 

(2) The maximum amounts determined in 
subsection (I), however, may not pertain to 
indebtedness imposed by special improvement 
district obligations or assessments against the school 
district or to bonds issued for the repayment of tax 
protests lost by the district. All bonds issued in 
excess of the amount are void, except as provided in 
this section. 

(3) When the total indebtedness of a school 
district has reached the limitations prescribed in this 
section, the school district may pay all reasonable 
and necessary expenses of the school district on a 
cash basis in accordance with the financial 
administration provisions of this chapter. 

(4) Whenever bonds are issued for the 
purpose of refunding bonds, any money to the credit 
of the debt service fund for the payment of the 
bonds to be refunded is applied toward the payment 
of the bonds and the refunding bond issue is 
decreased accordingly." 

Section 119. Section 20-9-407, MCA, is 
amended to read: 

"20-9-407. Industrial facility agreement 
for bond issue in excess of maximum. (1) In a 
school district within which a new major industrial 
facility which seeks to qualify for taxation as class 
five property under 1 5-6- 1 35 is being constructed or 
is about to be constructed, the school district may 
require, as a precondition of the new major industrial 
facility qualifying as class five property, that the 
owners of the proposed industrial facility enter into 
an agreement with the school district concerning the 
issuing of bonds in excess of the 45% debt 
limitation prescribed in 20-9-406. Under such an 
agreement, the school district may, with the approval 
of the voters, issue bonds which exceed the 
limitation prescribed in this section by a maximum 
of 4#% the debt limitation prescribed in 20-9-406 of 
the estimated taxable value of the property of the 
new major industrial facility subject to taxation 
when completed. The estimated taxable value of the 
property of the new major industrial facility subject 
to taxation shall be computed by the department of 
revenue when requested to do so by a resolution of 
the board of trustees of the school district. A copy of 
the department's statement of estimated taxable 
value shall be printed on each ballot used to vote on 
a bond issue proposed under this section. 

(2) Pursuant to the agreement between the 
new major industrial facility and the school district 
and as a precondition to qualifying as class five 
property, the new major industrial facility and its 



owners shall pay, in addition to the taxes imposed 
by the school district on property owners generally, 
so much of the principal and interest on the bonds 
provided for under this section as represents 
payment on an indebtedness in excess of the 
limitation prescribed in 20-9-406. After the 
completion of the new major industrial facility and 
when the indebtedness of the school district no 
longer exceeds the limitation prescribed in this 
section, the new major industrial facility shall be 
entitled, after all the current indebtedness of the 
school district has been paid, to a tax credit over a 
period of no more than 20 years. The credit shall as 
a total amount be equal to the amount which the 
facility paid the principal and interest of the school 
district's bonds in excess of its general liability as a 
taxpayer within the district. 

(3) A major industrial facility is a facility 
subject to the taxing power of the school district, 
whose construction or operation will increase the 
population of the district, imposing a significant 
burden upon the resources of the district and 
requiring construction of new school facilities. A 
significant burden is an increase in ANB of at least 
20%) in a single year." 

Section 120. Section 15-1-1 1 1, MCA, is 
amended to read: 

"15-1-111. Reimbursement to local 
governments and schools — duties of department 
and county treasurer — statutory appropriation. 
( 1 ) (a) On or b e for e May I, 1990, th e d e partm e nt of 
r e v e nu e s hall r e mit to th e county tr e a s urer of e ach 
county 30% of th e r e imburs e ment amount sp e cifi e d 
in s ub se ction (l)(b), a s comput e d by th e d e partm e nt. 
Th e d e partm e nt shall ba s e th e r e imbur se m e nt on th e 
r e duction in p e rsonal prop e rty tax r e v e nu es du e to 
th e r e duction in p e rsonal prop e rty tax rat es for cla ss 
e ight property, as provid e d for in 15 6 1 3 8 . and any 
r e duction in tax e s ba se d upon r e calculation of th e 
e ff e ctiv e tax rat e for prop e rty in 15 6 145. The 
r e imburs e ment — basis — mu s t a ls o — i nclud e — l os s of 
p e rsonal — property — ta« — r e venu e — d«e- — te — the 
r e clas si ficat i on of new indu s tr i al prop e rty from cla ss 
fiv e to cla s s ei ght with the r e duc e d tax rat e . Th e 
det e rmination of th e r e imbursem e nt basis must b e 
mad e in th e year in which the r e classification is 

(b) Th e r e imbur se m e nt r e v e nu e must b e 
bas e d on the county' s taxabl e valu e and mill l e vi es 
for tax y e ar 1 9 8 9. Prior to November I of each year, 
the department of revenue shall determine for each 
county the number of mills levied for the current tax 
year in each taxing jurisdiction levying mills against 
personal property. 

(2) Prior to S e pt e mb e r — h — I9m-. — the 
d e partm e nt' s ag e nt in the county s hall supply th e 
following informat i on to th e (a) The department for 
shall determine the amount of'laxable value lost 
within each taxing jurisdiction within the county; 

(a) th e numb e r of mills — l e vied — in th e 
jurisdict i on for taxabl e y e ar 19 8 9; 

(b) th e — numb e r of mills — l e vi e d — in — the 
jurisdiction for taxabl e y e ar 1990; 

(c) th e total taxabl e valuation for taxabl e 
y e ar s 19 8 9 and 1990, r e port e d se parat e ly for e ach 
y e ar, of all p e r s onal prop e rty not se cured by r e al 
prop e rty; and 

(d) th e total taxabl e valuation for taxabl e 
y e ars 19 8 9 and 1990, r e port e d se para te ly for e ach 
y e ar, — of a l l — p e r s onal — prop e rty — se cur e d — by — real 
prop e rty, because of the reduction in personal 
property tax rates for property included in class 
eight, class nine, and class ten, as those classes 
existed in 1989. The determination must be ba.sed on 
1989 taxable values for class eight, class nine, and 
class ten property as reported to the department by 
each taxing jurisdiction that existed in 1989, less the 
taxable value for the same property in 1989 as 
determined by the 1991 tax rate for property 
included in 15-6-138. 



14 



(b) The department shall calculate the 
taxable value lost in a taxing jurisdiction as a result 
of a reduction in the taxable value rate in 15-6-145 
that results from a reduction in taxable value of 
property under 15-6-138. 

(c) The amount of reimbursement is 
calculated by multiplying the current year mill levy 
for each taxing jurisdiction limes the total amount of 
taxable value lost as determined in subsections (2)(a) 
and (2)(b). 

(3) After rec e ipt of th e information from ito 
ag e nt, th e d e partm e nt shall calculat e th e amount of 
r e venu e lo s t to e ach taxing juri s diction, u si ng curr e nt 
y e ar mill levi e s, du e to th e annual r e duct i on in 
p e r s onal prop e rty tax rat e s s e t forth in 15 6 13 8 , and 
a ny re duct i on in tax es bas e d upon r e calculation of 
th e e ffectiv e tax rat e for prop e rty in 15 6 M5. The 
department shall total the amounts for all taxing 
Jurisdictions within the county. 

(4) For taxable year 1990 and for e ach y e ar 
th e r e aft e r, th e The department shall remit to the 
county treasurer 50% of the base amount of revenue 
reimbursable, determined pursuant to subsection f3^ 
as follow s : 

(a) i2}^ on or before November 30 , 1990 , 
and on or b e fore each Nov e mb e r 30 ther e aft e r, th e 
departm e nt shall r e mit 50% of th e bas e amount of 
th e r e v e nu e r e imbursabl e to th e county; and 

(b) the remaining 50% on or before May 
31 . 1991, and on or b e for e e ach May 31 thereaft e r, 
th e d e partm e nt shall r e mit 50% of th e ba se amount 
of th e r e venu e r e imbursable to the county . 

(5) Upon r e c e ipt of th e r e imbur se m e nt from 
th e d e partm e nt, th e county tr e asur e r shall di s tribut e 
th e r e imbursem e nt to e ach taxing juri s diction in th e 
r e lativ e proportion s r e quir e d by the levies for stat e , 
county, school district, and municipal purpo ses i n 
th e s am e mann e r as current year mill l e vi es on 
p e r s onal pro[>erty tax e s ar e distribut e d. 

(6) For the purpo s e s of this s e ction, "taxing 
juri s diction" m e an s local governm e nt s and includ es 
s chool d is tricts, each municipality with tax incr e m e nt 
financing, and th e s tat e of Montana. 

(5) Prior to December 31. 1993. for each 
county, the department shall determine the following 
information for each taxing jurisdiction that was in 
existence in tax year 1993: 

(a) the number of mills levied in each 
taxing jurisdiction for tax year 1993; and 

(b) the total taxable valuation for tax year 
1993 of all pro[>ertv included in class eight. 

(6) (a) (i) Based on the information 
determined under subsection (5). the department 
shall calculate the revenue loss for each taxing 
jurisdiction because of the change in the tax rate 
provided for in 15-6-138 and the reduction in 
commercial properly market value provided for in 
15-6-134. 

(ii) For purposes of this section, revenue loss 
for each taxing jurisdiction is: 

(A) the taxable value of all class eight 
property computed at the statutory tax rate in effect 
for tax year 1993 less the taxable value of all class 
eight property computed at the tax rate provided for 
in 15-6-138; 

(B) multiplied by the number of mills 
levied in the taxing jurisdiction for tax year 1993. 

(b) The total revenue loss within each 
county is the sum of the revenue loss computed for 
each taxing jurisdiction in the county. 

(7) (a) Prior to May 1. 1994. the 
department shall remit to each county treasurer 30% 
of the total reimbursement due under this section to 
compensate taxing jurisdictions for loss of revenue 
associated with class eight personal property not 
secured by real property. The county treasurer shall 
distribute the total reimbursement to each taxing 
jurisdiction as calculated by the department. 

(b) The amount of reimbursement due from 
the state to each county for tax years 1994. 1995. 



and 1996 is the total revenue loss calculated under 
subsections (5) and (6). The county treasurer shall 
distribute the total revenue loss to each taxing 
jurisdiclion as calculated by the department. 

(c) The amount of total reimbursement for 
each county for tax year 1997 and for each tax year 
thereafter is determined by using the formula R = A 
X (B/C) X (D/E) X (F/G). where: 

(i) "R" is the amount of reimbursement to 
be received by the county for Ihe current lax year; 

(ii) "A" is the total statewide amount 
available for reimbursement and is determined by 
totaling the amount of reimbursement, "R", for all 
counties for the immediately preceding lax year. For 
lax year 1997. the total statewide amount available 
for reimbursement is the total revenue loss 
calculated in subsection (6) for all counties in lax 
year 1996. 

(iii) "B" is the statewide lolal of all sales 
taxes and use taxes collected in the lax year 
immediately preceding the current tax year; 

(iv) "C" is Ihe statewide total of all sales 
taxes and use taxes collected in the lax year prior to 
Ihe tax year immediately preceding Ihe current lax 
year; 

(v) "D" is Ihe total taxable value of all 
commercial property in class four and all property in 
class eight within the county during the lax year 
immediately preceding Ihe current lax year; 

(vi) "E" is the total taxable value of all 
commercial property in class four and all property in 
class eight in the slate during the tax year 
immediately preceding the current lax year; 

(vii) "F" is Ihe average counlywide millage 
and is determined by dividing Ihe amount of revenue 
collected in property taxes within all jurisdictions in 
Ihe county in Ihe immediately preceding lax year by 
Ihe total taxable value of all property in the county 
in the immediately preceding lax year; and 

(viii) "G" is Ihe average statewide millage 
and is determined by dividing Ihe amount of revenue 
collected in properly taxes within all jurisdictions in 
Ihe state in Ihe immediately preceding lax year by 
the total taxable value of all property in the stale in 
the immediately preceding tax year. 

(8) Funds appropriated from the sales lax 
and use tax accouni for reimbursements calculated 
under subsections (5) through (7) for lax year 1994 
and subsequent tax years must be remitted lo the 
county treasurer as follows: 

(a) on or before November 30. 1994. and 
on or before each November 30 thereafter, the 
department shall remit 50% of the amount of the 
revenue reimbursable lo the county; and 

(b) on or before May 31, 1995, and on or 
before each May 31 thereafter, the department shall 
remil 50% of Ihe amount of the revenue 
reimbursable to Ihe county. 

(9) (a) Upon receipt of the reimbursement 
provided for in subsections (1) through (4). Ihe 
county treasurer shall distribute the reimbursement lo 
each taxing jurisdiction as calculated by the 
department. 

(b) For tax year 1997 and subsequent tax 
years, upon receipt of the reimbursements from the 
department, the county treasurer of each county shall 
distribute Ihe reimbursement lo each taxing 
jurisdiclion in the relative proportion determined 
under the total calculations provided by the 
department for tax year 1996. 

(10) For the purposes of this section, "taxing 
jurisdiction" means the stale of Montana; local 
governments, including counties and incorporated 
cities and towns, school districts, and lax increment 
financing districts; and miscellaneous taxing 
jurisdictions levying mills against property being 
reimbursed under this section. 

(11) (a) For distributions made pursuant lo 
subsection (9). the creation and dissolution of taxing 
jurisdictions are treated as follows: 



(i) A taxing jurisdiction that existed in lax 
year 1989 and that no longer exists is not entitled lo 
reimbursement. 

(ii) Taxing jurisdictions that are combined 
into a single taxing jurisdiclion are entitled lo 
reimbursement based on the combined proportion of 
those jurisdictions in lax year 1989. 

(iii) A taxing jurisdiction that existed in lax 
year 1989 and that is now split into two or more 
taxing jurisdictions is enlilled to reimbursement 
based on the proportion of 1989 taxable value within 
each new laxing jurisdiclion. The department shall 
determine Ihe proportion of 1989 taxable value 
located in each laxing jurisdiclion. 

(iv) A laxing jurisdiclion that did not exist 
in tax year 1989 is not enlilled lo reimbursement 
under subsection (9) unless ihe jurisdiclion was 
crealed as described in subseclion (I l)(a)(iii). 

(b) For distributions made pursuant lo 
subsections (5) through (7). the creation and 
dissolution of laxing jurisdictions al'ler lax year 1993 
are treated as follows: 

(i) Taxing jurisdictions that existed in lax 
year 1993 that no longer exist in subsequent lax 
years and that are not combined with another laxing 
jurisdiction are no longer enlilled lo reinibursemenl. 
The reimbursemenl for a laxing jurisdiclion that no 
longer exisls musl be proraled across all remaining 
jurisdiclions in the relative proportions thai would 
have existed in lax year 1993 had Ihe jurisdiction 
not been in existence in that year. 

(ii) Taxing jurisdiclions that are combined 
into a single taxing jurisdiclion are entitled lo 
reimbursement based on the combined proportion of 
those jurisdiclions in lax year 1993. 

(iii) Taxing jurisdictions crealed as a result 
of splitting an existing jurisdiclion are enlilled lo a 
share of ihe original reimbursemenl based on the 
relative proportion of all property in class eight and 
commercial property in class four within each of the 
newly crealed jurisdiclions in the lax year that the 
new jurisdictions are crealed. 

(iv) Taxing jurisdiclions that did not exist in 
lax year 1993 are not entitled to reimbursement 
under subseclion (9) unless crealed as described in 
subseclion (I l)(b)(iii). 

ffl (l2) The amounts necessary for the 
administration of this section , except subsections (5) 
through (7), are statutorily appropriated, as provided 
in 17-7-502, from the general fund lo reimburse 
school districts and local governments for reductions 
in tax rates on personal properly. 

(13) (a) In addition lo the calculation and 
distribution provided for in subsections (2). (3), and 
(6) through (8), each fiscal year, the department 
shall distribute from the sales and use lax accouni to 
each municipality, as defined in 7-15-4283(6), the 
amount, if any, as provided in subsection (13)(b), 
that is required to reimburse Ihe municipality the 
revenue lost by the lax increment financing district, 
crealed pursuant lo 7-15-4282 on or before July 1. 
1993. as a result of the slate reducing the mill levy 
for the elementary school and high school districts' 
debt service, transportation, and retirement funds. 

(b) (i) Based on school fiscal year 1994. the 
department shall determine the number of mills 
levied by each school district in the tax increment 
financing district for the retirement fund and 
determine Ihe reduction of transportation and debt 
service mills that would have occurred if [sections 
143 and 148] had been in effect for that year. 

(ii) For school fiscal year 1995 and each 
succeeding year, the reimbursemenl must be equal to 
the number of mills determined in subseclion 
(3)(b)(i) limes the incremental taxable value of the 
tax increment financing district. The department 
shall distribute the amounts lo Ihe municipalities in 
two equal installments on November 30 and May 31 
of the fiscal year. " 

Section 121. Section 15-6-133, MCA, is 



15 



amended to read: 

"15-6-133. Class three property 
description — taxable percentage. (1) Class three 
properly includes: 

(a) agricultural land as defined in 15-7-202; 

(b) nonproductive patented mining claims 
outside the limits of an incorporated city or town 
held by an owner for the ultimate purpose of 
developing the mineral interests on the property. For 
the purposes of this subsection ( 1 )(b), the following 
provisions apply: 

(i) The claim may not include any property 
that is used for residential purposes, recreational 
purposes as described in 70-16-301, or commercial 
purposes as defined in 15- 1 -101 or any property the 
surface of which is being used for other than mining 
purposes or has a separate and independent value for 
such other purposes. 

(ii) Improvements to the property that would 
not disqualify the parcel are taxed as otherwise 
provided in this title, including that portion of the 
land upon which such improvements are located and 
that is reasonably required for the use of the 
improvements. 

(iii) Nonproductive patented mining claim 
property must be valued as if the land were devoted 
to agricultural grazing use. 

(2) Class three property is taxed at the 
taxabl e p e rc e ntag e rat e "P" 30% of its productive 
capacity. 

(3) Unti l July — h — W86; — the — taxabl e 
p e rc e ntag e rat e "P" for cla s s thr ee prop e rty i s 30%. 

( 4 ) Pr i or to July I. 19 8 6, th e d e partm e nt of 
r e v e nu e s hal l d e t e rm i n e th e taxabl e p e rc e ntag e rat e 
^^ — appl i cabl e — te — class — three — prop e rty — for th e 
revaluat i on cycl e b e ginning January — h — 1 9 8 6, a s 
follows: 

(a) Th e — dir e ctor of th e — d e partm e nt of 
r e v e nu e s hall c e rt i fy to th e gov e rnor b e for e Ju l y 1, 
19 8 6, th e p e rc e ntag e by wh i ch th e appra i s e d valu e 
of all prop e rty i n th e s tat e cla s s i fi e d und e r cla ss 
thr e e as of January I, 19 8 6. ha s i ncr e a se d du e to th e 
r e valuation conduct e d und e r 15 7 111. This figur e i s 
th e "c e rtifi e d stat e wid e p e rc e ntag e incr e a se ". 

(b) The taxable valu e of prop e rly in cla s s 
thr ee i s d e t e rmin e d as a function of th e c e rtifi e d 
stat e wid e p e rc e ntage i ncr e a se in accordanc e with th e 
tabl e shown b e low. 

(c) Th is tabl e lim i t s th e s tat e wid e i ncr e as e 
in taxab le va l uation re s u l ting from r e apprai s al to 0%. 
Jfl — calculating — the — p e rc e ntag e — i ncreas e , — the 
d e partment — may — not — con s id e r — agricultural — use 
chang es during cal e ndar y e ar 19 8 5. 

(d) Th e — taxabl e — p e rc e ntag e — must — be 
calculat e d by int e rpolation to coinc i d e with th e 
n e arest who le numb e r c e rt i fi e d s tat e wid e p e rc e ntag e 
incr e as e from th e follow i ng tabl e : 

C e rtifi e d Stat e w i d e Cla ss Thr ee Taxable 

P e rc e ntag e Incr e a se P e rc e ntag e "P" 

e 30.00 



W- 



-4?.27 



39- 



2&m 



30- 



-3^^ 



4©- 



-UAi 



se- 



-^fteo 



(5) Aft e r July I , 19 8 6. no adju s tm e nt may 
b e mad e by th e d e p a rtm e n t t o the taxabl e perc e ntag e 
rate — '^^ — unt i l a r e valuation has b ee n mad e as 
provid e d in 15 7 111. " 

Section 122. Section 15-6-138, MCA, is 
amended to read: 

"15-6-138. Class eight property 
description — taxable percentage. (I) Class eight 
property includes: 

(a) all agricultural implements and 
equipment; 

(b) all mining machinery, fixtures, 
equipment, lools that are not exempt under 15-6- 
201(l)(r), and supplies except those included in class 
five; 



(c) all manufacturing machinery, fixtures, 
equipment, tools thai are not exempt under 15-6- 
201(l)(r), and supplies except those included in class 
five; 

(d) all trailers, including those prorated 
under 15-24-102, except tho,se subject to taxation 
under 61-3-504(2); 

(e) all goods and equipment intended for 
rent or lease, except goods and equipment 
specifically included and taxed in another class; 

(0 buses and trucks having a rated capacity 
of more than 1 ton, including those prorated under 
15-24-102; 

(g) truck toppers weighing more than 300 
pounds; 

(h) furniture, fixtures, and equipment, 
except that specifically included in another class, 
used in commercial establishments as defined in this 
section; 

(i) x-ray and medical and dental equipment; 

(j) citizens' band radios and mobile 
telephones; 

(k) radio and television broadcasting and 
transmitting equipment; 

(1) cable television systems; 
(m) coal and ore haulers; 

(n) theater projectors and sound equipment; 
and 

(o) all other property not included in any 
other class in this part, except that property subject 
to a fee in lieu of a property tax. 

(2) As used in this section, "coal and ore 
haulers" means nonhighway vehicles that exceed 
18,000 pounds per axle and that are primarily 
designed and used to transport coal, ore, or other 
earthen material in a mining or quarrying 
environment. 

(3) "Commercial establishment" includes 
any hotel; motel; office; petroleum marketing 
station; or service, wholesale, retail, or food-handling 
business. 

(4) Class eight property is taxed at 9% 
4.5% of its market value." 

Section 123. Section 15-6-141, MCA, is 
amended to read: 

"15-6-141. Class nine property 
description ~ taxable percentage. (I) Class nine 
property includesr 

(a) c e ntrally — assess e d — e l e ctric — pow e r 
compani e s' allocation s , including, if congr e ss pas se s 
l e g i s l ation that allows th e stat e to tax prop e rty 
own e d by an ag e ncy cr e at e d by congr ess to tran s mit 
Of — distr i bute — e l e ctrical — e n e rgy, — allocations — ef 
prop e rti es con s tructed, own e d, or op e rat e d by a 
public ag e ncy cr e at e d by th e congr e s s to transmit or 
di s tribut e el e ctric e n e rgy produc e d at privat e ly 
own e d g e n e rating faciliti es (not including rural 
e lectric coop e ratives); 

(b) allocation s for c e ntrally a ssesse d natural 
gas compani es having a major distribution s y s t e m in 
thi s s tat e ; and 

(e) property owned, possessed, or controlled 
by a person and subject to central assessment, as 
provided in 15-23-101, c e ntrally ass e ss e d compani e s' 
allocation s except: 

(4)(a) electric power and natural gas 
companies' property , including property of pipeline 
companies that transport natural gas, that is included 
in class thirteen ; 

fi»)(b) property owned by cooperative rural 
electric and cooperative rural telephone associations 
and classified in class five; 

(4h)(c) property owned by organizations 
providing telephone communications to rural areas 
and classified in class seven; 

fH4(d) railroad transportation property 
included in class twelve; and 

fv4(e) airline transportation property 
included in class twelve. 

(2) Class nine property is taxed at 12% of 



market value." 

Section 124. Class thirteen property ~ 
description — taxable percentage. ( 1 ) Class thirteen 
property includes: 

(a) operating property owned, possessed, or 
controlled by electric power companies that is 
subject to central assessment, as provided in 15-23- 
101, including, if congress passes legislation that 
allows the state to tax property owned by an agency 
created by congress to transmit or distribute 
electrical energy, allocations of properties 
constructed, owned, or operated by a public agency 
created by congress to transmit or distribute electric 
energy produced at privately owned generating 
facilities, not including rural electric cooperatives; 

(b) property, including property owned by 
rural electric cooperatives, placed in service after 
June 8, 1993, for the purpose of generating, 
manufacturing, or producing electricity or electrical 
energy, except for pollution control facilities 
included in class five; 

(c) property owned, possessed, or controlled 
by natural gas distribution companies that is subject 
to central assessment, as provided in 15-23-101, 
which companies have a major distribution system in 
this state; and 

(d) property owned, possessed, or controlled 
by natural gas pipeline companies that is subject to 
central assessment, as provided in 15-23-101. 

(2) Class thirteen property is taxed at 4.5% 
of market value. 

Section 125. Reimbursement to local 
govemmeats and schools — centrally assessed 
utility property — duties of department and 
county treasurer. (I) Prior to October 30, 1994, for 
each county, the department shall determine the 
following information for each taxing jurisdiction in 
existence in tax year 1994: 

(a) the number of mills levied in each 
taxing jurisdiction for tax year 1994; and 

(b) the total taxable valuation for tax year 
1994 of all property included in class thirteen. 

(2) (a) Based on the information determined 
under subsection ( I ), the department shall calculate 
the revenue loss for each taxing jurisdiction due to 
the difference in tax year 1994 taxable valuation 
rates between class thirteen property and the tax rate 
specified in 15-6-141 for class nine property. For 
purposes of this section, revenue loss for each taxing 
jurisdiction is determined as: 

(i) the absolute difference between actual 
taxable valuation of class thirteen property in tax 
year 1994 and what that taxable valuation would 
have been had the class nine taxable valuation rate 
been applicable to class thirteen property; 

(ii) multiplied by the number of mills levied 
in the taxing jurisdiction for tax year 1994. 

(b) The total revenue loss within each 
county is the sum of the revenue loss computed for 
each taxing jurisdiction in the county. 

(3) The amount of reimbursement due from 
the state to each county for tax years 1994, 1995, 
and 1996 is the total revenue loss calculated under 
subsection (2). The county treasurer shall distribute 
to each taxing jurisdiction the total revenue loss as 
calculated by the department. 

(4) The amount of total reimbursement for 
each county for tax year 1997 and for each tax year 
thereafter is determined in the same manner as under 
the procedures provided in 15-1-1 1 l(7)(c) through 
(11). 

Section 126. Section 15-6-144, MCA, is 
amended to read: 

"15-6-144. Class eleven property — 
description — taxable percentage. ( 1 ) Class eleven 
property includes all improvements on land that is 
eligible for valuation, assessment, and taxation as 
agricultural land under 15-7-202(2). Class eleven 
property includes I acre of real property beneath the 
agricultural improvements. The 1 acre shall be 



16 



valued at market value. 

(2) Class eleven property is taxed at 80% of 
the taxable percentage applicable to class four 
property." 

Section 127. Section 15-6-207, MCA, is 
amended to read: 

"15-6-207. Agricultural exemptions. (1) 
The following agricultural products are exempt from 
taxation: 

(a) all unprocessed agricultural products on 
the farm or in storage and owned by the producer; 

(b) all producer-held grain in storage; 

(c) all unprocessed agricultural products, 
except livestock; 

(d) except as provided in subsection (l)(e), 
livestock which have not attained the age of 24 
months as of March 1 ; 

(e) swine which have not attained the age 
of 6 months as of January 1 ; 

(0 poultry and the unprocessed products of 
poultry; and 

(g) bees and the unprocessed product of 
bee s; and 

(h) cats, dogs, and other household pets not 
raised for profit . 

(2) Any beet digger, beet topper, beet 
defoliator, beet thinner, beet cultivator, beet planter, 
or beet top saver designed exclusively to plant, 
cultivate, and harvest sugar beets is exempt from 
taxation if such implement has not been used to 
plant, cultivate, or harvest sugar beets for the 2 years 
immediately preceding the current assessment date 
and there are no available sugar beet contracts in the 
sugar beet grower's marketing area." 

Section 128. Section 15-8-205, MCA, is 
amended to read: 

" 15-8-205. Initial assessment of class four 
trailer and mobile home property - when. The 
county assessor shall assess all class four trailer and 
mobile home property described in 15-6-134 or 
included under 15-6-144 immediately upon arrival in 
the county if the taxes have not been previously paid 
for that year in another county in Montana." 

Section 129. Section 15-23-703, MCA, is 
amended to read: 

" 15-23-703. Taxation of gross proceeds — 
taxable value for bonding and guaranteed tax 
base aid to schools. (1) The county assessor shall 
compute from the reported gross proceeds from coal 
a tax roll that he the assessor shall transmit to the 
county treasurer on or before September 15 each 
year. The county assessor may not levy or assess 
any mills against the reported gross proceeds of coal 
but shall levy a tax of 5% against the value of the 
reported gross proceeds as provided in 15-23- 
701(l)(d). The county treasurer shall proceed to give 
full notice to each coal producer of the taxes due 
and to collect the taxes as provided in 15-16-101. 

(2) For bonding, county classification, and 
all nontax purposes, the taxable value of the gross 
proceeds of coal is 45% of the contract sales price 
as defined in 15-35-102(5). 

(3) Except as provided in subsection (6), 
the county treasurer shall calculate and distribute to 
the state, county, and eligible school districts in the 
county the amount of the coal gross proceeds tax, 
determined by multiplying the unit value calculated 
in 15-23-705 times the tons of coal extracted, 
treated, and sold on which the coal gross proceeds 
tax was owed during the preceding calendar year. 

(4) Except as provided in subsections (5), 
(6), and (8), the county treasurer shall credit the 
amount determined under subsection (3) and the 
amounts received under 15-23-706: 

(a) to the state and to the counties that 
levied mills in fiscal year 1990 against 1988 
production in the relative proportions required by the 
levies for state and county purposes in the same 
manner as property taxes were distributed in fiscal 
year 1990 in the taxing jurisdiction; and 



(b) to school districts in the county that 
either levied mills in school fiscal year 1990 against 
1988 production or used nontax revenue, such as 
Public Law 81-874 money, in lieu of levying mills 
against production, in the same manner that property 
taxes collected or property taxes that would have 
been collected would have been distributed in the 
1990 school fiscal year in the school district. 

(5) (a) If the total tax liability in a taxing 
jurisdiction exceeds the amount determined in 
subsection (3), the county treasurer shall, 
immediately following the distribution from taxes 
paid on May 31 of each year, send the excess 
revenue, excluding any protested coal gross proceeds 
tax revenues, to the department for redistribution as 
provided in 15-23-706. 

(b) If the total tax liability in a taxing 
jurisdiction is less than the amount determined in 
subsection (3), the taxing jurisdiction is entitled to a 
redistribution as provided by 15-23-706. 

(6) The board of county commissioners of 
a county may direct the county treasurer to 
reallocate the distribution of coal gross proceeds 
taxes that would have gone to a taxing unit, as 
provided in subsection (4)(a), to another taxing unit 
or taxing units, other than an elementary school or 
high school, within the county under the following 
conditions: 

(a) The Except as provided in subsection 
(6)(c), the county treasurer shall first allocate the 
coal gross proceeds taxes to the taxing units within 
the county in the same proportion that all other 
property tax proceeds were distributed in the county 
in fiscal year 1990. 

(b) tf Subject to the requirements of 
subsection (6)(c). if the allocation in subsection 
(6)(a) exceeds the total budget for a taxing unit, the 
commissioners may direct the county treasurer to 
allocate the excess to £my taxing unit within the 
county. 

(c) For fiscal year 1995 and each 
succeeding year, the county treasurer shall remit to 
the state treasurer the amount of money allributable 
to the mills levied in fiscal year 1990 for the county 
retirement fund provided for in 20-9-501 and for the 
county transportation fund, which was provided for 
in 20-10-146. as that section read on June 30, 1993. 
The state treasurer shall credit the money received to 
the state special revenue fund for stale equalization 
aid to the public schools as provided in 20-9-343. 

(7) The board of trustees of an elementary 
or high school district may reallocate the coal gross 
proceeds taxes distributed to the district by the 
county treasurer under the following conditions: 

(a) The district shall first allocate the coal 
gross proceeds taxes to the budgeted funds of the 
district in the same proportion that all other property 
tax proceeds were distributed in the district in fiscal 
year 1990. 

(b) If the allocation under subsection (7)(a) 
exceeds the total budget for a fund, the trustees may 
allocate the excess to any budgeted fund of the 
school district. 

(8) The county treasurer shall credit all 
taxes collected under this part from coal mines that 
began production after December 31, 1988, in the 
relative proportions required by the levies for state, 
county, and school district purposes in the same 
manner as property taxes were distributed in the 
previous fiscal year." 

Section 130. Section 15-24-301. MCA, is 
amended to read: 

"15-24-301. Personal property brought 
into the state — assessment ~ exceptions — custom 
combine equipment. (1) Except as provided in 
subsections (2) through (5), property in the following 
cases is subject to taxation and assessment for all 
taxes levied that year in the county in which it is 
located: 

(a) any personal property (including 



livestock) brought, driven, or coming into this state 
at any time during the year that is used in the state 
for hire, compensation, or profit; 

(b) property whose owner or user is 
engaged in gainful occupation or business enterprise 
in the state; or 

(c) property which comes to rest and 
becomes a part of the general property of the state. 

(2) The taxes on this property are levied in 
the same manner and to the same extent, except as 
otherwise provided, as though the property had been 
in the county on the regular assessment date, 
provided that the property has not been regularly 
assessed for the year in some other county of the 
state. 

(3) Nothing in this section shall be 
construed to levy a tax against a merchant or dealer 
within this state on goods, wares, or merchandise 
brought into the county to replenish the stock of the 
merchant or dealer. 

(4) Any motor vehicle not subject to a fee 
in lieu of tax brought, driven, or coming into this 
state by any nonresident person temporarily 
employed in Montana and used exclusively for 
transportation of such person is subject to taxation 
and assessment for taxes as follows: 

(a) The motor vehicle is taxed by the 
county in which it is located. 

(b) One-fourth of the annual tax liability of 
the motor vehicle must be paid for each quarter or 
portion of a quarter of the year that the motor 
vehicle is located in Montana. 

(c) The quarterly taxes are due the first day 
of the quarter. 

(5) Agricultural harvesting machinery 
classifi e d und e r class eight, licensed in other s tal es , 
another state and operated on the lands of p e rsons a 
person other than the owner of the machinery under 
contract s a contract for hire shall b e ]s subject to a 
fee in lieu of taxation of $35 per machine for the 
calendar year in which the fee is collected. The 
machin es s hall b e machinery is subject to property 
taxation under clas s e ight Title 15. chapter 6. only if 
th e y ar e it is sold in Montana." 

Section 131. Section 15-36-112, MCA, is 
amended to read: 

"15-36-112. Disposition of oil and gas 
state and local government severance taxes — 
calculation of unit value for local government 
severance tax. (1) Each year the department of 
revenue shall determine the amount of tax collected 
under this chapter from within each taxing unit. 

(2) For purposes of the distribution of local 
government severance taxes collected under this 
chapter, the department shall determine the unit 
value of oil and gas for each taxing unit as follows: 

(a) The unit value for petroleum and other 
mineral or crude oil for each taxing unit is the 
quotient obtained by dividing the net proceeds taxes 
calculated on petroleum or mineral or crude oil 
produced in that taxing unit in calendar year 1988 
by the number of barrels of petroleum or other 
mineral or crude oil produced in that taxing unit 
during 1988, excluding new and interim production. 

(b) The unit value for natural gas is the 
quotient obtained by dividing the net proceeds taxes 
calculated on natural gas produced in that taxing unit 
in calendar year 1988 by the number of cubic feet of 
natural gas produced in that taxing unit during 1988, 
excluding new and interim production. 

(3) The state and local government 
severance taxes collected under this chapter are 
allocated as follows: 

(a) The local government severance tax is 
statutorily appropriated, as provided in 17-7-502, for 
allocation to the county for distribution as provided 
in subsection (4); 

(b) The state severance tax is allocated to 
the state general fund. 

(4) (a) For the purpose of distribution of the 



17 



local government severance tax, the department shall 
adjust the unit value determined under this section 
according to the ratio that the local government 
severance taxes collected during the quarters to be 
distributed plus accumulated interest earned by the 
state and penalties and interest on delinquent local 
government severance taxes bears to the total 
liability for local government severance taxes for the 
quaners to be distributed. The taxes must be 
calculated and distributed as follows: 

(i) By November 30 of each year, the 
de lartment shall calculate and distribute to each 
eligible county the amount of local government 
severance tax, determined by multiplying unit value 
as adjusted in this subsection (4)(a) times the units 
of production on which the local government 
severance tax was owed during the calendar quarters 
ending March 31 and June 30 of the preceding 
calendar year. 

(ii) By May 31 of each year, the department 
shall calculate and distribute to each eligible county 
the amount of local government severance tax, 
determined by multiplying unit value as adjusted in 
this subsection (4)(a) times the units of production 
on which the local government severance tax was 
owed during the 2 calendar quarters immediately 
following those quarters referred to in subsection 
(4)(a)(i). 

(b) Any amount by which the total tax 
liability exceeds or is less than the total distributions 
determined in subsections (4)(a)(i) and (4)(a)(ii) 
mi St be calculated and distributed in the following 
m; nner: 

(i) The excess amount or shortage must be 
div.ded by the total distribution determined for that 
perod to obtain an excess or shortage percentage. 

(ii)The excess percentage must be 
multiplied by the distribution to each taxing unit, 
and this amount must be added to the distribution to 
each respective taxing unit. 

(iii) The shortage percentage must be 
multiplied by the distribution to each taxing unit, 
and this amount must be subtracted from the 
distribution to each respective taxing unit. 

(5) Except as provided in subsection (6), 
the county treasurer shall distribute the money 
received under subsection (4) to the taxing units that 
levied mills in fiscal year 1990 against calendar year 
1988 production in the same manner that all other 
property tax proceeds were distributed during fiscal 
year 1990 in the taxing unit, except that no 
distribution may be made to a municipal taxing unit. 

(6) The board of county commissioners of 
a county may direct the county treasurer to 
reallocate the distribution of local government 
severance tax money that would have gone to a 
taxing unit, as provided in subsection (5), to another 
taxing unit or taxing units, other than an elementary 
school or high school, within the county under the 
following conditions; 

(a) The Except as provided in subsection 
(6)(c), the county treasurer shall first allocate the 
flocal government severance} taxes to the taxing 
units wilhin the county in the same proportion that 
all other property tax proceeds were distributed in 
the county in fiscal year 1990. 

(b) If Subject to the requirements of 
subsection (6)(c), if the allocation in subsection 
(6)(a) exceeds the total budget for a taxing unit, the 
commissioners may direct the county treasurer to 
allocate the excess to any taxing unit within the 
county. 

(c) For fiscal year 1995 and each 
ucceeding year, the county treasurer shall remit to 
he state treasurer the amount of money attributable 
3 the mills levied in fiscal year 1990 for the county 
itirement fund provided for in 20-9-501 and for the 
ounty transportation fund, which was provided for 
n 20-10-146, as that section read on June 30, 1993. 
Tie state treasurer shall credit the money received to 



the state special revenue fund for state equalization 
aid to the public schools as provided in 20-9-343. 

(7) The board of trustees of an elementary 
or high school district may reallocate the flocal 
government severance] taxes distributed to the 
district by the county treasurer under the following 
conditions: 

(a) The district shall first allocate the flocal 
government severance] taxes to the budgeted funds 
of the district in the same proportion that all other 
property tax proceeds were distributed in the district 
in fiscal year 1990. 

(b) If the allocation under subsection (7)(a) 
exceeds the total budget for a fund, the trustees may 
allocate the excess to any budgeted fund of the 
school district." 

Section 132. Section 20-9-331, MCA, is 
amended to read: 

"20-9-331. Basic county tax and other 
revenues for county equalization of the 
elementary district foundation program. ( 1 ) The 
county commissioners of each county shall levy an 
annual basic tax of 33 mills on the dollar of the 
taxable value of all taxable property within the 
county, except for property subject to a tax or fee 
under 23-2-517, 23-2-803, 61-3-504(2), 61-3-521, 
61-3-537, and 67-3-204, for the purposes of local 
and state foundation program support. The revenue 
collected from this levy must be apportioned to the 
support of the elementary foundation programs of 
the school districts in the county and to the state 
special revenue fund, state equalization aid account, 
in the following manner: 

(a) In order to determine the amount of 
revenue raised by this levy which is retained by the 
county, the sum of the estimated revenue identified 
in subsection (2) must be subtracted from the total 
of the foundation programs of all elementary 
districts of the county. 

(b) If the basic levy and other revenue 
prescribed by this section produce more revenue 
than is required to repay a state advance for county 
equalization, the county treasurer shall remit the 
surplus funds to the state treasurer for deposit to the 
state special revenue fund, state equalization aid 
account, immediately upon occurrence of a surplus 
balance and each subsequent month thereafter, with 
any final remittance due no later than June 20 of the 
fiscal year for which the levy has been set. 

(2) The revenue realized from the county's 
portion of the levy prescribed by this section and the 
revenue from the following sources must be used for 
the equalization of the elementary foundation 
program of the county as prescribed in 20-9-335, 
and a separate accounting must be kept of the 
revenue by the county treasurer in accordance with 
20-9-212(1); 

(a) the portion of the federal Taylor 
Grazing Act funds distributed to a county and 
designated for the common school fund under the 
provisions of 17-3-222; 

(b) the portion of the federal flood control 
act funds distributed to a county and designated for 
expenditure for the benefit of the county common 
schools under the provisions of 17-3-232; 

(c) all money paid into the county treasury 
as a result of fines for violations of law, except 
money paid to a justice's court, and the use of which 
is not otherwise specified by law; 

(d) any money remaining at the end of the 
immediately preceding school fiscal year in the 
county treasurer's accounts for the various sources 
of revenue established or referred to in this section; 

(e) any federal or state money distributed to 
the county as payment in lieu of property taxation, 
including federal forest reserve funds allocated under 
the provisions of 17-3-213; 

(0 gross proceeds taxes from coal under 
15-23-703; 

(g) net proceeds taxes for new production, 



as defined in 15-23-601, and local government 
severance taxes on any other production occurring 
after December 31, 1988; and 

(h) anticipated revenue from property taxes 
and fees imposed under 23-2-517, 23-2-803, 61-3- 
504(2), 61-3-521, 61-3-537, and 67-3-204 ; and 

(i) sales tax and use tax revenue ." 

Section 133. Section 20-9-333, MCA. is 
amended to read: 

"20-9-333. Basic special levy and other 
revenues for county equalization of high school 
dLstrict foundation program. (1) The county 
commissioners of each county shall levy an annual 
basic special tax for high schools of 22 mills on the 
dollar of the taxable value of all taxable property 
within the county, except for property subject to a 
tax or fee under 23-2-517, 23-2-803, 61-3-504(2), 
61-3-521, 61-3-537, and 67-3-204, for the purposes 
of local and state foundation program support. The 
revenue collected from this levy must be apportioned 
to the support of the foundation programs of high 
school districts in the county and to the state special 
revenue fund, state equalization aid account, in the 
following manner: 

(a) In order to determine the amount of 
revenue raised by this levy which is retained by the 
county, the sum of the estimated revenue identified 
in subsection (2) must be subtracted from the sum of 
the county's high school tuition obligation and the 
total of the foundation programs of all high school 
districts of the county. 

(b) If the basic levy and other revenue 
prescribed by this section produce more revenue 
than is required to repay a state advance for county 
equalization, the county treasurer shall remit the 
surplus funds to the state treasurer for deposit to the 
state special revenue fund, state equalization aid 
account, immediately upon occurrence of a surplus 
balance and each subsequent month thereafter, with 
any final remittance due no later than June 20 of the 
fiscal year for which the levy has been set. 

(2) The revenue realized from the county's 
portion of the levy prescribed in this section and the 
revenue from the following sources must be used for 
the equalization of the high school foundation 
program of the county as prescribed in 20-9-335, 
and a separate accounting must be kept of the 
revenue by the county treasurer in accordance with 
20-9-212(1): 

(a) any money remaining at the end of the 
immediately preceding school fiscal year in the 
county treasurer's accounts for the various sources 
of revenue established in this section; 

(b) any federal or state money distributed to 
the county as payment in lieu of property taxation, 
including federal forest reserve funds allocated under 
the provisions of 17-3-213; 

(c) gross proceeds taxes from coal under 
15-23-703; 

(d) net proceeds taxes for new production, 
as defined in 15-23-601, and local government 
severance taxes on any other production occurring 
after December 31, 1988; and 

(e) anticipated revenue from property taxes 
and fees imposed under 23-2-517, 23-2-803, 61-3- 
504(2), 61-3-521, 61-3-537, and 67-3-204 ; and 

(f) sales lax and use tax revenue ." 
Section 134. Section 20-9-343, MCA, is 

amended to read; 

"20-9-343. (Temporary) Definition of and 
revenue for state equalization aid. ( 1 ) As used in 
this title, the term "slate equalization aid" means the 
money deposited in the state special revenue fund as 
required in this section plus any legislative 
appropriation of money from other sources for: 

(a) distribution to the public schools for the 
payment of guaranteed tax base aid and for 
equalization of the foundation program; 

(b) the Montana educational 
telecommunications network as provided in 20-32- 



18 



101; and 

(c) filing fees for school district audits as 
required by 2-7-514(2). 

(2) The superintendent of public instruction 
may spend funds appropriated for state equalization 
aid, as required by subsections (l)(a) and (l)(b), 
throughout the biennium. 

(3) The following must be paid into the 
state special revenue fund for state equalization aid 
to public schools of the state: 

(a) money received from the collection of 
income taxes under chapter 30 of Title 15, as 
provided by 15-1-501; 

(b) except as provided in 15-31-702, money 
received from the collection of corporation license 
and income taxes under chapter 31 of Title 15, as 
provided by 15-1-501; 

(c) money allocated to state equalization 
from the collection of the severance tax on coal; 

(d) money received from the treasurer of 
the United States as the state's shares of oil, gas, 
and other mineral royalties under the federal Mineral 
Lands Leasing Act, as amended; 

(e) interest and income money described in 
20-9-341 and 20-9-342; 

(f) money received from the state 
equalization aid levy under 20-9-360; 

(g) income from the lottery, as provided in 
23-7-402; 

(h) the surplus revenues collected by the 
counties for foundation program support according 
to 20-9-331 and 20-9-333; 

(i) investment income earned by investing 
money in the state equalization aid account in the 
state special revenue fund; and 

(j) 15% of the income and earnings of all 
coal severance tax funds as provided in 17-5-704. 

(4) The superintendent of public instruction 
shall request the board of investments to invest the 
money in the state equalization aid account to 
maximize investment earnings to the account. 

(5) Any surplus revenue in the state 
equalization aid account in the second year of a 
biennium may be used to reduce any appropriation 
required for the next succeeding biennium. 
(Terminates June 30, 1993-sec. 5, Ch. 729, L. 
1991.) 

20-9-343. (Effective July 1, 1993) 
Definition of and revenue for state equalization 
aid. (1 ) As used in this title, the term "state 
equalization aid" means the money deposited in the 
state special revenue fund as required in this section 
plus any legislative appropriation of money from 
other sources for distribution to the public schools 
for the purposes of payment of guaranteed tax base 
aid and^ equalization of the foundation program , and 
payment of retirement fund obligations, payment of 
debt service, and for the Montana educational 
telecommunications network as provided in 20-32- 
101. 

(2) The superintendent of public instruction 
may spend funds appropriated for state equalization 
aid as required for the purposes of guaranteed tax 
base aid, the foundation program, retirement fund 
obligations, debt service, and the Montana 
educational telecommunications network, throughout 
the biennium. 

(3) The following must be paid into the 
state special revenue fund for state equalization aid 
to public schools of the state: 

(a) money received from the collection of 
income taxes under chapter 30 of Title 15, as 
provided by 15-1-501; 

(b) except as provided in 15-31-702, money 
received from the collection of corporation license 
and income taxes under chapter 31 of Title 15, as 
provided by 15-1-501; 

(c) money allocated to state equalization 
from the collection of the severance tax on coal; 

(d) money received from the treasurer of 



the United States as the state's shares of oil, gas, 
and other mineral royalties under the federal Mineral 
Lands Leasing Act, as amended; 

(e) interest and income money described in 
20-9-341 and 20-9-342; 

(f) money received from the state 
equalization aid levy under 20-9-360; 

(g) income from the lottery, as provided in 
23-7-402; 

(h) the surplus revenues collected by the 
counties for foundation program support according 
to 20-9-331 and 20-9-333; 

(i) investment income earned by investing 
money in the state equalization aid account in the 
state special revenue fund; and 

(j) 15% of the income and earnings of all 
coal severance tax funds as provided in 17-5-704^ 
and 

(k) money received from the collection of 
sales taxes and use taxes and distributed under 
[section 721 . 

(4) The superintendent of public instruction 
shall request the board of investments to invest the 
money in the state equalization aid account to 
maximize investment earnings to the account. 

(5) Any surplus revenue in the state 
equalization aid account in the second year of a 
biennium may be used to reduce any appropriation 
required for the next succeeding biennium." 

Section 135. Section 20-9-344, MCA, is 
amended to read: 

"20-9-344. Purpose of state equalization 
aid and duties of board of public education for 
distribution. (I) The money available for state 
equalization aid must be distributed and apportioned 
to provide: 

(a) an annual minimum operating revenue 
for the elementary and high schools in each county^ 
revenue for the retirement fund , e xclusive of and 
r e v e nu es revenue required for debt service and 
exclusive of revenue required for the payment of any 
costs and expense incurred in connection with any 
adult education program, recreation program, school 
food services program, new buildings and grounds, 
and transportation; and 

(b) the Montana educational 
telecommunications network as provided in 20-32- 
101. 

(2) The board of public education shall 
administer and distribute the state equalization aid 
and state advances for county equalization in the 
manner and with the powers and duties provided by 
law. To this end, the board of public education shall: 

(a) adopt policies for regulating the 
distribution of state equalization aid and state 
advances for county equalization in accordance with 
the provisions of law; 

(b) have the power to require reports from 
the county superintendents, budget boards, county 
treasurers, and trustees as it considers necessary; and 

(c) order the superintendent of public 
instruction to distribute the state equalization aid on 
the basis of each district's annual entitlement to the 
aid as established by the superintendent of public 
instruction. In ordering the distribution of state 
equalization aid, the board of public education may 
not increase or decrease the state equalization aid 
distribution to any district on account of any 
difference that may occur during the school fiscal 
year between budgeted and actual receipts from any 
other source of school revenue. 

(3) The board of public education may 
order the superintendent of public instruction to 
withhold distribution of state equalization aid or 
order the county superintendent of schools to 
withhold county equalization money from a district 
when the district fails to: 

(a) submit reports or budgets as required by 
law or rules adopted by the board of public 
education; or 



(b) maintain accredited status. 

(4) Prior to any proposed order by the 
board of public education to withhold distribution of 
state equalization aid or county equalization money, 
the district is entitled to a contested case hearing 
before the board of public education, as provided 
under the Montana Administrative Procedure Act. 

(5) If a district or county receives more 
state equalization aid than it is entitled to, the county 
treasurer shall return the overpayment to the state 
upon the request of the superintendent of public 
instruction in the manner prescribed by the 
superintendent of public instruction. 

(6) Except as provided in 20-9-347(3), the 
foundation program payment and guaranteed tax 
base aid payment must be distributed according to 
the following schedule: 

(a) from August to May of the school fiscal 
year, 8% of the foundation program payment to each 
district; 

(b) in November of the school fiscal year, 
one-half of the guaranteed tax base aid payment and 
one-half of the state retirement obligation payment 
to each district or county; 

(c) in May of the school fiscal year, the 
remainder of the guaranteed tax base aid payment 
and one-half of the state retirement obligation 
payment to each district or county; and 

(d) in June of: 

(i) the 1993 school fiscal year, one-half of 
the remaining foundation program payment of each 
district and on July 15, 1993, the remaining school 
fiscal year 1993 foundation program payment of 
each district; and 

(ii) the school fiscal year, the remaining 
foundation program payment to each district. 

(7) The distribution of foundation program 
payments and guaranteed tax base aid provided for 
in subsection (6) must occur by the last working day 
of each month." 

Section 136. Section 20-9-346, MCA, is 
amended to read: 

"20-9-346. Duties of the superintendent 
of public insttoiction for state equalization aid 
distribution. The superintendent of public 
instruction shall administer the distribution of the 
state equalization aid by: 

(1) establishing the annual entitlement of 
each district and county to state equalization aid in 
support of the retirement fund and foundation 
program , based on the data reported in the retirement 
and general fund budgets for each district that have 
been duly adopted for the current school fiscal year 
and verified by the superintendent of public 
instruction and by applying the verified data under 
the provisions of the state equalization aid allocation 
procedure prescribed in 20-9-347; 

(2) distributing by state warrant or 
electronic transfer the state equalization aid and state 
advances for county equalization, for each district or 
county entitled to the aid, to the county treasurer of 
the respective county or county where the district is 
located, in accordance with the distribution ordered 
by the board of public education; 

(3) keeping a record of the full and 
complete data concerning money available for state 
equalization aid, state advances for county 
equalization, and the entitlements for state 
equalization aid of the districts of the state; 

(4) reporting to the board of public 
education the estimated amount that will be available 
for state equalization aid; and 

(5) reporting to the legislature as provided 
in 5-1 1-210: 

(a) the figures and data available 
concerning distributions of state equaliz.ition aid 
during the preceding 2 school fiscal years; 

(b) the amount of state equalization aid then 
available; 

(c) the apportionment made of the available 



19 



money but not yet distributed; 

(d) the latest estimate of accnials of money 
available for state equalization aid; and 

(e) the amount of state advances and 
repayment for county equalization." 

Section 137. Section 20-9-347, MCA, is 
amended to read: 

"20-9-347. Formula for state equalization 
aid apportionment in support of foundation 
program and retirement ~ exceptions. ( 1 ) The 
superintendent of public instruction shall apportion 
the slate equalization aid available for support of the 
foundation program, individually for the elementary 
districts of a county or the high school districts of a 
county, in accordance with 20-9-346 and on the 
basis of the following procedure: 

(a) Determine the percentage that the total 
funds available to all counties in the state in support 
of the foundation program (including the state 
money available for state equalization aid in support 
of the foundation program) is of the total amount of 
the foundation programs of all counties. 

(b) Determine the percentage that the total 
funds available in each county in support of the 
foundation programs in the county (excluding state 
money available for state equalization aid in support 
of the foundation program) is of the total amount of 
the foundation programs of all districts of the 
county. 

(c) Counties in which the percentage 
determined in subsection (l)(b) exceeds the 
percentage determined in subsection (l)(a) are not 
entitled to an apportionment of the state equalization 
aid in support of the foundation program. 

(d) After elimination of the counties 
referred to in subsection (l)(c), determine the 
percentage that the total money available to all 
remaining counties in support of the foundation 
program (including the state money available for 
state equalization aid in support of the foundation 
program) is of the total amount of the foundation 
programs of all remaining counties. 

(e) Each district of each remaining county 
is entitled to an apportionment of the state 
equalization aid in support of the foundation 
program equal to the difference between the 
percentage determined in subsection (l)(d) and the 
percentage determined for the county in subsection 
( 1 )(b) multiplied by the foundation program amount 
for the district. 

(2) The superintendent of public instruction 
shall also apportion state equalization aid to each 
district in sup[>on of the district's retirement fund 
obligations. The superintendent of public instruction 
shall adopt rules to ensure that for school fiscal year 
1995 and succeeding years, each district receives 
retirement equalization aid equal to the full amount 
required by the elementary districts and high school 
districts in the county. 

f£M3) The superintendent of public 
instruction shall: 

(a) supply the county treasurer and the 
county superintendent with a report of the 
apportionments of state equalization aid in support 
of the foundation program of each district of the 
county, and the state equalization aid in support of 
the foundation program must be apportioned to the 
districts in accordance with the report; 

(b) in the manner described in 20-9-344, 
provide for a state advance to each county in an 
amount that is no less than the amount anticipated to 
be raised for the basic county tax fund as provided 
in 20-9-331 and for the basic special tax fund as 
provided in 20-9-333; 

(c) adopt rules to implement the provisions 
of subsection (3)^ (3)(b) . 

(^4) (a) The superintendent of public 
instruction is authorized to adjust the schedule 
prescribed in 20-9-344 for distribution of the 
foundation program and guaranteed tax base aid 



payments if the distribution will cause a district to 
register warrants under the provisions of 20-9- 
212(9). 

(b) To qualify for an adjustment in the 
payment schedule, a district shall demonstrate to the 
superintendent of public instruction, in the manner 
required by the office, that the payment schedule 
prescribed in 20-9-344 will result in insufflcient 
money available in all funds of the district to make 
payment of the district's warrants. The county 
treasurer shall confirm the anticipated deficit. 
Nothing in this section may be construed to 
authorize the superintendent of public instruction to 
exceed a district's annual payment for state and 
county equalization aid." 

Section 138. Section 20-9-351, MCA, is 
amended to read: 

"20-9-351. Funding of deficiency in state 
equalization aid. If the money available for state 
equalization aid is not the result of a reduction in 
spending under 17-7-140 and is not sufficient to 
provide the foundation program schedule support 
determined in 20-9-348^ and the guaranteed tax base 
aid required under 20-9-366 through 20-9-369 , and 
the retirement fund support required under 20-9-347 . 
the superintendent of public instruction shall request 
the budget director to submit a request for a 
supplemental appropriation in the second year of the 
biennium that is sufficient to complete the funding 
of guaranteed tax base aid , retirement, and the 
foundation programs of the elementary or secondary 
schools, or both, for the current biennium." 

Section 139. Section 20-9-366, MCA, is 
amended to read: 

"20-9-366. Deflnitions. As used in 20-9- 
366 through 20-9-369, the following definitions 
apply: 

( 1 ) "County — r e tir e ment — hmH — valu e — per 
e l e m e ntary ANB" or "county r e tir e m e nt mill valu e 
p e r high Gchool ANB" m e ans th e sum of th e taxabl e 
valuation in th e pr e viou s y e ar of all prop e rty in th e 
county divid e d by 1, (XX), with th e quoti e nt divid e d 
by th e total county e l e m e ntary ANB count or the 
total — county high — s chool — ANB count us e d to 
calculat e th e e l e m e ntary school districts' and high 
s chool di s trict s ' curr e nt y e ar foundation program 
amounts. 

(QM\) "District mill value per ANB" means 
the taxable valuation in the previous year of all 
property in the district divided by 1,000, with the 
quotient divided by the ANB count of the district 
used to calculate the district's current year 
foundation program amount. 

f^2) "Permissive amount" means that 
portion of a district's general fund budget in excess 
of the foundation program amount for the district, as 
provided in 20-9-316 through 20-9-321, but not 
exceeding 35% of the district's foundation program 
amount, and which excess is authorized under the 
provisions of 20-9-145 and 20-9-353. 

f4)(3) "Statewide mill value per elementary 
ANB" or "statewide mill value per high school 
ANB", for permissive and r e tir e m e nt debt service 
guaranteed tax base purposes, means the sum of the 
taxable valuation in the previous year of all property 
in the state, multiplied by 121% and divided by 
1,000, with the quotient divided by the total state 
elementary ANB count or the total state high school 
ANB amount used to calculate the elementary school 
districts' and high school districts' current year 
foundation program amounts." 

Section 140. Section 20-9-367, MCA, is 
amended to read: 

"20-9-367. Eligibility to receive 
guaranteed tax base aid. fB If the district mill 
value per ANB of any elementary or high school 
district is less than the corresponding statewide 
district mill value per elementary ANB or high 
school ANB, the district may receive guaranteed tax 
base aid based on the number of mills levied in the 



district in support of its permissive amount of the 
general fund budget and its debt service fund . 

(2) If th e county r e tir e m e nt mill valu e p e r 
e l e m e ntary ANB or county r e tir e m e nt mill valu e p e r 
high s chool ANB i s l es s than th e corr e sponding 
s tat e w i d e county mill valu e p e r e l e m e ntary ANB or 
high — s chool — ANB, — the — county — may — r e c e iv e 
guaranteed tax ba se aid bas e d on th e numb e r of 
mill s — l e v ie d — ifl — the — county — in — s upport of th e 
r e t i r e m e nt fund budgets of th e r e sp e ctiv e e l e m e ntary 
or high school district s in the county. " 

Section 141. Section 20-9-368, MCA, is 
amended to read: 

"20-9-368. Amount of guaranteed tax 
base aid — reversion. ( 1 ) Th e amount of guaranteed 
tax bas e aid p e r ANB that a county may r e c e iv e in 
s upport of th e r e tir e ment fund budg e ts of the 
e l e m e ntary s chool districts in th e county i s th e 
diff e r e nc e — b e tw ee n — the — county — mM — valu e — per 
e l e m e ntary ANB and th e s tat e wid e county mill va l u e 
p e r e l e m e ntary ANB, multipli e d by th e number of 
mills l e vi e d in s upport of th e r e t i r e m e nt fund 
budg e ts for the e l e m e ntary district s in th e county. 

(2) Th e amount of guarant ee d tax ba se a i d 
p e r ANB that a county may r e c e iv e in s upport of th e 
r e tir e m e nt fund budg e ts of the high s chool di s trict s 
in th e county is th e diff e r e nc e b e twe e n th e county 
mill valu e p e r high school ANB and th e s tat e wid e 
county mill valu e p e r high school ANB. multipl ie d 
by th e numb e r of mills l e vied in s upport of th e 
r e tir e m e nt fund budg e t s for th e high school districts 
in th e county. 

4^(1) The amount of guaranteed tax base 
aid per ANB that a district may receive in support of 
its permissive amount of the general fund budget is 
the difference between the district mill value per 
ANB and the corresponding statewide district mill 
value per ANB, multiplied by the number of mills 
levied in support of the district's permissive amount 
of the general fund budget. 

(2) The amount of guaranteed tax base aid 
per ANB that a district may receive in support of its 
debt service fund budget is the difference between 
the district mill value per ANB and the 
corresponding statewide mill value per ANB, 
multiplied by the number of mills levied in support 
of the district's debt service fund budget. 

f4K3) Guaranteed tax base aid provided to 
any county or district under this section is earmarked 
to finance the fund or portion of the fund for which 
it is provided. If the actual expenditures from the 
fund or portion of the fund for which guaranteed tax 
base aid is earmarked are less than the amount 
budgeted, the guaranteed tax base aid reverts in 
proportion to the amount budgeted but not expended. 
If a county or district receives more guaranteed tax 
base aid than it is entitled to, the excess must be 
returned to the state as required by 20-9-344." 

Section 142. Section 20-9-369, MCA, is 
amended to read: 

"20-9-369. Duties of superintendent of 
public instruction and department of revenue. ( I ) 
The superintendent of public instruction shall 
administer the distribution of guaranteed tax base aid 
by: 

(a) providing each school district and 
county superintendent, by March 1 of each year, 
with the preliminary statewide and county district 
mill values per ANB and, by May 1 of each year, 
with the final statewide; and district , and county mill 
values per ANB, for use in calculating the 
guaranteed tax base aid available for the ensuing 
school fiscal year; 

(b) requiring each county and district that 
qualifies and applies for guaranteed tax base aid to 
report to the county superintendent all budget and 
accounting information required to administer the 
guaranteed tax base aid; 

(c) keeping a record of the complete data 
concerning appropriations available for guaranteed 



20 



tax base aid and the entitlements for such aid of the 
counti e s and districts that qualify; 

(d) distributing the guaranteed tax base aid 
entitlement to each qualified county or district from 
the appropriations for that purpose. 

(2) The superintendent shall adopt rules 
necessary to implement 20-9-366 through 20-9-369. 

(3) The department of revenue shall provide 
the superintendent of public instruction by December 
I of each year a final determination of the taxable 
value of property within each school district and 
county of the state reported to the department of 
revenue based on information delivered to the 
county clerk and recorder as required in 15-10-305." 

Section 143. Section 20-9-439, MCA, is 
amended to read: 

"20-9-439. Computation of net levy 
requirement — procedure when levy inadequate. 
(1) The county superintendent shall compute the 
levy requirement for each school district's debt 
service ftind on the basis of the following procedure; 

(a) d e termin e E)etermine the total money 
available in the debt service fund for the reduction 
of the property tax on the district by totaling; 

(i) the end-of-the-year fund balance in the 
debt service fund, less any limited operating reserve 
as provided in 20-9-438; 

(ii) anticipated interest to be earned by the 
investment of debt service cash in accordance with 
the provisions of 20-9-2 1 3(4) or by the investment 
of bond proceeds under the provisions of 20-9-435; 
and 

(iii) any other money , including money from 
federal sources, anticipated by the trustees to be 
available in the debt service fund during the ensuing 
school fiscal year from such sources as legally 
authorized money transfers into the debt service fund 
or from rental income , excluding any guaranteed tax 
base aid.T 

(b) the Subtract the total amount available 
to reduce the property tax, determined in subsection 
(l)(a), must b e subtract e d ^om the final budget 
e xp e nditur e amount for the' debt service fiind as 
established in 20-9-438^^ 

(c) Determine the number of mills to be 
levied on the taxable property in the district to 
finance the net debt service fund levy requirement 
by dividing the remainder determined in subsection 
(l)(b) by the sum of; 

(i) the amount of guaranteed tax base aid 
that the district will receive for each mill levied, as 
certified by the superintendent of public instruction; 
and 

(ii) the taxable valuation of the district 
divided by 1,000. 

(2) the The net debt service fund levy 
requirement determined in subsection (l)(b) (l)(c) 
must be reported to the county commissioners on the 
second Monday of August by the county 
superintendent as the net debt service fund levy 
requirement for the district, and a levy must be made 
by the county commissioners in accordance with 20- 
9-142. 

(34(3) If the board of county commissioners 
fails in any school fiscal year to make a levy for any 
issue or series of bonds of a school district sufficient 
to raise the money necessary for payment of interest 
and principal becoming due during the next ensuing 
school fiscal year, in any amounts established under 
the provisions of this section, the holder of any bond 
of the issue or series or any taxpayer of the district 
may apply to the district court of the county in 
which the school district is located for a writ of 
mandate to compel the board of county 
commissioners of the county to make a sufficient 
levy for such purposes. If, upon the hearing of the 
application, it appears to the satisfaction of the court 
that the board of county commissioners of the 
county has failed to make a levy or has made a levy 
that is insufficient to raise the amount required to be 



raised as established in the manner provided in this 
section, the court shall determine (he amount of the 
deficiency and shall issue a writ of mandate directed 
to and requiring the board of county commissioners, 
at the next meeting for the purpose of fixing tax 
levies for county purposes, to fix and make a levy 
against all taxable property in the school district that 
is sufficient to raise the amount of the deficiency. 
The levy is in addition to any levy required to be 
made at that time for the ensuing school fiscal year. 
Any costs that may be allowed or awarded the 
petitioner in the proceeding must be paid by the 
members of the board of county commissioners and 
may not be a charge against the school district or the 
county." 

Section 144. Section 20-9-501. MCA, is 
amended to read; 

"20-9-501. Retirement fund. (1) The 
trustees of a district employing personnel who are 
members of the teachers' retirement system or the 
public employees' retirement system or who are 
covered by unemployment insurance or who are 
covered by any federal social security system 
requiring employer contributions shall establish a 
retirement fund for the purposes of budgeting and 
paying the employer's contributions to the systems. 
The district's contribution for each employee who is 
a member of the teachers' retirement system must be 
calculated in accordance with Title 19, chapter 4, 
part 6. The district's contribution for each employee 
who is a member of the public employees' 
retirement system must be calculated in accordance 
with 19-3-801. The district's contributions for each 
employee covered by any federal social security 
system must be paid in accordance with federal law 
and regulation. The district's contribution for each 
employee who is covered by unemployment 
insurance must be paid in accordance with Title 39, 
chapter 51, part 11. 

(2) The trustees of a district required to 
make a contribution to a system referred to in 
subsection (1) shall include in the retirement fund of 
the preliminary budget the estimated amount of the 
employer's contribution. After the final retirement 
fund budget has been adopted, the trustees shall pay 
the employer contributions to the systems in 
accordance with the financial administration 
provisions of this title. 

(3) When the final retirement fund budget 
has been adopted, the county superintendent shall 
establish the l e vy requir e m e nt amount of the stale 
obligation by; 

(a) determining the sum of the money 
available to reduce the r e tir e ment — fi»nd — levy 
r e quir e m e nt amount of the state obligation by 
adding; 

(i) any anticipat e d mon e y that may b e 
r e aliz e d in the r e tir e m e nt fund during th e e n s uing 
s chool fiscal y e ar, inc l uding antic i pat e d r e v e nu e 
from prop e rty tax es and f ee s impo se d und e r 23 2 
517,23 2 8 03,61 3 504(2), 61 3 521,61 3 537, and 
67 3 204; 

(ii) net proceed s tax e s and local gov e rnm e nt 

s e v e ranc e tax es on any oth e r oil and gas production 

occurring aft e r D e c e mb e r 31, 19 88 ; 

(iii) coal gro s s proceeds taxe s und e r 15 23 
703. 

fr^i) any fiind balance available for 
reappropriation as determined by subtracting the 
amount of the end-of-the-year fund balance 
earmarked as the retirement fund operating reserve 
for the ensuing school fiscal year by the trustees 
from the end-of-the-year fund balance in the 
retirement fund. The retirement fund operating 
reserve may not be more than 35% of the final 
retirement fund budget for the ensuing school fiscal 
year and must be used for the purpose of paying 
retirement fund warrants issued by the district under 
the final retirement fund budget^^-aiid 

MCii) any other revenue anticipated that 



may be realized in the retirement fund during the 
ensuing school fiscal year , e xcluding any guaranteed 
tax ba se a i d.^ 

(b) notwith s tand i ng — the — prov isi on s — of 
s ub se ct i on ( 8 ), subtracting the money available for 
reduction of the l e vy r e quir e m e nt stale obligation , as 
determined in subsection (3)(a), from the budgeted 
amount for expenditures in the final retirement fund 
budget. 

(4) The county superintendent shall; 

(a) total the — net — r e tir e ment — fund — levy 
r e quirements the amount of ihe stale obliealion 
separately for all elementary school districts, 
including any joint district located in the county, all 
high school districts, and all community college 
districts of the county, including any prorated joint 
district or special education cooperative agreement 
levy requirements; and 

(b) report e ach levy r e quir e m e nt the amount 
of the state obligation to the county commission e r s 
superintendent of public instruction in the same 
manner as provided in 20-9-134 on th e se cond 
Monday of Augu s t as the respective county levy 
requirements for elementary district; and high school 
district; retirement funds and report lo Ihe board of 
regents in the same manner as provided in 20-9- 1 34 
the amount of the slate obligation for community 
college district retirement funds. 

(5) The superintendent of public instruction 
shall pay the state obligation amounts determined in 
subsection (4) to each county according to the 
distribution schedule provided in 20-9-344. 

(5) The county comm issi on e r s s hall fix and 
s e t th e county l e vy in accordanc e w i th 20 9 1 4 2. 

(6) Th e net r e tir e m e nt fi»d levy 

r e quir e m e nt for a joint e l e m e ntary di s trict or a joint 
h i gh s chool district must b e prorated lo each county 
in which a part of th e di s trict i s locat e d in the s am e 
proportion as th e di s trict ANB of th e jo i nt district i s 
di s tribut e d by pupil r es id e nc e in e ach county. Th e 
county sup e rint e nd e nts of th e counti es aff e ct e d s hall 
jointly d e t e rmine th e net r e tir e m e nt fund levy 
r e quir e ment for each county as provid e d in 20 9 

(7) Th e net — ret i r e m e nt fund levy 

r e quir e m e nt for districts that ar e m e mb e rs of s p e c i al 
e ducation coop e rativ e agr ee m e nts mu s t b e prorat e d 
to e ach county in which th e di s trict i s locat e d in th e 
s am e proportion as th e s p e cia l e ducation coop e rativ e 
budg e t i s prorat e d to th e m e mb e r s chool district s . 
The county s uperint e ndent s of th e countie s aff e ct e d 
s hall jointly d e t e rmin e the n e t retir e m e nt fund l e vy 
r e quir e m e nt for each county in th e sam e mann e r as 
provid e d in 20 9 151 and th e county commi ssi on e r s 
s hall fix and l e vy th e n e t r e t i r e m e nt fund l e vy for 
e ach county in th e s am e mann e r as provid e d in 20 
9-i42T 

( 8 ) TTi e — county — sup e rint e nd e nt — shaW 
calculat e th e numb e r of mi l ls to b e l e vi e d on th e 
taxabl e — prop e rty — in — th e county — to financ e — the 
r e tir e m e nt fund n e t l e vy r e qu i r e m e nt by divid i ng th e 
amount d e t e rmined in s ub se ction ( 4 )(a) by th e s um 
efj 

(a) th e amount of guaranteed tax bas e aid 
that th e county will r e c e iv e for e ach mill l e vi e d, as 
c e rtifi e d by th e s up e rint e nd e nt of pub li c in s truction; 

(b) th e taxabl e valuation of th e district 
divid e d by 1,000. " 

Section 145. Section 20-6-702, MCA, is 
amended to read; 

"20-6-702. Funding for K-12 school 
districts. (1) Notwithstanding the provisions of 
subsections (2) through (6) {5}, a K-12 school 
district formed under the provisions of 20-6-701 is 
subject to the provisions of law for high school 
districts. 

(2) The number of elected trustees of the 
K-12 school district must be based on the 
classification of the attached elementary district 



21 



under the provisions of 20-3-341 and 20-3-351. 

(3) Calculations for the following must be 
made separately for the elementary school program 
and the high school program of a K-12 school 
district: 

(a) the calculation of ANB for purposes of 
determining the foundation program schedule 
payments must be in accordance with the provisions 
of 20-9-311; 

(b) the basic county tax and revenues for 
the elementary foundation program amount for the 
district must be determined in accordance with the 
provisions of 20-9-331, and the basic special tax and 
revenues for the high school foundation program 
amount for the district must be determined in 
accordance with 20-9-333; and 

(c) the guaranteed tax base aid for the 
permissive levy amount for a K-12 school district 
must be calculated separately, using the mill value 
per elementary ANB and the mill value per high 
school ANB as defined in 20-9-366. The permissive 
amount to be levied for the K-12 school district 
must be prorated based on the ratio of the 
foundation program amounts for elementary school 
programs to the foundation program amounts for 
high school programs. 

( 1 ) Th e r e tir e m e nt obligation and e ligibility 
for r e tir e m e nt guarant ee d tax bas e a i d for a K 12 
s chool di s trict must b e calculat e d and fund e d a s a 
high school dir . lrict r e tir e m e nt obligation und e r th e 
provisions of 20 9 501. 

f5)(4) For the purposes of budgeting for a 
K-12 school district, the trustees shall adopt a single 
fund for any of the budgeted or nonbudgeted funds 
described in 20-9-201 for the costs of operating all 
grades and programs of the district. 

f6^(5) Tuition for attendance in the K-12 
school district must be determined separately for 
high school pupils and for elementary pupils under 
the provisions of chapter 5, part 3, except that the 
actual expenditures used for calculations in 20-5-305 
and 20-5-312 must be based on an amount prorated 
between the elementary and high school programs in 
the appropriate funds of each district in the year 
prior to the attachment of the districts." 

Section 146. Section 20-10-141, MCA, is 
amended to read; 

"20-10-141. Schedule of maximum 
reimbursement by mileage rates. ( 1 ) The following 
mileage rates for school transportation constitute the 
maximum reimbursement to districts for school 
transportation from state and county sourc es of 
transportation revenue under the provisions of 20- 1 0- 
145 and 20 10 1 4 6 . Th e s e Except as provided in 20- 
10-143. the rates may not limit the amount that a 
district may budget in its transportation fund budget 
in order to provide for the estimated and necessary 
cost of school transportation during the ensuing 
school fiscal year. All bus miles traveled on routes 
approved by the county transportation committee are 
reimbursable. Nonbus mileage is reimbursable for a 
vehicle driven by a bus driver to and from an 
■ overnight location of a school bus when the location 
is more than 10 miles from the school. A district 
may approve additional bus or nonbus miles within 
its own district or approved service area but may not 
claim reimbursement for the mileage. Any vehicle, 
the operation of which is reimbursed for bus mileage 
under the rate provisions of this schedule, must be a 
school bus, as defined by this title, driven by a 
qualified driver on a bus route approved by the 
county transportation committee and the 
superintendent of public instruction. 

(2) The rate per bus mile traveled must be 
determined in accordance with the following 
schedule when the number of eligible transportees 
that board a school bus on an approved route is not 
less than one-half of its rated capacity: 

(a) 85 cents per bus mile for a school bus 
with a rated capacity of not less than 12 but not 



more than 45 children; and 

(b) when the rated capacity is more than 45 
children, an additional 2.13 cents per bus mile for 
each additional child in the rated capacity in excess 
of 45 must be added to a base rate of 85 cents per 
bus mile. 

(3) Reimbursement for nonbus mileage 
provided for in subsection ( 1 ) may not exceed 50% 
of the maximum reimbursement rate determined 
under subsection (2). 

(4) When the number of eligible 
transportees boarding a school bus on an approved 
route is less than one-half of its rated capacity, the 
rate per bus mile traveled must be computed as 
follows: 

(a) determine the number of eligible 
transportees that board the school bus on the route; 

(b) multiply the number determined in 
subsection (4)(a) by two and round off to the nearest 
whole number; and 

(c) use the adjusted rated capacity 
determined in subsection (4)(b) as the rated capacity 
of the bus to determine the rate per bus mile 
traveled from the rate schedule in subsection (2). 

(5) The rated capacity is the number of 
riding positions of a school bus as determined under 
the policy adopted by the board of public education." 

Section 147. Section 20-10-142, MCA, is 
amended to read; 

"20-10-142. Schedule of maximum 
reimbursement for individual transportation. The 
following rates for individual transportation 
constitute the maximum reimbursement to districts 
for individual transportation from state and county 
s ourc es — ef transportation revenue under the 
provisions of 20-10-145 and 20 10 116 . These rates 
also shaH constitute the limitation of the budgeted 
amounts for individual transportation for the ensuing 
school fiscal year. The schedules provided in this 
section shaH may not be altered by any authority 
other than the legislature of the state of Montana. 
When the trustees contract with the parent or 
guardian of any eligible transportee to provide 
individual transportation for each day of school 
attendance, they shall reimburse the parent or 
guardian on the basis of the following schedule: 

( 1 ) When a parent or guardian transports an 
eligible transportee or transportees from the 
residence of the parent or guardian to a school or to 
schools located within 3 miles of one another, the 
total reimbursement per day of attendance shaH must 
be determined by multiplying the distance in miles 
between the residence and the school, or the most 
distant school if more than one, by 2, subtracting 6 
miles from the product so obtained, and multiplying 
the difference by 21.25 cents provided that: 

(a) if two or more eligible transportees are 
transported by a parent or guardian to two or more 
schools located within 3 miles of one another and if 
such schools are operated by different school 
districts, the total amount of the reimbursement s hall 
must be divided equally between the districts; 

(b) if two or more eligible transportees are 
transported by a parent or guardian to two or more 
schools located more than 3 miles from one another, 
the parent or guardian shaH must be separately 
reimbursed for transporting the eligible transportee 
or transportees to each school; 

(c) if a parent transports two or more 
eligible transportees to a school and a bus stop 
which school and bus stop are located within 3 miles 
of one another, the total reimbursement shaH must 
be determined under the provisions of this 
subsection and shall must be divided equally 
between the district operating the school and the 
district operating the bus; 

(d) if a parent transporting two or more 
eligible transportees to a school or bus stop must, 
because of varying arrival and departure times, make 
more than one round-trip journey to the bus stop or 



school, the total reimbursement allowed by this 
section s hall must be limited to one round trip per 
day for each scheduled arrival or departure time; 

(e) notwithstanding subsection (l)(a), (l)(b), 
( I )(c), or ( 1 )(d), ne a reimbursement may not be less 
than 25 cents a day. 

(2) When the parent or guardian transports 
an eligible transportee or transportees from the 
residence to a bus stop of a bus route approved by 
the trustees for the transportation of the transportee 
or transportees, the total reimbursement per day of 
attendance shaH must be determined by multiplying 
the distance in miles between the residence and the 
bus stop by 2, subtracting 3 miles from the product 
so obtained, and multiplying the difference by 22.5 
cents provided that: 

(a) if the eligible transportees transported 
attend schools in different districts but ride on one 
bus, the districts shall divide the total reimbursement 
equally; and 

(b) if the parent or guardian is required to 
transport the eligible transportees to more than one 
bus, the parent or guardian shaH must be separately 
reimbursed for transportation to each bus. 

(3) Where, due to excessive distances, 
impassable roads, or other special circumstances of 
isolation the rates prescribed in subsection ( I ) or (2) 
would be an inadequate reimbursement for the 
transportation costs or would result in a physical 
hardship for the eligible transportee, his the 
transportee 's parent or guardian may request an 
increase in the reimbursement rate. S*ieh-a A request 
for increased rates due to isolation s hall must be 
made by the parent or guardian on the contract for 
individual transportation for the ensuing school fiscal 
year by indicating the special facts and 
circumstances which exist to justify the increase. 
Before any increased rate due to isolation ean may 
be paid to the requesting parent or guardian, s uch 
the rate must be approved by the county 
transportation committee and the superintendent of 
public instruction after the trustees have indicated 
their approval or disapproval. Regardless of the 
action of the trustees and when approval is given by 
the county transportation committee and the 
superintendent of public instruction, the trustees shall 
pay sueh the increased rate due to isolation. The 
increased rate shaH must be V/2 times the rate 
prescribed in subsection ( I ) above. 

(4) When the isolated conditions of the 
household where an eligible transportee resides 
require such the eligible transportee to live away 
from the household in order to attend school, he 
s hall b e the transportee is eligible for the room and 
board reimbursement. Approval to receive the room 
and board reimbursement shaH must be obtained in 
the same manner prescribed in subsection (3) above. 
The per diem rate for room and board s hall b e is 
$5.31 for one eligible transportee and $3.19 for each 
additional eligible transportee of the same household. 

(5) When the individual transportation 
provision is to be satisfied by supervised home study 
or supervised correspondence study, the 
reimbursement rate shaH must be the cost of such 
study, provided that the course of instruction is 
approved by the trustees and supervised by the 
district." 

Section 148. Section 20-10-144, MCA, is 
amended to read: 

"20-10-144. Computation of revenues and 
net tax levy requirements for district 
transportation fund budget. Before the fourth 
Monday of July and in accordance with 20-9-123, 
the county superintendent shall compute the revenue 
available to finance the transportation fund budget of 
each district. The county superintendent shall 
compute the revenue for each district on the 
following basis: 

(1) The "schedule amount" of the 
preliminary budget expenditures that is derived from 



22 



the rate schedules in 20-10-141 and 20-10-142 must 
be determined by adding the following amounts: 

(a) the sum of the maximum reimbursable 
expenditures for all approved school bus routes 
maintained by the district (to determine the 
maximum reimbursable expenditure, multiply the 
applicable rate per bus mile by the total number of 
miles to be traveled during the ensuing school fiscal 
year on each bus route approved by the county 
transportation committee and maintained by such 
district); plus 

(b) the total of all individual transportation 
per diem reimbursement rates for the district as 
determined from the contracts submitted by the 
district multiplied by the number of pupil-instruction 
days scheduled for the ensuing school attendance 
year; plus 

(c) any estimated costs for supervised home 
study or supervised correspondence study for the 
ensuing school fiscal year; plus 

(d) the amount budgeted on the preliminary 
budget for the contingency amount permitted in 20- 
10-143, except if the amount exceeds 10% of the 
total of subsections (l)(a), (l)(b), and (l)(c) , the 
transportation fund budget limitation provided for in 
20-10-143. or $100, whichever is larg e r largest, the 
contingency amount on the preliminary budget must 
be reduced to the limitation amount and used in this 
determination of the schedule amount. 

(2) (a) The schedule amount determined in 
subsection ( 1 ) or the total preliminary transportation 
fund budget, whichever is smaller, is divided by 2 
and is used to determine the available state and 
county revenue to be budgeted^ on th e following 

(i) one half — is — the — budg e t e d — state 
transportat i on r e imbur se ment, exc e pt that th e s tat e 
transportation r e imburs e ment for th e tran s portation 
of s p e cial e ducation pupils under th e provi s ions of 
20 7 442 must b e 50% of th e s ch e dul e amount 
attributed to th e tran s portation of sp e cial e ducation 
pupil s ; and 

(ii) on e half — is — the — budg e t e d — county 
transportation fund r e imburs e m e nt and must b e 
financed in th e mann e r provid e d in 20 10 146. 

(bK3) When the district has a sufficient 
amount of cash for reappropriation and other sources 
of district revenue, as determined in subsection (3) 
(4) , to reduce the total district obligation for 
financing to zero, any remaining amount of district 
revenue and cash reappropriated must be used to 
reduce th e county financing obligation in s ub se ction 
(2)(a)(ii) and, if th e county financing obligation s ar e 
r e duced — te — z e ro, — to reduc e — the — state — financial 
obligation in s ub se ction (2)(a)(i). 

(c) Th e county r e v e nu e requir e m e nt for a 
joint di s trict, aft e r the application of any di s trict 
mon e y und e r sub s ection (2)(b), mu s t b e prorat e d to 
e ach county incorporat e d by the joint district in th e 
s am e proportion as th e ANB of th e joint di s trict i s 
di s tribut e d by pup i l r es id e nc e in e ach county the 
state financial obligation in 20-10-145 . 

(S4(4) The total of the money available for 
the reduction of property tax on the district for the 
transportation fund must be determined by totaling: 

(a) anticipated federal money received 
under the provisions of Title I of Public Law 8 1 -874 
or other anticipated federal money received in lieu 
of that federal act; 

(b) anticipated payments from other districts 
for providing school bus transportation services for 
the district; 

(c) anticipated payments from a parent or 
guardian for providing school bus transportation 
services for his child; 

(d) anticipated or reappropriated interest to 
be earned by the investment of transportation fund 
cash in accordance with the provisions of 20-9- 
213(4); 

(e) anticipated or reappropriated revenue 



from property taxes and fees imposed under 23-2- 
517, 23-2-803, 61-3-504(2), 61-3-521, 61-3-537, and 
67-3-204; 

(0 anticipated revenue from coal gross 
proceeds under 15-23-703; 

(g) anticipated net proceeds taxes for new 
production, as defined in 15-23-601, and local 
government severance taxes on any other production 
occurring after December 31, 1988; 

(h) sales tax and use tax revenue distributed 
under [section 721; 

(h^(i) any other revenue anticipated by the 
trustees to be earned during the ensuing school fiscal 
year that may be used to finance the transportation 
fund; and 

ii)(\) any fund balance available for 
reappropriation as determined by subtracting the 
amount of the end-of-the-year fund balance 
earmarked as the transportation fund operating 
reserve for the ensuing school fiscal year by the 
trustees from the end-of-the-year fund balance in the 
transportation fund. The operating reserve may not 
be more than 20% of the final transportation fund 
budget for the ensuing school fiscal year and is for 
the purpose of paying transportation fund warrants 
issued by the district under the final transportation 
fund budget. 

(4X5) The district levy requirement for each 
district's transportation fund must be computed by: 

(a) subtracting the schedule amount 
calculated in subsection (1) from the total 
preliminary transportation budget amount; and 

(b) subtracting the amount of money 
available to reduce the property tax on the district, 
as determined in subsection (3) ([4), from the amount 
determined in subsection (4)(a) (5)(a) . 

(5X6) The transportation fund levy 
requirements determined in subsection (4) {5) for 
each district must be reported to the county 
commissioners on the second Monday of August by 
the county superintendent as the transportation fund 
levy requirements for the district, and the levy must 
be made by the county commissioners in accordance 
with 20-9-142." 

Section 149. Section 20-10-145, MCA, is 
amended to read: 

"20-10-145. State transportation 
reimbursement. (1) A district providing school bus 
transportation or individual transportation in 
accordance with this title, board of public education 
transportation policy, and superintendent of public 
instruction transportation rules must receive a state 
reimbursement of its transportation expenditures 
under the transportation reimbursement rate 
provisions of 20-10-141 and 20-10-142. The state 
transportation reimbursement is on e half 100% of 
the reimbursement amounts established in 20-10-141 
and 20-10-142 or on e half 100% of the district's 
transportation fund budget, whichever is smaller, and 
must be computed on the basis of the number of 
days the transportation services were actually 
rendered, not to exceed 180 pupil-instruction days. 
In determining the amount of the state transportation 
reimbursement, an amount claimed by a district may 
not be considered for reimbursement unless the 
amount has been paid in the regular manner 
provided for the payment of other financial 
obligations of the district. 

(2) Requests for the state transportation 
reimbursement must be made by each district 
semiannually during the school fiscal year on the 
claim forms and procedure promulgated by the 
superintendent of public instruction. The claims for 
state transportation reimbursements must be routed 
by the district to the county superintendent, who 
after reviewing the claims shall send them to the 
superintendent of public instruction. The 
superintendent of public instruction shall establish 
the validity and accuracy of the claims for the state 
transportation reimbursements by determining 



compliance with this title, board of public education 
transportation policy, and the transportation rules of 
the superintendent of public instruction. After 
making any necessary adjustments to the claims, the 
superintendent of public instruction shall order a 
disbursement from the state money appropriated by 
the legislature of the state of Montana for the state 
transportation reimbursement. The payment of all the 
district's claims within one county must be made to 
the county treasurer of the county, and the county 
superintendent shall apportion the payment in 
accordance with the apportionment order supplied by 
the superintendent of public instruction." 

Section 150. Section 17-3-213, MCA, is 
amended to read: 

"17-3-213. Allocation to general road 
fund and countywide school levies. ( 1 ) The forest 
reserve funds so apportioned to each county must be 
apportioned by the county treasurer in each county 
as follows: 

(a) to the general road fund, 66 2/3% of the 
total amount received; 

(b) to the following countywide school 
levies, 33 1/3% of the total sum received: 

(i) county equalization for elementary 
schools provided for in 20-9-331; and 

(ii) county equalization for high schools 
provided for in 20-9-333i 

(iii) th e county tran s portation fund provid e d 
for in 20 10 H6; and 

(iv) th e e l e m e ntary and h i gh s chool di s trict 
retir e m e nt fund obl i gation s provid e d for in 20 9 501 . 

(2) The apportionment of money to the 
funds provided for under subsection (l)(b) must be 
made by the county superintendent based on the 
proportion that the mill levy of each fund bears to 
the total number of mills for all the funds. Wh e n e v e r 
the — total — amount — of — money — availabl e — for 
apportionm e nt und e r th is se ct i on i s gr e at e r than th e 
total r e quir e m e nt s of a l e vy, th e e xc ess mon e y and 
any int e r es t incom e mu s t be r e tained in a s e parat e 
r ese rv e fund, lo be r e apportion e d in th e e n s u i ng 
s chool — fi s cal year to th e l e vies d es ignat e d in 
subs e ction (l)(b). 

(3) In counties in which special road 
districts have been created according to law, the 
board of county commissioners shall distribute a 
proportionate share of the 66 2/3% of the total 
amount received for the general road fund to the 
special road districts within the county based upon 
the percentage that the total area of the road district 
bears to the total area of the entire county." 

Section 151. Section 20-3-205, MCA, is 
amended to read: 

" 20-3-205. Powers and duties. The county 
superintendent has general supervision of the schools 
of the county within the limitations prescribed by 
this title and shall perform the following duties or 
acts: 

(1) determine, establish, and reestablish 
trustee nominating districts in accordance with the 
provisions of 20-3-352, 20-3-353, and 20-3-354; 

(2) administer and file the oaths of 
members of the boards of trustees of the districts in 
his county in accordance with the provisions of 20- 
3-307; 

(3) register the teacher or specialist 
certificates or emergency authorization of 
employment of any person employed in the county 
as a teacher, specialist, principal, or district 
superintendent in accordance with the provisions of 
20-4-202; 

(4) act on each tuition application submitted 
to him in accordance with the provisions of 20-5- 
301, 20-5-302, 20-5-304, and 20-5-31 1 and transmit 
the tuition information required by 20-5-312; 

(5) file a copy of the audit report for a 
district in accordance with the provisions of 20-9- 
203; 

(6) classify districts in accordance with the 



23 



provisions of 20-6-201 and 20-6-301; 

(7) keep a transcript and reconcile the 
district boundaries of the county in accordance with 
the provisions of 20-6-103; 

(8) fulflll all responsibilities assigned to 
him under the provisions of this title regulating the 
organization, alteration, or abandonment of districts; 

(9) act on any unification proposition and, 
if approved, establish additional trustee nominating 
districts in accordance with 20-6-312 and 20-6-313; 

(10) estimate the average number belonging 
(ANB) of an opening school in accordance with the 
provisions of 20-6-502, 20-6-503, 20-6-504, or 20-6- 
506; 

(11) process and, when required, act on 
school isolation applications in accordance with the 
provisions of 209-302; 

( 1 2) complete the budgets, compute the 
budgeted revenues and tax levies, file final budgets 
and budget amendments, and fulfill other 
responsibilities assigned to him under the provisions 
of this title regulating school budgeting systems; 

(13) submit an annual financial report to the 
superintendent of public instruction in accordance 
with the provisions of 20-9-211; 

(14) monthly, unless otherwise provided by 
law, order the county treasurer to apportion state 
money, county school money, and any other school 
money subject to apportionment in accordance with 
the provisions of 20-9-212, 20-9-334, 20-9-347, or 
20- 1 0- 1 45 . or 20 10 1-16 ; 

(15) act on any request to transfer average 
number belonging (ANB) in accordance with the 
provisions of 20-9-313(3); 

( 1 6) calculate the estimated budgeted general 
fund sources of revenue in accordance with the 
provisions of 20-9-348 and the other general fund 
revenue provisions of the general fund part of this 
title; 

(17) compute the revenues and the district 
and county levy requirements for each fund included 
in each district's final budget and report the 
computations to the board of county commissioners 
in accordance with the provisions of the general 
fund, transportation, bonds, and other school funds 
parts of this title; 

(18) file and forward bus driver 
certifications, transportation contracts, and state 
transportation reimbursement claims in accordance 
with the provisions of 20-10-103, 20-10-143, or 20- 
10-145; 

(19) for districts that do not employ a 
district superintendent or principal, recommend 
library book and textbook selections in accordance 
with the provisions of 20-7-204 or 20-7-602; 

(20) notify the superintendent of public 
instruction of a textbook dealer's activities when 
required under the provisions of 20-7-605 and 
otherwise comply with the textbook dealer 
provisions of this title; 

(21) act on district requests to allocate 
federal money for indigent children for school food 
services in accordance with the provisions of 20-10- 
205; 

(22) perform any other duty prescribed from 
time to time by this title, any other act of the 
legislature, the policies of the board of public 
education, the policies of the board of regents 
relating to community college districts, or the rules 
of the superintendent of public instruction; 

(23) administer the oath of office to trustees 
without the receipt of pay for administering the oath; 

(24) keep a record of his official acts, 
preserve all reports submitted to him under the 
provisions of this title, preserve all books and 
instructional equipment or supplies, keep all 
documents applicable to the administration of the 
office, and surrender all records, books, supplies, 
and equipment to his successor, 

(25) within 90 days after the close of the 



school fiscal year, publish an annual report in the 
county newspaper stating the following financial 
information for the school fiscal year just ended for 
each district of the county: 

(a) the total of the cash balances of all 
funds maintained by the district at the beginning of 
the year; 

(b) the total receipts that were realized in 
each fund maintained by the district; 

(c) the total expenditures that were made 
from each fund maintained by the district; and 

(d) the total of the cash balances of all 
funds maintained by the district at the end of the 
school fiscal year; and 

(26) hold meetings for the members of the 
trustees from time to time at which matters for the 
good of the districts must be discussed." 

Section 152. Section 20-10-104, MCA, is 
amended to read: 

"20-10-104. Penalty for violating law or 
rules. (1) Every district, its trustees and employees, 
and every person under a transportation contract 
with a district shall be subject to the policies 
prescribed by the board of public education and the 
rules prescribed by the superintendent of public 
instruction. When a district knowingly violates a 
transportation law or board of public education 
transportation policy, such district shall forfeit any 
reimbursement otherwise payable under 20-10-145 
and 20 10 116 for bus miles actually traveled during 
that fiscal year in violation of such law or policies. 
The county superintendent shall suspend all such 
reimbursements payable to the district until the 
district corrects the violation. When the district 
corrects the violation, the county superintendent shall 
resume paying reimbursements to the district, but the 
amount forfeited may not be paid to the district. 

(2) When a person operating a bus under 
contract with a district knowingly fails to comply 
with the transportation law or the board of public 
education transportation policies, the district may not 
pay him for any bus miles traveled during the 
contract year in violation of such law or policies. 
Upon discovering such a violation, the trustees of 
the district shall give written notice to the person 
that unless the violation is corrected within 10 days 
of the giving of notice, the contract will be canceled. 
The trustees of a district shall order the operation of 
a bus operated under contract suspended when the 
bus is being operated in violation of transportation 
law or policies and the trustees find that such 
violation jeopardizes the safety of pupils." 

Section 153. Section 20-15-311, MCA, is 
amended to read: 

"20-15-311. Funding sources. The annual 
operating budget of a community college district 
shall be financed from the following sources: 

(1) the estimated revenues to be realized 
from student tuition and fees, except those related to 
community service courses as defined by the board 
of regents; 

(2) a mandatory mill levy on the 
community college district; 

(3) the 1-mill adult education levy 
authorized under provisions of 20-15-305; 

(4) the state general fund appropriation; 

(5) an optional voted levy on the 
community college district that shall be submitted to 
the electorate in accordance with general school 
election laws; 

(6) all other income, revenue, balances, or 
reserves not restricted by a source outside the 
community college district to a specific purpose; 

(7) income, revenue, balances, or reserves 
restricted by a source outside the community college 
district to a specific purpose. Student fees paid for 
community service courses as defined by the board 
of regents shall be considered restricted to a specific 
purpose; 

(8) income from a political subdivision that 



is designated a community college service region 
under 20-15-241 ; and 

(9) sales tax and use tax revenue distributed 
under [section 721 ." 

Section 154. Section 61-3-303. MCA, is 
amended to read: 

"61-3-303. Application for registration. 
(1) Every owner of a motor vehicle operated or 
driven upon the public highways of this state shall 
for each motor vehicle owned, except as herein 
otherwise expressly provided, file or cause to be 
filed in the office of the county treasurer where the 
owner makes his the owner's permanent residence at 
the time of making the application or, if the vehicle 
is owned by a corporation or used primarily for 
commercial purposes, in the taxing jurisdiction of 
the county where the vehicle is permanently 
assigned, an application for registration or 
reregistration upon a blank form to be prepared and 
furnished by the department. The application shall 
contain: 

(a) name and address of owner, giving 
county, school district, and town or city within 
whose corporate limits the motor vehicle is taxable, 
if taxable, or within whose corporate limits the 
owner's residence is located if the motor vehicle is 
not taxable; 

(b) name and address of the holder of any 
security interest in the motor vehicle; 

(c) description of motor vehicle, including 
make, year model, engine or serial number, 
manufacturer's model or letter, gross weight, type of 
body, and if truck, the rated capacity; and 

(d) other information that the department 
may require. 

(2) A person who files an application for 
registration or reregistration of a motor vehicle, 
except of a mobile home as defined in 15-1-101(1), 
shall upon the filing of the application pay to the 
county treasurer: 

(a) the registration fee, as provided in 61-3- 
311 and 61-3-321; and 

(b) unl e ss it has b ee n pr e viou s ly paid 
whichever tax of the following is applicable : 

(i) the personal property taxes assessed 
against the vehicle for the current year of 
registration and the immediately previous year^ 
unless the taxes have been previously paid ; er 

(ii) the new motor vehicle sales tax against 
the vehicle for the current year of registration ; or 

(iii) the sales tax or use tax imposed by 61- 
3-504(4) . 

(3) The application may not be accepted by 
the county treasurer unless the payments required by 
subsection (2) accompany the application. The 
department or its agent may not assess and the 
county treasurer may not collect taxes or fees for a 
period other than: 

(a) the current year; and 

(b) the immediately previous year, if the 
vehicle was not registered or operated on the 
highways of the state, regardless of the period of 
time since the vehicle was previously registered or 
operated. 

(4) The department or its agent may make 
full and complete investigation of the tax status of 
the vehicle. Any applicant for registration or 
reregistration must submit proof from the tax or 
other appropriate records of the proper county at the 
request of the department or its agent." 

Section 155. Section 61-3-317, MCA, is 
amended to read: 

"61-3-317. New registration required for 
transferred vehicle - sales tax and use lax — grace 
period — penalty — display of proof of purchase. 
Except as otherwise provided herein, the new owner 
of a transferred motor vehicle shall hav e has a grace 
period of 20 calendar days from the date of purchase 
to make application and pay the taxes or f ee s, or 
both, sales tax or use tax provided by part 5 of this 



24 



chapter, unl e ss th e in addition to any property tax or 
fee in lieu of tax that has been paid for the year, as 
if the vehicle were being registered for the first time 
in that registration year. If the motor vehicle was not 
purchased from a duly licensed motor vehicle dealer 
as provided in this chapter, it is not a violation of 
this chapter or any other law for the purchaser to 
operate the vehicle upon the streets and highways of 
this state without a certificate of registration during 
the 20-day period, provided that at all times during 
that period a vehicle purchase sticker in a form 
prescribed and furnished by the department, obtained 
from the county treasurer or a law enforcement 
officer as authorized by the department, reciting the 
date of purchase is clearly displayed in the rear 
window of the motor vehicle. Registration and 
license fees collected under 61-3-321 are not 
required to be paid when a license plate is 
transferred under this section and 61-3-335; 
however, the transfer may be subject to the sales tax 
or use tax provided by part 5 of this chapter . Failure 
to make application within the time provided herein 
subjects the purchaser to a penalty of $10. The 
penalty shaH must be collected by the county 
treasurer at the time of registration and shall be in 
addition to the fees otherwise provided by law." 

Section 156. Section 61-3-502, MCA, is 
amended to read: 

" 61-3-502. (Temporary) Sales tax on new 
motor vehicles — exemptions. (1) In consideration 
of the right to use the highways of the state, there is 
imposed a tax upon all sales of new motor vehicles, 
excluding vehicles with a gross vehicle weight in 
excess of 46.000 pounds used exclusively in 
interstate commerce, vehicles registered as part of a 
fleet as defined in 61-3-318(2). trailers, semitrailers, 
and housetrailers, for which a license is sought and 
an original application for title is made. The tax 
must be paid by the purchaser when h e app l i es 
applying for his an original Montana license through 
the county treasurer. 

(2) Except as provid e d in subs e ctions (1) 
and (5), th e The sales tax is; 

(a) H4% 4% of the sales price as defined in 
[section II f o.b. factory list price or f o.b. port of 
e ntry list pric e , during the first quart e r of th e y e ar or 
for a r e gistration p e riod oth e r than a cal e ndar y e ar or 
cal e ndar quart e r; 

(b) 1 1/ 8 % of th e list pric e during the 
s e cond quart e r of th e y e ar; 

(c) 3/1 of 1 % during th e third quart e r of th e 

(d) 3/ 8 of 1% during th e fourth quart e r of 
th e y e ar . 

(3) If the manufacturer or importer fails to 
furnish the f o.b. factory list price or f o.b. port-of- 
entry list price, the department may use published 
price lists. 

('I) The n e w car sal e s tax on — v e hicl es 
subj e ct to th e provisions of 61 3 313 through 61 3 
316 is U4% of th e fo.b. factory list pric e or fo.b. 
port of e ntry li s t pric e r e gardl e ss of th e month in 
which th e n e w v e hicl e is purchas e d. 

(5) The s al e s tax on n e w motor vehicl es 
r e gist e r e d a s part of a fl e et und e r 61 3 31 8 i s 3/'1 of 
1% of th e fo.b. factory li s t pric e or fo.b. port of 
e ntry list pric e . 

(6)(4) Except as provided in 61-3-551, the 
proceeds from this the tax imposed under 
subsections (1) and (2) must be remitted to the state 
treasurer every 30 days for credit as follows: 

(a) 37.5% to the state highway account of 
the state special revenue fun d: and 

(b) 62.5% to the sales tax and use tax 
account established in [section 711 . 

GM5) The new vehicle is not subject to any 
other assessment, fee in lieu of tax, or tax during the 
calendar year in which the original application for 
title is made. 

(^6) (a) The applicant for original 



registration of any new and unused motor vehicle, or 
a new motor vehicle furnished without charge by a 
dealer to a school district for use as a traffic 
education motor vehicle by a school district 
operating a state-approved traffic education program 
within the state, whether or not previously licensed 
or titled to the school district (except a mobile home 
as defined in 15-1-101(1)), acquired by original 
contract after January 1 of any year, is required, 
whenever the vehicle has not been otherwise 
assessed, to pay the motor vehicle sales tax provided 
by this section irrespective of whether the vehicle 
was in the state of Montana on January 1 of the 
year. 

(b) No motor vehicle may be registered or 
licensed under the provisions of this subsection 
unless the application for registration is accompanied 
by a statement of origin to be furnished by the 
dealer selling the vehicle, showing that the vehicle 
has not previously been registered or owned, except 
as otherwise provided herein, by any person, firm, 
corporation, or association that is not a new motor 
vehicle dealer holding a franchise or distribution 
agreement from a new car manufacturer, distributor, 
or importer. 

(9M1) (a), Motor vehicles operating 
exclusively for transportation of persons for hire 
within the limits of incorporated cities or towns and 
within 15 miles from such limits are exempt from 
subsection (1). 

(b) Motor vehicles brought or driven into 
Montana by a nonresident, migratory, bona fide 
agricultural worker temporarily employed in 
agricultural work in this state where those motor 
vehicles are used exclusively for transportation of 
agricultural workers are also exempt from subsection 

(1). 

(c) Vehicles lawfully displaying a licensed 
dealer's plate as provided in 61-4-103 are exempt 
from subsection (1) when moving to or from a 
dealer's place of business when unloaded or loaded 
with dealer's property only, and in the case of 
vehicles having a gross loaded weight of less than 
24,000 pounds, while being demonstrated in the 
course of the dealer's business. 

61-3-502. (Effective on receipt of taxes or 
fees for September 1993) Sales tax on new motor 
vehicles — exemptions. (1) In consideration of the 
right to use the highways of the state, there is 
imposed a tax upon all sales of new motor vehicles, 
excluding vehicles with a gross vehicle weight in 
excess of 46,(X)0 pounds used exclusively in 
interstate commerce, vehicles registered as part of a 
fleet as defined in 61-3-318(2), trailers, semitrailers, 
and housetrailers, for which a license is sought and 
an original application for title is made. The tax 
must be paid by the purchaser when he appli e s 
applying for his an original Montana license through 
the county treasurer. 

(2) Except as provid e d in s ubs e ction s (-1) 
and (5), th e The sales tax is? 

(a) — Wi% 4% of the sales price as defined in 
[section 11 fo.b. factory li s t pric e or fo.b. port of 
e ntry li s t pric e , during th e fir s t quart e r of th e year or 
for a registration p e riod oth e r than a cal e ndar y e ar or 
cal e ndar quart e r; 

(b) 1 1/ 8 % of th e list pric e during th e 
se cond quart e r of the y e ar; 

(c) 3/ 4 of 1 % during th e third quart e r of th e 

(d) 3/ 8 of 1% during th e fourth quart e r of 
the y e ar . 

(3) If the manufacturer or importer fails to 
furnish the fo.b. factory list price or fo.b. port-of- 
entry list price, the department may use published 
price lists. 

( 4 ) Th e n e w car sal e s tax on v e hicl e s 
s ubj e ct to th e provisions of 61 3 313 through 61 3 
316 i s \Vi% of th e fo.b. factory list pric e or fo.b. 
port of e ntry list pric e r e gardl e ss of th e month in 



which th e n e w v e h i cl e i s purchas e d. 

(5) Th e sal e s tax on n e w motor vehicl e s 
r e gi s t e r e d as part of a fl e et und e r 61 3 31 8 i s 3/4 of 
1% of th e fo.b. factory list pric e or fo.b. port of - 
e ntry li s t pric e . 

(6)(4) The proceeds froi . this the lax 
imposed under subsections (I) aiul (2) must be 
remitted to the state treasurer eviry 30 days for 
credit as follows: 

(a) 37.5% to the state highway account of 
the state special revenue fun d; and 

(b) 62.5% to the sales lax and use tax 
account established in [section 71) . 

f^5) The new vehicle is not subject to any 
other assessment, fee in lieu of tax, or tax during the 
calendar year in which the original application for 
title is made. 

f8)(6) (a) The applicant for original 
registration of any new and unused motor vehicle, or 
a new motor vehicle furnished without charge by a. 
dealer to a school district for use as a traffic 
education motor vehicle by a school district 
operating a state-approved traffic education program 
within the state, whether or not previously licensed 
or titled to the school district (except a mobile home 
as defined in 15-1-101(1)), acquired by original 
contract after January 1 of any year, is required, 
whenever the vehicle has not been otherwise 
assessed, to pay the motor vehicle sales tax provided 
by this section irrespective of whether the vehicle 
was in the state of Montana on January 1 of the 
year. 

(b) No motor vehicle may be registered or 
licensed under the provisions of this subsection 
unless the application for registration is accompanied 
by a statement of origin to be furnished by the 
dealer selling the vehicle, showing that the vehicle 
has not previously been registered or owned, except 
as otherwise provided herein, by any person, firm, 
corporation, or association that is not a new motor 
vehicle dealer holding a franchise or distribution 
agreement from a new car manufacturer, distributor, 
or importer. 

(^7) (a) Motor vehicles operating 
exclusively for transportation of persons for hire 
within the limits of incorporated cities or towns and 
within 15 miles from such limits are exempt from 
subsection (1). 

(b) Motor vehicles brought or driven into 
Montana by a nonresident, migratory, bona fide 
agricultural worker temporarily employed in 
agricultural work in this state where those motor 
vehicles are used exclusively for transportation of 
agricultural workers are also exempt from subsection 

(1). 

(c) Vehicles lawfully displaying a licensed 
dealer's plate as provided in 61-4-103 are exempt 
from subsection (1) when moving to or from a 
dealer's place of business when unloaded or loaded 
with dealer's property only, and in the case of 
vehicles having a gross loaded weight of less than 
24,000 pounds, while being demonstrated in the 
course of the dealer's business." 

Section 157. Section 61-3-504, MCA, is 
amended to read: 

" 61-3-504. Computation of property tax ^ ' 
sales tax and use lax on used vehicles . (1) The 
amount of property taxes on a motor vehicle, other 
than an automobile, truck having a rated capacity of 
1 ton or less, motorcycle, quadricycle, motor home, 
travel trailer, camper, or mobile home, is computed 
and determined by the county treasurer on the basis 
of the levy of the year preceding the current year of 
application for registration or reregistration. 

(2) The amount of property lax on an 
automobile or truck having a rated capacity of 1 ton 
or less, except for vehicles owned by disabled 
veterans qualifying for special license plates under 
61-3-332(10)(c), and on a motorcycle or quadricycle 
is 2% of the value determined under 61-3-503. 



25 



(3) The amount of property tax on fleet 
vehicles subject to the provisions of 61-3-318 is 1% 
of the value determined under 61-3-503. 

(4) (a) A sales tax of 4% is imposed on the 
sale, measured by the sales price, as defined in 
Iseclion 1). of all motor vehicles, except vehicles 
with a gross vehicle weight in excess of 46.000 
pounds used exclusively in interstate commerce, not 
subject to the new car sales lax imposed under 61-3- 
502. The tax is imposed on the purchaser and must 
be paid at the time the motor vehicle is registered 
pursuant to 61-3-317. 

(b) A use tax of 4% is imposed on the 
value of all used motor vehicles, except vehicles 
with a gross vehicle weight in excess of 46.000 
t)ounds used exclusively in interstate commerce, that 
are: 

(i) manufactured by the person using the 
motor vehicle in this slate; 

(ii) acquired outside this state as the result 
of a transaction that would have been subject to the 
sales tax had it occurred within this stale; 

(iii) acquired within the exterior boundaries 
of an Indian reservation within this state as a result 
of a transaction that would have been subject to the 
sales tax had it occurred outside of the exterior 
boundaries of an Indian reservation within this state; 
or 

(iv) acquired as the result of a transaction 
that was not initially subject to the sales tax imixised 
by subsection (4)(a) or the use tax imposed by 
subsection (4)(b) but which transaction, because of 
the buyer's subsequent use of the proi:)erty. is subject 
to the sales tax or use tax. 

(5) For the purpose of imposing the use tax 
imposed by subsection (4)(b), the motor vehicle 
must be valued according to the provisions for 
assessment contained in 61-3-503. 

(44(6) For all taxable motor vehicles, the 
amount of tax is entered on the application form in 
a space provided th e r e for ." 

Section 158. Section 61-3-506, MCA, is 
amended to read: 

"61-3-506. (Temporary) Rules. The 
department of revenue shall adopt rules for the 
payment of property taxes and the department of 
transportation shall adopt rules for the payment of 
new car taxes under the provisions of 61-3-313 
through 61-3-316, 61-3-501. and 61-3-520. The 
department of revenue may adopt rules for the 
proration of taxes for the implementation and 
administration of 61-3-313 through 61-3-316, 61-3- 
501, and 61-3-520. but shall specifically provide that 
new car taxes shall be for a 12-month period. 
(Terminates December 31. 1993 -sec. 11. Ch. 525, 
L. 1989.) 

61-3-506. (Effective January 1, 1994) 
Rules. The department of revenue shall adopt rules 
for the payment of property taxes , sales taxes under 
the provisions of 61-3-502. and sales taxes and use 
taxes under the provisions of [sections I through 7 1 1 
and 61-3-504, and the department of transportation 
shall adopt rules for the payment of new car taxes 
under the provisions of 61-3-313 through 61-3-316 
-and 61-3-501. The department of revenue may adopt 
rules for the proration of taxes for the 
implementation and administration of 61-3-313 
through 6 1 -3-3 1 6 and 61 -3-501 , but shall specifically 
provide that new car taxes or sales taxes and use 
taxes shall be for a 12-month period." 

Section 159. Section 61-3-509, MCA, is 
amended to read: 

"61-3-509. Disposition oftaxes.(l) Except 
as provided in subs e ction subsections (2) and (3) and 
[section 1611 . the county treasurer shall, after 
deducting the district court fee, credit all taxes on 
motor vehicles and fees in lieu of tax on motor 
homes, travel trailers, and campers collected under 
61-3-504 (1) through (3). 61-3-521, and 61-3-537 to 
a motor vehicle suspense fund, and at some time 



between March 1 and March 10 of each year and 
every 60 days thereafter, the county treasurer shall 
distribute the money in the motor vehicle suspense 
fund in the relative proportions required by the 
levies for state, county, school district, and 
municipal purposes in the same manner as personal 
property taxes are distributed. 

(2) The county treasurer shall deduct as a 
district court fee 7% of the amount of the 2% tax 
collected on an automobile or truck having a rated 
capacity of 1 ton or less. The county treasurer shall 
credit the fee for district courts to a separate 
suspense account and shall forward the amount in 
the account to the state treasurer at the time the 
county treasurer distributes the motor vehicle 
suspense fund. The state treasurer shall credit 
amounts received under this subsection to the 
general fund to be used for purposes of state funding 
of the district court expenses as provided in 3-5-901. 
Any amount forwarded to the state treasurer under 
this subsection that is not used for district court 
expenses must be refunded to the counties in the 
proportion that the amount collected from each 
county bears to the total amount collected. 

(3) In addition to the amount provided in 
subsection (2), the county treasurer shall deduct 10% 
of the amount of the 2% tax collected on an 
automobile or truck having a rated capacity of 1 ton 
or less. The county treasurer shall credit the amount 
deducted to a separate suspense account and shall 
forward the amount in the account to the state 
treasurer at the time the county treasurer distributes 
the motor vehicle suspense fund. The slate treasurer 
shall credit amounts received under this subsection 
to the school equalization aid account. " 

Section 160. Section 61-3-701, MCA, is 
amended to read: 

"61-3-701. Foreign vehicles used in 
gainful occupation to be registered — reciprocity. 
(1) Before any foreign licensed motor vehicle may 
be operated on the highways of this state for hire, 
compensation, or profit or before the owner and/or 
user thereof uses the vehicle if such owner and/or 
user is engaged in gainful occupation or business 
enterprise in the state, including highway work, the 
owner of the vehicle shall make application to a 
county treasurer for registration upon an application 
form furnished by the department. Upon satisfactory 
evidence of ownership submitted to the county 
treasurer and the payment of property taxes and use 
taxes , if appropriate, as required by 15-8-201, 15-8- 
202, 15-24-301, 61-3-504, or 61-3-537, the treasurer 
shall accept the application for registration and shall 
collect the regular license fee required for the 
vehicle. 

(2) The treasurer shall thereupon issue to 
the applicant a copy of the certificate entitled 
"Owner's Certificate of Registration and Payment 
Receipt" and forward a duplicate copy of the 
certificate to the department. The treasurer shall at 
the same time issue to the applicant the proper 
license plates or other identification markers, which 
shall at all times be displayed upon the vehicle when 
operated or driven upon roads and highways of this 
state during the period of the life of the license. 

(3) The registration receipt shall not 
constitute evidence of ownership but shall be used 
only for registration purposes. No Montana 
certificate of ownership shall be issued for this type 
of registration. 

(4) This section is not applicable to any 
vehicle covered by a valid and existing reciprocal 
agreement or declaration entered into under the 
provisions of the laws of Montana." 

Section 161. Distribution of sales tax or 
use tax collected by county treasurer. The county 
treasurer shall: 

( I ) immediately upon collection, credit 50% 
of the sales lax and use tax collected pursuant to 61- 
3-303(2)(b)(iii) to the motor vehicle suspense fund 



described in 61-3-509; and 

(2) on or before the 25th day of every 
month, remit the remaining 50% to the state 
treasurer for deposit in the sales tax and use tax 
account established in [section 71]. 

Section 162. Section 61-4-112, MCA, is 
amended to read: 

"61-4-112. New motor vehicles — 
transfers by dealers. (I) When a motor vehicle 
dealer transfers a new motor vehicle to a purchaser 
or other recipient, the dealer shall: 

(a) issue and affix a sticker as prescribed in 
61-4-111(1 )(a) for transfers of used motor vehicles 
and retain a copy of the sticker; 

(b) within 4 working days following the 
date of delivery of the new motor vehicle, forward 
to the county treasurer of the county where the 
purchaser or recipient resides: 

(i) one copy of the sticker issued under 
subsection (l)(a); 

(ii) an application for certificate of title with 
a notice of security interest, if any, executed by the 
purchaser or recipient; and 

(iii) a statement of origin as prescribed in 
61-3-502(«4(b )(6)(b) . 

(2) Upon receipt from the county treasurer 
of the documents required under subsection (1). the 
department shall issue a certificate of ownership and 
certificate of registration together with a statement of 
lien as provided in 61-3-202." 

Section 163. Section 15-30-101, MCA, is 
amended to read: 

" 15-30-101. Definitions. For the purpose of 
this chapter, unless otherwise required by the 
context, the following definitions apply: 

(1) "Base year structure" means the 
following elements of the income tax structure: 

(a) th e tax brack e ts e stablish e d i n 15 30 
103. but unadjusted by s ub se ction (2) of 15 30 103. 
in e ff e ct on June 30 of th e taxabl e y e ar; 

(b) the exemptions contained in 15-30-1 12t 
but unadju s t e d by 15 30 1 12(6). in e ff e ct on Jun e 30 
of th e taxabl e y e ar ; 

(€)(b) the maximum standard deduction 
provided in 15-30-122 , but unadjust e d by subs e ction 
(2) of 15 30 122, in e ff e ct on Jun e 30 of th e taxabl e 

(2) "Consum e r pric e — ind e x" — means — the 
consum e r pric e ind e x. Unit e d Stat es city av e rag e , for 
all it e ms, using th e 1967 bas e of 100 as publ i sh e d 
by — the bureau of labor s tati s tics of th e — U^ 
d e partm e nt of labor. 

(^2) "Department" means the department 
of revenue. 

f4)(3) "Dividend" means any distribution 
made by a corporation out of its earnings or profits 
to its shareholders or members, whether in cash or 
in other property or in stock of the corporation, other 
than stock dividends as herein defined. "Stock 
dividends" means new stock issued, for surplus or 
profits capitalized, to shareholders in proportion to 
their previous holdings. 

fS)(4) "Fiduciary" means a guardian, 
trustee, executor, administrator, receiver, conservator, 
or any person, whether individual or corporate, 
acting in any fiduciary capacity for any person, trust, 
or estate. 

(6K5) "Foreign country" or "foreign 
government" means any jurisdiction other than the 
one embraced within the United States, its territories 
and possessions. 

(7^6) "Gross income" means the taxpayer's 
gross income for federal income tax purposes as 
defined in section 61 of the Internal Revenue Code 
of 1954 or as that section may be labeled or 
amended, excluding unemployment compensation 
included in federal gross income under the 
provisions of section 85 of the Internal Revenue 
Code of 1954 as amended. 

( 8 ) "Inflation — factor" — means — a — numb e r 



26 



d e t e rmin e d for e ach taxabl e y e ar by dividing th e 
con s um e r pric e index for Jun e of th e taxab le year by 
th e consum e r pric e ind e x for June, 19 8 0. 

ffi(7) "Information agents" includes all 
individuals, corporations, associations, and 
partnerships, in whatever capacity acting, including 
lessees or mortgagors of real or personal property, 
fiduciaries, brokers, real estate brokers, employers, 
and all officers and employees of the state or of any 
municipal corporation or political subdivision of the 
state, having the control, receipt, custody, disposal, 
or payment of interest, rent, salaries, wages, 
premiums, annuities, compensations, remunerations, 
emoluments, or other fixed or determinable annual 
or periodical gains, profits, and income with respect 
to which any person or fiduciary is taxable under 
this chapter. 

(40X8) "Knowingly" is as defined in 45-2- 
101. 

ft-}-)(9) "Net income" means the adjusted 
gross income of a taxpayer less the deductions 
allowed by this chapter. 

f42 K10) "Paid", for the purposes of the 
deductions and credits under this chapter, means 
paid or accrued or paid or incurred, and the terms 
"paid or incurred" and "paid or accrued" shaH must 
be constnied according to the method of accounting 
upon the basis of which the taxable income is 
computed under this chapter. 

(44 K11) "Pension and annuity income" 
means: 

(a) systematic payments of a definitely 
determinable amount from a qualified pension plan, 
as that term is used in section 401 of the Internal 
Revenue Code, or systematic payments received as 
the result of contributions made to a qualified 
pension plan that are paid to the recipient or 
recipient's beneficiary upon the cessation of 
employment; 

(b) payments received as the result of past 
service and cessation of employment in the 
uniformed services of the United States; 

(c) lump-sum distributions from pension or 
profitsharing plans to the extent that the distributions 
are included in federal adjusted gross income; 

(d) distributions from individual retirement, 
deferred compensation, and self-employed retirement 
plans recognized under sections 401 through 408 of 
the Internal Revenue Code to the extent that the 
distributions are not considered to be premature 
distributions for federal income tax purposes; or 

(e) amounts after cessation of regular 
employment received from fully matured, privately 
purchased annuity contracts. 

fJ-4)Q2i "Purposely" is as defined in 45-2- 
101. 

(44 K13) "Received", for the purpose of 
computation of taxable income under this chapter, 
means received or accrued and the term "received or 
accrued" shaU must be construed according to the 
method of accounting upon the basis of which the 
taxable income is computed under this chapter. 

ft4 K14) "Resident" applies only to natural 
persons and includes, for the purpose of determining 
liability to the tax imposed by this chapter with 
reference to the income of any taxable year, any 
person domiciled in the state of Montana and any 
other person who maintains a permanent place of 
abode within the state even though temporarily 
absent from the state and has not established a 
residence elsewhere. 

fW)£15) "Taxable income" means the 
adjusted gross income of a taxpayer less the 
deductions and exemptions provided for in this 
chapter. 

f W(16) "Taxable year" means the 
taxpayer's taxable year for federal income tax 
purposes. 

f44 K17) "Taxpayer" includes any person or 
fiduciary, resident or nonresident, subject to a tax 



imposed by this chapter and does not include 
corporations." 

Section 164. Section 15-30-103, MCA, is 
amended to read: 

"15-30-103. Rate of tax. fH There shaH-be 
is levied, collected, and paid for each taxable year 
commencing on or after December 3 1 , +968 1993 . 
upon the taxable income of every taxpayer 
individual subject to this tax, after making allowance 
for exemptions and deductions as — h e r ei naft e r 
provid e d , a tax at the rate of 6% of the individual's 
taxable income on th e following brack e ts of taxabl e 
incom e as adjust e d und e r subs e ction (2) at th e 
following rat es : 

(a) on th e fir s t $1,000 of taxabl e incom e or 
any part th e r e of, 2%; 

(b) on th e n e xt $ 1 ,000 of taxable incom e or 
any part th e r e of, 3%; 

(c) on th e n e xt $2,000 of taxabl e incom e or 
any part th e r e of, 4%; 

(d) on the n e xt $2,000 of taxabl e incom e or 
any part th e r e of, 5%; 

( e ) on th e n e xt $2,000 of taxabl e income or 
any part th e r e of, 6%; 

(f) on th e n e xt $2,000 of taxabl e i ncom e or 
any part th e r e of, 7%; 

(g) on th e n e xt $4,000 of taxabl e incom e or 
any part th e r e of, 8 %; 

(h) on th e n e xt $6,000 of taxabl e incom e or 
any part ther e of, 9%; 

(i) on th e next $15,000 of taxabl e incom e 
or any part th e r e of, 10%; 

(j) on any taxabl e incom e i n e xce ss of 
$35,000 or any part th e r e of 11%. 

(2) By Nov e mb e r — 1 — of e ach y e ar, th e 
d e partm e nt — shaH — multiply — the — brack e t — amount 
contain e d in subs e ction (1) by th e inflation factor for 
that taxabl e y e ar and round th e cumulativ e brack e ts 
to th e n e ar e st $100. Th e resulting adjust e d brack e ts 
ar e e ff e ctiv e for that taxabl e y e ar and shall b e us e d 
as th e basis for imposition .of th e tax in sub se ction 
(1) of thi s se ction ." 

Section 165. Section 15-30-105, MCA, is 
amended to read: 

"15-30-105. Tax on nonresident — 
alternative tax based on gross sales. ( 1 ) A like tax 
is imposed upon every person not resident of this 
state, which tax shaH must be levied, collected, and 
paid annually at the rates rate specified in 15-30-103 
with respect to hi s e ntir e net the person's taxable 
income. Aft e r calculating th e tax impos e d, th e tax 
du e and payabl e mu s t b e d e t e rmin e d bas e d upon th e 
ratio of incom e e arn e d in Montana to total incom e . 
Int e r es t incom e from in s tallm e nt sal e s of real or 
tangibl e comm e rcial or busin es s prop e rty locat e d in 
Montana i s con s id e r e d incom e e arn e d in Montana. 

(2) Pursuant to the provisions of Article III, 
section 2, of the Multistate Tax Compact, every 
nonresident taxpayer required to file a return and 
whose only activity in Montana consists of making 
sales and who does not own or rent real estate or 
tangible personal property within Montana and 
whose annual gross volume of sales made in 
Montana during the taxable year does not exceed 
$100,000 may elect to pay an income tax of 1/2 of 
1% of the dollar volume of gross sales made in 
Montana during the taxable year. Such The tax shall 
be is in lieu of the tax imposed under 15-30-103. 
The gross volume of sales made in Montana during 
the taxable year shall must be determined according 
to the provisions of Article IV, sections 16 and 17, 
of the Multistate Tax Compact." 

Section 166. Section 15-30-111, MCA, is 
amended to read: 

"15-30-111. Adjusted gross income. (I) 
Adjusted gross income shall b e js the taxpayer's 
federal income tax adjusted gross income as defined 
in section 62 of the Internal Revenue Code of 1954 
or as that section may be labeled or amended and in 
addition s hall i nclud e includes the following: 



(a) interest received on obligations of 
another state or territory or county, municipality, 
district, or other political subdivision thereof; 

(b) refund s r e c e iv e d of f e d e ral incom e tax, 
to th e e xt e nt the d e duction of such tax r e sult e d in a 
r e duct i on of Montana i ncome tax l iab ili ty; 

(e)(b) that portion of a shareholder's 
income under subchapter S. of Chapter 1 of the 
Internal Revenue Code of 1954, that has been 
reduced by any federal taxes paid by the subchapter 
S. corporation on the income; and 

W(c) depreciation or amortization taken on 
a title plant as defined in 33-25-105(15). 

(2) Notwithstanding the provisions of the 
federal Internal Revenue Code of 1954, as labeled or 
amended, adjusted gross income does not include the 
following which are exempt from taxation under this 
chapter: 

(a) all interest income from obligations of 
the United States government, the state of Montana, 
county, municipality, district, or other political 
subdivision thereof; 

(b) interest income earned by a taxpayer 
age 65 or older in a taxable year up to and including 
$800 for a taxpayer filing a separate return and 
$1,600 for each joint return; 

(c) (i) except as provided in subsection 
(2)(c)(ii), the first $3,600 of all pension and annuity 
income received as defined in 15-30-101; 

(ii) for pension and annuity income 
described under subsection (2)(c)(i), as follows: 

(A) each taxpayer filing singly, head of 
household, or married filing separately shall reduce 
the total amount of the exclusion provided in 
(2)(c)(i) by $2 for every $1 of federal adjusted gross 
income in excess of $30,000 as shown on the 
taxpayer's return; 

(B) in the case of married taxpayers filing 
jointly, if both taxpayers are receiving pension or 
annuity income or if only one taxpayer is receiving 
pension or annuity income, the exclusion claimed as 
provided in subsection (2)(c)(i) must be reduced by 
$2 for every $1 of federal adjusted gross income in 
excess of $30,000 as shown on their joint return; 

(d) all Montana income tax refunds or tax 
refund credits; 

(e) gain required to be recognized by a 
liquidating corporation under 15-31-1 13(l)(a)(ii); 

(0 all tips covered by section 3402(k) of 
the Internal Revenue Code of 1954, as amended and 
applicable on January 1, 1983, received by persons 
for services rendered by them to patrons of premises 
licensed to provide food, beverage, or lodging; 

(g) all benefits received under the workers' 
compensation laws; 

(h) all health insurance premiums paid by 
an employer for an employee if attributed as income 
to the employee under federal law; and 

(i) all money received because of a 
settlement agreement or judgment in a lawsuit 
brought against a manufacturer or distributor of 
"agent orange" for damages resulting from exposure 
to "agent orange". 

(3) A shareholder of a DISC that is exempt 
from the corporation license tax under 15-31- 
102(l)(l) shall include in his the shareholder's-. 
adjusted gross income the earnings and profits of the 
DISC in the same manner as provided by federal 
law (section 995, Internal Revenue Code) for all 
periods for which the DISC election is effective. 

(4) A taxpayer who, in determining federal 
adjusted gross income, has reduced his the 
taxpayer's business deductions by an amount for 
wages and salaries for which a federal tax credit was 
elected under section 44B of the Internal Revenue 
Code of 1954 or as that section may be labeled or 
amended is allowed to deduct the amount of the 
wages and salaries paid regardless of the credit 
taken. The deduction must be made in the year the 
wages and salaries were used to compute the credit. 



27 



In the cose of a partnership or small business 
corporation, the deduction must be made to 
determine the amount of income or loss of the 
partnership or small business corporation. 

(5) Married taxpayers filing a joint federal 
return who must include part of their social security 
benefits or part of their tier I railroad retirement 
benefits in federal adjusted gross income may split 
the federal base used in calculation of federal 
taxable social security benefits or federal taxable tier 
I railroad retirement benefits when they file separate 
Montana income tax returns. The federal base must 
be split equally on the Montana return. 

(6) A taxpayer receiving retirement 
disability benefits who has not attained age 65 by 
the end of the taxable year and who has retired as 
permanently and totally disabled may exclude from 
adjusted gross income up to $100 per week received 
as wages or payments in lieu of wages for a period 
during which the employee is absent from work due 
to the disability. If the adjusted gross income before 
this exclusion and before application of the two- 
earner married couple deduction exceeds $15,000, 
the excess reduces the exclusion by an equal 
amount. This limitation affects the amount of 
exclusion, but not the taxpayer's eligibility for the 
exclusion. If eligible, married individuals shall apply 
the exclusion separately, but the limitation for 
income exceeding $15,000 is determined with 
respect to the spouses on their combined adjusted 
gross income. For the purpose of this subsection, 
permanently and totally disabled means unable to 
engage in any substantial gainful activity by reason 
of any medically determined physical or mental 
impairment lasting or exf)ected to last at least 12 
months. (Subsection (2)(f) terminates on occurrence 
of contingency— sec. 3, Ch. 634, L. 1983.)" 

Section 167. Section 15-30-112, MCA, is 
amended to read: 

"15-30-112. Exemptions. (1) Exc e pt as 
provid e d in s ub se ction (6), in In the case of an 
individual, the exemptions provided by subs e ctions 
(2) through (5) this section shall b e are allowed as 
deductions in computing taxable income. 

(2) (a) An exemption of $800 $3,500 shaH 
be js allowed for taxable years beginning after 
December 3 1 , Wf^ 1993 , for the taxpayer. 

(b) An additional exemption of $800 $3,500 
s hall b e is allowed for taxable years beginning after 
December 31, 49?8 1993 , for the spouse of the 
taxpayer if a separate return is made by the taxpayer 
and if the spouse, for the calendar year in which the 
taxable year of the taxpayer begins, has no gross 
income and is not the dependent of another taxpayer. 

(3) (a) An additional exemption of $ 8 00 
$3,500 shaH — be js allowed for taxable years 
beginning after December 31, ^97% 1993 , for the 
taxpayer if he the taxpayer has attained the age of 
65 before the close of his the taxpayer's taxable 
year. 

(b) An additional exemption of $800 $3.500 
shall b e ]s allowed for taxable years beginning after 
December 31, Wf% 1993 , for the spouse of the 
taxpayer if a separate return is made by the taxpayer 
■ and if the spouse has attained the age of 65 before 
the close of such taxable year and, for the calendar 
year in which the taxable year of the taxpayer 
begins, has no gross income and is not the 
dependent of another taxpayer. 

(4) (a) An additional exemption of $ 8 00 
$3,500 shaH — be is allowed for taxable years 
beginning after December 31, WW 1993 . for the 
taxpayer if he the taxpayer is blind at the close of 
his the taxpayer's taxable year. 

(b) An additional exemption of $800 $3.500 
s ha l l b e is allowed for taxable years beginning after 
December 31, Wm 1993 , for the spouse of the 
taxpayer if a separate return is made by the taxpayer 
and if the spouse is blind and, for the calendar year 
in which the taxable year of the taxpayer begins, has 



no gross income and is not the dependent of another 
taxpayer. For the purposes of this subsection (4)(b), 
the determination of whether the spouse is blind 
shaH must be made as of the close of the taxable 
year of the taxpayer, except that if the spouse dies 
during such taxable year, such determination s hall 
must be made as of the time of such death. 

(c) For purposes of this subsection (4), an 
individual is blind only if his the individual's central 
visual acuity does not exceed 20/200 in the belter 
eye with correcting lenses or if his the individual's 
visual acuity is greater than 20/200 but is 
accompanied by a limitation in the fields of vision 
such that the widest diameter of the visual field 
subtends an angle no greater than 20 degrees. 

(5) (a) An exemption of $800 $3.500 shaW 
be is allowed for taxable years beginning after 
December 3 1 , 1 97 8 1993 , for each dependent: 

(i) whose gross income for the calendar 
year in which the taxable year of the taxpayer begins 
is less than $800 $3.500 ; or 

(ii) who is a child of the taxpayer and who: 

(A) has not attained the age of 19 years at 
the close of the calendar year in which the taxable 
year of the taxpayer begins; or 

(B) is a student. 

(b) No exemption shall b e is allowed under 
this subsection £5^ for any dependent who has made 
a joint return with his the dependent's spouse for the 
taxable year beginning in the calendar year in which 
the taxable year of the taxpayer begins. 

(c) For purposes of subsection (5)(a)(ii), the 
term "child" means an individual who is a son, 
stepson, daughter, or stepdaughter of the taxpayer. 

(d) For purposes of subsection (5)(a)(ii)(B), 
the term "student" means an individual who, during 
each of 5 calendar months during the calendar year 
in which the taxable year of the taxpayer begins: 

(i) is a full-time student at an educational 
institution; or 

(ii) is pursuing a full-time course of 
institutional on-farm training under the supervision 
of an accredited agent of an educational institution 
or of a state or political subdivision of a state. For 
purposes of this subsection (5)(d)(ii). the term 
"educational institution" means only an educational 
institution which normally maintains a regular 
faculty and curriculum and normally has a regularly 
organized body of students in attendance at the place 
where its educational activities are carried on. 

(6) Th e d e partm e nt, by Nov e mb e r 1 of e ach 
year, shall multiply all th e e x e mptions provid e d in 
this s e ction by th e infiation factor for that taxabl e 
year and round th e product to the n e are s t $10. Th e 
r e sulting adjust e d e x e mption s ar e e ff e ctiv e for that 
taxabl e y e ar and sha l l b e us e d in calculating th e tax 
impos e d in 15 30 103. " 

Section 168. Section 15-30-117, MCA, is 
amended to read: 

"15-30-117. Net operating loss — 
computation. ( 1 ) A Montana net operating loss for 
a loss incurred in tax years beginning after 
December 31, 1993, must be determined in 
accordance with section 1 72 of the Internal Revenue 
Code of 1954 or as that section may be labeled or 
amended and in accordance with the following: 

(a) The net operating loss deduction for 
Montana purposes is increased by th e following: 

(i) that portion of th e f e d e ral incom e lax 
and motor v e hicl e tax allowed a s a d e duction und e r 
15 30 121 or 15 30 131 wh i ch i s attributabl e to 
incom e from a Montana trad e or busin e ss; and 

(ii) Montana wages and salaries allowed as 
a business deduction under 15-30-1 1 1(4). 

(b) The net operating loss deduction for 
Montana purposes is decreased by the following: 

(t) interest received on obligations of 
another state or territory or of a county, 
municipality, district, or political subdivision thereof 
allowed as nonbusiness income under 15-30- 



llldKaH 

(i i ) f e d e ral incom e tax r e fund s required to b e 
r e ported und e r 15 30 111 and 15 30 131 as Montana 
bu s in ess incom e ; 

(i i i) s tate incom e tax; and 

( i v) any — oth e r — nonbu s in e s s — d e duct i on s 
allow e d und e r 15 30 1 21 in e xce s s of nonbusin e ss 
incom e. 

(2) Notwithstanding the provisions of 
section 172 of the Internal Revenue Code of 1954 or 
as that section may be labeled or amended, a net 
operating loss does not includcr 

(a) income defined as exempt from state 
taxation under 15-30-1 1 l(2)=-eF 

(b) a z e ro brack e t d e duction provid e d for 
und e r s e ction 63 of the Internal R e v e nu e Code of 
1951 or as that se ction may b e lab e l e d or am e nded ." 

Section 169. Section 15-30-122, MCA, is 
amended to read: 

"15-30-122. Standard deduction. (1) A 
standard deduction e qual to 20% of adjusted gross 
income shall b e is allowed if e l e ct e d by th e taxpay e r 
on hi s on the taxpayer's return. The standard 
d e duction s h a ll b o in li e u of all deductions allow e d 
und e r 15 30 121. Th e maximum 

(2) (a) Except as provided in subsections 
(2)(b) through (2)(d), the standard deduction s hall b e 
$1,500 is $6,000. , as a dju s t e d und e r the provision s 
of s ubs e ction (2), e xc e pt that in the ca se of 

(b) For a single joint return of husband and 
wife , the standard deduction is $10,000. or i n th e 
cas e of 

(c) For a single individual who qualifies to 
file as a head of household on his the individual's 
federal income tax return, the maximum standard 
deduction shall b e $3,000 is $8.000. . as adju s t e d 
und e r th e prov i sions of subs e ction (2). 

(d) The standard deduction shall not b e 
allow e d to e ith e r th e hu s band or th e wif e if the tax 
of on e of th e spou ses i s d e t e rmin e d without r e gard 
to th e s tandard d e duction for married taxpayers 
filing separately is 50% of the standard deduction 
provided in subsection (2)(b) for a joint return . 

(3) For purposes of this section, the 
determination of whether an individual is married 
s hall must be made as of the last day of the taxable 
year; provided, however, if one of the spouses dies 
during the taxable year, the determination shall must 
be made as of the date of death. 

(2) By — Nov e mb e r — 1 — of e ach y e ar, th e 
d e partm e nt shall multiply th e maximum standard 
d e duction for s ingl e r e turn s by th e inflation factor 
for that taxabl e y e ar and round th e product to th e 
n e ar e st $10. Th e standard d e duction for joint r e turns 
and qualifi e d h e ad of hou se hold r e turn s s hall b e 
twic e th e amount for s ingl e r e turns. Th e r es ulting 
adju s t e d d e ductions ar e e ff e ctiv e for that taxabl e 
y e ar and shall b e us e d in calculating th e tax impo se d 
in 15 30 103. " 

Section 170. Section 15-30-126, MCA, is 
amended to read: 

" 15-30-126. Small business coiTJoration — 
deduction for donation of computer equipment to 
schools. A small business corporation, as defined in 
15-31-201, is allowed a deduction equal to the fair 
market value, not to exceed 30% of the small 
business corporation's net income, of a computer or 
other sophisticated technological equipment or 
apparatus intended for use with the computer 
donated to an elementary, secondary, or accredited 
postsecondary school located in Montana if: 

( 1 ) the contribution is made no later than 5 
years after the manufacture of the donated property 
is substantially completed; 

(2) the property is not transferred by the 
donee in exchange for money, other property, or 
services; and 

(3) the electing small business corporation 
receives a written statement from the donee in which 
the donee agrees to accept the property and 



28 



representing that the use and disposition of the 
property will be in accordance with the provisions of 
subsection (2) ; and 

(1) th e d e duction allow e d in this oe ction is 
in li e u of the deduction allow e d und e r 15 30 121 for 
charitable contributions ." 

, Section 171. Section 15-30-131, MCA, is 
amended to read: 

"15-30-131. Nonresident and t e mporary 
part-year resident taxpayers — adjusted gross 
income. Ui In the case of a nonresident or part-year 
resident taxpayer other than a resid e nt of this stat e, 
adjusted gross income includes the entire amount of 
adjusted gross income as provided for in 15 30 1 1 1 
from sources within this slate but does not include 
income from annuities, interest on bank deposits, 
interest on bonds, notes or other interest-bearing 
obligations, or dividends on stock of corporations, 
except to the extent to which the income from 
annuities, interest on bank deposits, interest on 
bonds, notes or other interest-bearing obligations, or 
dividends on stock of corporations is a part of 
income from any business, trade, profession, or 
occupation carried on in this state. Interest income 
from installment sales of real or tangible commercial 
or business property located in Montana must be 
included in adjusted gross income. Adjusted gross 
income from sources within and outside of this state 
must be allocated and apportioned under rules 
adopted by the department in accordance with the 
Multistate Tax Compact. 

(2) For purposes of this section, 
"installment sales" means sales in which the buyer 
agrees to pay the seller in one or more deferred 
installments. 

(3) The deducnons allowed in computing 
net income are restricted to a prorated standard 
deduction, as adjusted, allowed under 15-30-122 and 
prorated exemptions, as adjusted, allowed under 15- 
30-112. The standard deduction and the claimable 
exemptions must be prorated according to the ratio 
that the taxpayer's Montana adjusted gross income 
bears to the taxpayer's federal adjusted gross 
income ." 

Section 172. Section 15-30-137, MCA, is 
amended to read: 

"15-30-137. Determination of tax of 
estates and trusts. The amount of tax must be 
determined from taxable income of an estate or trust 
in the same manner as the tax on taxable income of 
individuals, by applying the rates rate contained in 
15-30-103. Credits allowed individuals under Title 
15. chapter 30, also apply to estates and trusts when 
applicable." 

Section 173. Section 15-30-142, MCA, is 
amended to read: 

" 15-30-142. Returns and payment of tax - 
- penalty and interest — refunds — credits. ( 1 ) A 
return must be filed as provided in subsections (2Ka) 
through (2)(d) on forms and according to rules 
prescribed by the department. 

(2) A return must be filed by: 

(a) Ev e ry every single individual and e v e ry 
marri e d individual not filing a joint return with his 
or h e r spous e and having a gross income for the 
taxable year of more than $1,000, the combined 
amount of the standard deduction for a single 
individual plus the amount for each exemption 
claimable by the individual as provided in 15-30- 
1 12: as adju s t e d under th e provi s ion s of subs e ction 
(7), and 

(b) every individual filing as a head of 
household having gross income for the taxable year 
of more than the combined amount of the standard 
deduction for a head of household plus the amount 
for each exemption claimable by the individual as 
provided in 15-30-112; 

(c) married individuals not filing separate 
returns and having a combined gross income for the 
taxable year of more than $2^000, the combined 



amount of the standard deduction for married 
individuals not filing separately plus the amount for 
each exemption claimable by the individuals as 
provided in 15-30-112: 

(d) as adju s ted und e r th e prov is ion s of 
s ubs e ction (7), s hall b e liable for a r e turn to b e fil e d 
on s uch form s and according to s uch rul e s a s th e 
departm e nt may pr es crib e married individuals filing 
separately with combined gross income exceeding 
one-half of the combined amount of the standard 
deduction for married individuals not filing 
separately plus the amount for each exemption 
claimable by the individual as provided in 15-30- 
1 12 . Th e gro ss incom e amount s r e f e rr e d to in th e 
prec e ding s e nt e nc e shall b e incr e as e d by $ 8 00, a s 
adjust e d und e r th e provisions of 15 30 112(6), for 
each additional p e r s onal e x e mption allowanc e th e 
taxpay e r is e ntitl e d to claim for hims e lf and his 
spouse und e r 15 30 112(3) and ('1). 

(3) A nonresident shall b e is required to file 
a return if his the nonresident's gross income for the 
taxable year derived from sources within Montana 
exceeds the total amount of the prorated exemption 
deduction and prorated standard deduction h e i s 
entitl e d to claim for him se lf and hi s claimable by the 
nonresident and the nonresident's spouse under the 
provisions of 15-30-1 12(2), (3), and (4). 

(34(4) In accordance with instructions set 
forth by the department, every taxpayer who is 
married^ and who is living with hu s band or wif e the 
taxpayer's spouse, and who is required to file a 
return may, at his or h e r the taxpayer's option, file 
a joint return with husband or wife the spouse even 
though one of the spouses has neither gross income 
nor deductions. If a joint return is made, the tax 
shaH must be computed on the aggregate taxable 
income and the liability with respect to the tax shaH 
be is joint and several. If a joint return has been 
filed for a taxable year, the spouses may not file 
separate returns after the time for filing the return of 
either has expired unless the department so consents. 

(^(5) If any s uch a taxpayer is unable to 
make his own a return that is required to be made 
by the taxpayer , the return shaH must be made by a 
duly authorized agent or by a guardian or other 
person charged with the care of the person or 
property of such taxpayer. 

(4-K6) All taxpayers, including but not 
limited to those subject to the provisions of 15-30- 
202 and 15-30-241, shall compute the amount of 
income tax payable and shall, at the time of filing 
the return required by this chapter, pay to the 
department any balance of income tax remaining 
unpaid after crediting the amount withheld as 
provided by 15-30-202 and/or any payment made by 
reason of an estimated tax return provided for in 15- 
30-241; provided, however, the tax so computed is 
greater by $1 than the amount withheld and/or paid 
by estimated return as provided in this chapter. If the 
amount of tax withheld and/or payment of estimated 
tax exceeds by more than $1 the amount of income 
tax as computed, the taxpayer s hall b e ]s entitled to 
a refund of the excess. 

(§4(7) As soon as practicable after the 
return is filed, the department shall examine and 
verify the tax. 

(4)(8) If the amount of tax as verified is 
greater than the amount theretofore paid, the excess 
shaH must be paid by the taxpayer to the department 
within 60 days after notice of the amount of the tax 
as computed, with interest added at the rate of 9% 
per annum or fraction thereof on the additional tax. 
In such case there s hall b e js no penalty because of 
sueh the understatement, provided the deficiency is 
paid within 60 days after the first notice of the 
amount is mailed to the taxpayer. 

(^(9) By November 1 of each year, the 
department shall multiply determine the minimum 
amount of gross income necessitating the filing of a 
return by th e inflation factor for the taxable year. 



These adjusted amounts are effective for that taxable 
year, and persons having gross incomes less than 
these adjusted amounts are not required to file a 
return. 

(8 4(10) Individual income tax forms 
distributed by the department for each taxable year 
must contain instructions and tables based on the 
adjusted base year structure for that taxable year. 

(II) For the purposes of this section: 

(a) "exemption" means the exemptions 
provided by 15-30-112; 

(b) "standard deduction" means the 
deductions provided by 15-30-122. " 

Section 174. Section 15-30-177, MCA, is 
amended to read: 

"15-30-177. Residential property tax 
credit for elderly — limitations. (1) Only one 
claimant per household in a claim period under the 
provisions of 15-30-171 through 15-30-179 is 
entitled to relief. 

(2) Except as provided in subsection (3), no 
claim for relief may be allowed for any portion of 
property taxes paid or rent-equivalent taxes paid that 
is derived from a public rent or tax subsidy program. 

(3) Except for dwellings rented from a 
county or municipal housing authority, no claim for 
relief may be allowed on rented lands or rented 
dwellings that are not subject to ad valorem taxation 
in Montana during the claim period. 

(4) A claimant who receives the renters' 
property tax credit under [sections 73 through 801 or 
who receives a homeowners' tax credit under 
[sections 81 through 881 is not entitled to receive the 
residential property tax credit for the elderiy under 
15-30-171 through 15-30-179 for the same tax year. " 

Section 175, Section 15-30-323, MCA, is 
amended to read: 

"15-30-323. Penalty for deHciency. (1) If 
the payment required by 15-30-142(64(8) is not 
made within 60 days or if the understatement is due 
to negligence on the part of the taxpayer but without 
fraud, there shaH must be added to the amount of the 
deficiency 5% th e r e of of the deficiency ; provided, 
however, that no deficiency penalty shaU may be 
less than $2. Interest will be computed at the rate of 
9% per annum or fraction thereof on the additional 
assessment. Except as otherwise expressly provided 
in this subsection, the interest shaU must in all cases 
be computed from the date the return and tax were 
originally due as distinguished from the due date as 
it may have been extended to the date of payment. 

(2) If the time for filing a return is 
extended, the taxpayer shall pay in addition interest 
thereen on the tax due at the rate of 9% per annum 
from the time when the return was originally 
required to be filed to the time of payment." 

Section 176. Section 15-31-131, MCA, is 
amended to read: 

"15-31-131. Credit for dependent care 
assistance. (I) There is a credit against the taxes 
otherwise due under this chapter allowable to an 
employer for amounts paid or incurred during the 
taxable year by the employer for dependent care 
assistance actually provided to or on behalf of an 
employee if the assistance is furnished by a 
registered or licensed day-care provider and pursuant 
to a program that meets the requirements of section 
89(k) and 129(d)(2) through (6) of the Internal 
Revenue Code. 

(2) (a) The amount of the credit allowed 
under subsection (1) is 20% of the amount paid or 
incurred by the employer during the taxable year, 
but the citdit may not exceed $1,250 of day-care 
assistance actually provided to or on behalf of the 
employee. 

(b) For the purposes of this subsection, 
marital status must be determined under the rules of 
section 21(e)(3) and (4) of the Internal Revenue 
Code. 

(c) In the case of an onsite facility, the 



29 



amount upon which the credit allowed under 
subsection (1) is based, with respect to any 
dependent, must be based upon utiUzation and the 
value of the services provided. 

(3) An amount paid or incurred during the 
taxable year of an employer in providing dependent 
care assistance to or on behalf of any employee does 
not qualify for the credit allowed under subsection 
(I) if the amount was paid or incurred to an 
individual described in section 129(c)(1) or (2) of 
the Internal Revenue Code. 

(4) An amount paid or incurred by an 
employer to provide dependent care assistance to or 
on behalf of an employee does not qualify for the 
credit allowed under subsection ( 1 ): 

(a) to the extent the amount is paid or 
incurred pursuant to a salary reduction plan; or 

(b) if the amount is paid or incurred for 
services not performed within this slate. 

(5) If the credit allowed under subsection 
(1) is claimed, the amount of any deduction allowed 
or allowable under this chapter for the amount that 
qualifies for the credit (or upon which the credit is 
based) must be reduced by the dollar amount of the 
credit allowed. TTie election to claim a credit 
allowed under this section must be made at the time 
of filing the tax return. 

(6) The amount upon which the credit 
allowed under subsection (1) is based may not be 
included in the gross income of the employee to 
whom the dependent care assistance is provided. 
However, the amount excluded from the income of 
an employee under this section may not exceed the 
limitations provided in section 129(b) of the Internal 
Revenue Code. For purposes of Title in. chapter 30, 
part 2, with respect to an employee to whom 
dependent care assistance is provided, "wages" does 
not include any amount excluded under this 
subsection. Amount s e xclud e d und e r thi s sub.section 
do not q uali fy a s e x penses fo r w hi ch a d e duction i s 
allow e d to th e e mploy ee und e r I.S 30 1 21. 

(7) Any tax credit otherwise allowable 
under this section that is not used by the taxpayer in 
a particular year may be carried forward and olt'set 
against the taxpayer's tax liability for the next 
succeeding tax year. Any credit remaining unused in 
the next succeeding tax year may be carried forward 
and used in the second succeeding tax year, and 
likewise through the fifth year succeeding the tax 
year in which the credit was first allowed or 
allowable. A credit may not be carried forward 
beyond the fifth succeeding tax year. 

(8) If the taxpayer is an S corporation, as 
defined in section 1361 of the Internal Revenue 
Code, and the taxpayer elects to take tax credit 
relief, the election may be made on behalf of the 
corporation's shareholders. A shareholder's credit 
must be computed using the shareholder's pro rata 
share of the corporation's costs that qualify for the 
credit. In all other respects, the effect of the tax 
credit applies to the corporation as otherwise 
provided by law. 

(9) For purposes of the credit allowed under 
sub.section (I): 

(a) The definitions and special rules 
contained in section 129(e) of the Internal Revenue 
Code apply to the extent applicable. 

(b) "Employer" means an employer carrying 
on a business, trade, occupation, or profession in this 
state. 

(c) "Internal Revenue Code" pienns the 
federal Internal Revenue Code as amended and in 
effect on January I, 1989." 

Section 177. Section 15-32.^03, MCA, is 
amended to read: 

"15-32-303. Deduction for purchase of 
Montana produced organic fertilizer. In addition 
to all other deductions from — adju s t e d — gros s 
individua l incom e allowed in comput i ng taxabl e 
incom e und e r Titl e 1 5, chapt e r 30, or from gross 



corporate income allowed in computing net income 
under Title 15, chapter 31, part I, a taxpayer may 
deduct hts expenditures made by the taxpayer for 
organic fertilizer produced in Montana and used in 
Montana if the expenditure was not otherwise 
deducted in computing taxable income." 

Section 178. Section 15-51-101, MCA, is 
amended to read: 

"15-51-101. Rate of tax ~ electrical 
energy producers, (jj In Except as provided in 
subsections (2) and (3), in addition to the licen.se tax 
new — provid e d — by — law, each person or other 
organization new engaged in the generation, 
manufacture, or production of electricity and 
electrical energy in the state of Montana , e ith e r 
through wat e rpow e r or by any oth e r m e an s , for 
barter, sale, or exchange (and h e r e inafter r e f e rr e d to 
as th e "produc e r") shall on or before the 30th day 
after each calendar quarter, quarterly periods ending 
March 31, June 30, September 30, and December 
31, render a statement to the department of revenue 
showing the gross amount, except for actual and 
necessary plant use, required to produce the energy 
of electricity and electrical energy produced, 
manufactured, or generated during the preceding 
calendar quarter without any deduction and shall pay 
a license tax thereon in the sum of $.0002 $.00252 
per kilowatt hour on all sueh electricity and 
electrical energy generated, manufactured, or 
produced, measured at the place of production and 
as shown on the statement required in the manner 
and within the time hereinafter provided. 

(2) The license tax required to be paid by 
a qualified facility, as that term is defined in the 
Federal Power Act, as amended by the Public 
Utilities Regulatory Policies Act of 1978, that 
exceeds $.0002 per kilowatt hour must be 
reimbursed to the qualified facility by the wholesale 
purchaser making purchases of a qualified facility's 
electricity or electrical energy if the wholesale 
purchases are made pursuant to a contract in effect 
on June 30, 1993. The wholesale purchaser shall 
reimburse the qualified facility on or before the date 
that the qualified facility is required to pay the tax 
imposed under subseclion ( 1 ). 

(3) Notwithstanding the provisions of 
subsections ( 1 ) and (2). the tax rate on all electricity 
and electrical energy generated, manufactured, or 
produced from a facility or from an additional 
generating unit of a facility placed in service after 
June 8, 1993, and prior to January I, 1997, is as 
follows: 

(a) $.0002 per kilowatt hour commencing 
on the first day of commercial operation of the 
facility or of an additional generating unit of a 
facility through the end of the calendar quarter 
ending 5 years after the first day of commercial 
operation; 

(b) $.0008 per kilowatt hour for the next 5 
years; 

(c) $.0016 per kilowatt hour for the next 5 
years; and 

(d) $.00252 per kilowatt hour thereafter. " 
Section 179. Section 16-1-306, MCA, is 

amended to read: 

"16-1-306. Revenue to be paid to state 
treasurer. Except as provided in [section 711, 16-1- 
404, 16-1-405. 16-1-408. 16-1-410. and 16-1-411^ 
and 16-2-301 . all fees, charges, taxes, and revenues 
collected by or under authority of the department 
shall must be deposited with the state treasurer. He 
The stale treasurer shall deposit the funds to the 
credit of the stale general fund , except tor sales tax 
and use lax revenue that must be deposited 
according to {section 711 ." 

Section 180. .Section 16-1-411, MCA, is 
amended to read: 

"16-1-411. (Temporary) Tax on wine. (1) 
A lax of 27 cents per liter is hereby levied and 
imposed on table wine imported by any table wine 



distributor or the department. 

(2) (a) The tax on table wine imported by 
a table wine distributor shall be paid by the table 
wine distributor by the 15lh day of the month 
following sale of the table wine from the table wine 
distributor's warehouse. Failure to file a table wine 
tax return or failure to pay the tax required by this 
section subjects the table wine distributor to the 
penalties and interest provided for in 16-1-409. 

(b) The tax on table wine imported by the 
department shall be collected at the time of sale. 

(3) The tax paid by a table wine distributor 
in accordance with, subsection (2)(a) and the tax 
collected by the department in accordance with 
subsection (2)(b) shall be distributed as follows: 

(a) 16 cents to the state general fund; and 

(b) of the remaining 1 1 cents: 

(i) 8.34 cents to the state special revenue 
fund to the credit of the department of corrections 
and human services for the treatment, rehabilitation, 
and prevention of alcoholism; 

(ii) 1 1/3 cents is statutorily appropriated, as 
provided in 17-7-502, to the department, for 
allocation to the counties, based on population, for 
the purpose established in 16-1-404; and 

(iii) I 1/3 cents is statutorily appropriated, as 
provided in 17-7-502, to the department, for 
allocation to the cities and towns, based on 
population, for the purpose established in 16-1-405. 

(4) The In addition to sales taxes and use 
taxes imposed under [section 2], the taxes computed 
and paid in accordance with 16-1-423, 16-2-301, and 
this section shall be the only taxes imposed by the 
stale or any of its subdivisiojis. including cities and 
towns. 

(5) The proceeds of the surtax imposed by 
16-1-423 must be deposited in the state general fund. 

16-1-411. (Effective on receipt of taxes or 
fees for September 1993) Tax on wine. (1) A tax 
of 27 cents per liter is hereby levied and imposed on 
table wine imported by any table wine distributor or 
the department. 

(2) (a) The lax on table wine imported by 
a table wine distributor shall be paid by the table 
wine distributor by the 15lh day of the month 
following sale of the table wine from the table wine 
distributor's warehouse. Failure to file a table wine 
tax return or failure to pay the tax required by this 
section subjects the table wine distributor to the 
penalties and interest provided for in 16-1-409. 

(b) The tax on table wine imported by the 
department shall be collected at the lime of sale. 

(3) The tax paid by a table wine distributor 
in accordance with subsection (2)(a) and the tax 
collected by the department in accordance with 
subsection (2)(b) shall be distributed as follows: 

(a) 16 cents to the state general fund; and 

(b) of the remaining 1 1 cents: 

(i) 8.34 cents to the stale special revenue 
fund to the credit of the department of corrections 
and human services for the treatment, rehabilitation, 
and prevention of alcoholism; 

(ii) I 1/3 cents is statutorily appropriated, as 
provided in 17-7-502, to the department, for 
allocation to the counties, based on population, for 
the purpose established in 16-1-404; and 

(iii) I 1/3 cents is statutorily appropriated, as 
provided in 17-7-502, to the department, for 
allocation to the cities and towns, based on 
population, for the purpose established in 16-1-405. 

(4) The In addition to the sales tax and use 
tax imposed under [section 2], the tax computed and 
paid in accordance with this section shall be the only 
lax imposed by the state or any of its subdivisions, 
including cities and towns." 

Section 181. Section 16-2-301, MCA, is 
amended to read: 

"16-2-301. Retail selling price on table 
wine — tax on certain table wine. ( 1 ) ia) The retail 
selling price at which table wine is sold either by the 



30 



department, through a state employee-operated store, 
or by a commission agent who was appointed before 
April 30, 1987, including subsequent renewals of 
such appointment, and who elects to order table 
wine from the department is computed by adding to 
the statewide weighted average cost of table wine 
the tax and state markup as designated by the 
department. 

(b) The retail selling price at which table 
wine is sold pursuant to subsection (l)(a) may not 
include the sales tax or use tax imposed under 
[section 2). The sales lax or use tax must be 
collected as provided in [sections 1 through 71] and 
must be deposited as provided in [seclion 711. 

(2) ia| The retail selling price at which 
table wine is sold by a commission agent appointed 
by the department after May 1, 1987, is as 
determined by the agent. 

(b) The retail selling price at which table 
wine is sold pursuant to subsection (2)(a) may not 
include the sales tax or use tax imposed under 
[section 21. The sales tax or use tax must be 
collected as provided in [sections 1 through 711 and 
must be deposited as provided in [section 711. 

(3) In addition to the tax on wine assessed 
under 16-1-411, there is a tax of 1 cent a liter on 
table wine sold by a table wine distributor to an 
agent as described in subsection (2). This additional 
tax must be paid to the department by the distributor 
in the same manner as the tax under 16-1-411 is 
paid. The department shall deposit the tax paid under 
this section in the general fimd. 

(4) The sales tax and use tax collected 
under [sections 1 through 711 are not considered to 
be collected under this seclion. " 

Section 182. Transition. (1) 
Notwithstanding the provisions of 15-30-111, the 
adjusted gross income of an individual includes 
refunds of federal income tax received for tax years 
prior to December 31, 1993, to the extent that the 
deduction of the tax resulted in a reduction of 
Montana income tax liability. 

(2) Notwithstanding the provisions of 15- 
30-122, all itemized deductions allowed pursuant to 
26 U.S.C. 161 and 211 that may be carried forward, 
including but not limited to the contributions 
carryover, investment interest expense carryover, 
home mortgage interest amortization, bond premium 
amortization, and deduction for income in respect of 
a decedent, may be continued to be carried forward 
for a period not to exceed 5 years. 

(3) (a) Notwithstanding the provisions of 
[section 48], each person engaging in business prior 
to [the applicability date of sections 1 through 7 1 ] 
must have applied for and received, prior to [the 
applicability date of sections 1 through 71], a valid 
seller's permit described in [section 48]. 

(b) Notwithstanding the provisions of 
[section 8], any person engaging in business prior to 
[the applicability date of sections 1 through 7 1 ] may 
apply for and receive, prior to [the applicability date 
of sections 1 through 71], a valid nontaxable 
transaction certificate described in [section 8]. 

(c) The department of revenue shall adopt 
rules to provide procedures for receiving and 
processing an application for a seller's permit and 
for providing a seller's permit and a nontaxable 
transaction certificate prior to (the applicability date 
of sections 1 through 71]. 

Section 1 83. Sales tax and use tax rates — 
restrictions. A sales tax rate or use tax rate imposed 
in [section 2] may be increased only if the increase 
is approved by the electorate. 

Section 184. Special election. Pursuant to 
Article III, sections 5 and 6, of The Constitution of 
the State of Montana, this act shall be submitted to 
the qualified electors of Montana for their approval 
or disapproval at a statewide election to be held June 
8, 1993. 

Section 185. Repealer. Sections 15-10-401, 



15-10-402. 15-10-406, 15-10-411, 15-10-412, 15-30- 
121, 15-30-156, 15-30-157, 15-30-159, 15-30-160, 
and 20-10-146, MCA, are repealed. 

Section 1 86. Codification instruction. ( 1 ) 
(Sections 1 through 71, 182, and 183] are intended 
to be codified as an integral part of Title 15, and the 
provisions of Title 15 apply to [sections 1 through 
71, 182, and 183]. 

(2) [Sections 73 through 88 and 89 through 
93) are intended to be codified as an integral part of 
Title 15, chapter 30, and the provisions of Title 15, 
chapter 30, apply to (sections 73 through 88 and 89 
through 93]. 

(3) [Section 72] is intended to be codified 
as an integral part of Title 15, chapter 1, part 5, and 
the provisions of Title 15, chapter 1, part 5, apply to 
[section 72]. 

(4) (Section 161] is intended to be codified 
as an integral part of Title 61, and the provisions of 
Title 61 apply to (section 161]. 

(5) [Section 124] is intended to be codified 
as an integral part of Title 15, chapter 6, part 1, and 
the provisions of Title 15, chapter 6, part 1, apply to 
[section 124]. 

(6) [Section 125] is intended to be codified 
as an integral part of Title 15, chapter 1, part 1, and 
the provisions of Title 15, chapter 1, part 1, apply to 
(section 125]. 

Section 1 87. Coordination instruction. ( 1 ) 
If House Bill No. 3 is passed and approved without 
an appropriation to fund the special election held 
pursuant to [section 184], then [this act] is void. 

(2) If (this act] is approved at the special 
election held pursuant to (section 1 84( and if Senate 
Bill No. 32 is passed and approved and it amends 
20-9-344, 20-9-366, 20-9-367, 20-9-368, 20-9-406, 
and 20-9-439, then Senate Bill No. 32 is void on 
June 30, 1994. 

(3) If Senate Bill No. 168 is passed and 
approved, then (sections 121 and 126 of this act] are 
void. 

(4) If House Bill No. 671 is passed and 
approved, then: 

(a) [sections 163 through 177] are effective 
on January 1, 1994, and apply to tax years beginning 
after December 31, 1993; and 

(b) House Bill No. 671 terminates 
December 31, 1993, and applies only to the tax year 
beginning in 1993. 

Section 188. Severability. If a part of [this 
act] is invalid, all valid parts that are severable from 
the invalid part remain in effect. If a part of [this 
act] is invalid in one or more of its applications, the 
part remains in effect in all valid applications that 
are severable from the invalid applications. 

Section 189. Saving clause. (This act] does 
not affect rights and duties that matured, penalties 
that were incurred, or proceedings that were begun 
before [the effective date of this act]. 

Section 190. Effective date. (This act] is 
effective on approval by the electorate. 

Section 191. Applicability. (1) (a) Except 
as provided in subsection (l)(b), [sections 1 through 
93 and 154 through 162] apply on and after April 1, 
1994. 

(b) Purchases of goods and services 
pursuant to construction contracts that were bid prior 
to June 8, 1993, are exempt from the sales tax and 
use tax. However, property or services purchased on 
or after April 1, 1995, pursuant to a construction 
contract are subject to the sales tax and use tax 
regardless of when the contract was bid. 

(2) (Sections 94 through 134, 163 through 
181, and 1851 apply on and after January 1, 1994, 
and to tax years beginning after December 3 1 , 1993. 

(3) (Sections 135 through 152] apply on 
and after July 1, 1994. 

(4) Except as provided in subsection (5), 
distribution of taxes must be made according to the 
provisions of the statute governing allocation of the 



tax in effect on the last day of the tax peric 1 in 
which the activity, enterprise, or product being taxed 
was engaged in, took place, was assembled, or was 
produced. 

(5) All taxes collected pursuant to audit or 
collected after the date the tax is payable must be 
distributed according to the statute governing 
allocation of the tax in effect on the date the taxes 
are collected. 

Seclion 192. Submission to electorate. The 
question of whether this act will become effective 
.shall be submitted to the qualified electors of 
Montana at the election called pursuant to section 
184 by printing on the ballot the full title ol this act 
and the following: 

|] FOR imposing a 4% sales tax and use tax 
as part of comprehensive tax reform. 

[] AGAINST imposing a 4% sales tax and 
use tax as part of comprehensive tax reform. 



31 



What is the Voter Information Pamphlet? 

The Voter Information Pamphlet (VIP) is a publication printed by 
the Secretary of State to provide Montana voters information about 
ballot issues that will be appearing on the statewide ballot. The 
Secretary of State distributes the pamphlets to the county election 
administrators who mail a VIP to each household with a registered 
voter. 

What's in the VIP? 

The VIP shows how the ballot measure will appear on the ballot. 
This includes: 

1 . the ballot number, 

2. the method of placement on the ballot, 

3. the title of the measure, 

4. the Attorney General's explanatory statement, 

5. the fiscal statement, 

6. the statements of implication (the FOR and AGAINST 

statements), and 

7. the arguments advocating adoption and rejection 

written by the appointed committees. 
Finally, it includes the full text of the measure so you can read and 
decide for yourself how you will vote on June 8, 1993. 

Who writes the information that goes in the VIP? 

Attorney General - The Attorney General writes an explanatory 
statement for the measure. This statement, not to exceed 100 
words, is a true and impartial explanation of the purpose of the 
measure in easy to understand language. The fiscal statement, 



also prepared by the Attorney General, is an explanation of the 
impact the measure would have on the State's revenues, 
expenditures, or fiscal liability. The Attorney General also writes 
the statements of implication. 

Pro and Con Arguments - The members of the committee that write 
the arguments and rebuttals for each measure are appointed in a 
procedure set out by state law. The Speaker of the House and 
President of the Senate appointed one pro and con committee 
member. These two appointees then chose a third. Arguments 
are limited to 500 words and rebuttals to 250 words. 

What if I can't vote on election day? 

You can vote by absentee ballot if you cannot get to the polls 
because you; 1) expect to be absent from your precinct or county 
on election day, 2) are physically incapacitated, 3) suffer from 
chronic illness or general ill health, or 4) have a health emergency 
between 5 p.m. on June 4 and noon on election day. 

If you qualify for an absentee ballot, contact your county election 
administrator to request an absentee ballot application. Absentee 
ballot applications will be accepted up to noon the day before the 
election. 

How CAN I FIND OUT IF I'M REGISTERED? 

If you failed to vote in the 1992 Presidential Election, you are no 
longer registered and need to re-register. If you are not sure if or 
where you are registered, you should contact your county election 
administrator. The registration deadline for the special election is 
May 10, 1993. 



Additional copies of the Voter Information Pamphlet are available upon request from your County Election Administrator or Mike 
Cooney, Secretary of State. This document printed on recycled paper. 

425,000 copies of this public document were published at an estimated cost of $0.08 per copy, for a total of $32,500.00. Distribution costs paid for by county governments. 



VOTER INFORMATION PAMPHLET 
FOR THE JUNE 8TH SPECIAL ELECTION 



COUNTY ELECTION ADMINISTRATOR 
County Courthouse 

DO NOT FORWARD 



Bulk Rate 

U.S. POSTAGE 

PAID 

HELENA, MT 
Permit No. 199 



CHAMBERS FAMILY 

2011 MISSOULA 

HELENA MT 59601 



32