Summary of Legislation
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2013 LEGISLATURE : SUMMARY OF LEGISLATION The following is an outline of legislation from the 2013 Legislative Session that would have affected or will affect businesses in Montana. It is broken down by issue area including the Montana Chamber’s Roadmap to Jobs Agenda, spending, work comp, health care, tax policy, employment law, environment and natural resource development, and property rights and land use. Each bill includes the title, sponsor, final status, effective date, and summary. Bill summaries are broken down into the following categories: 1) Roadmap to Jobs Agenda; 2) spending; 3) work comp issues; 4) health care policy; 5) employment policy; 6) military issues; 7) environmental and natural resource development; 8) property rights and land use. Contact: Glenn Oppel, Government Relations Director, [email protected], 431-3685 ROADMAP TO JOBS AGENDA : HB 224 Revise appeal bonds in civil cases Sponsor: Rep. Cary Smith (Billings) Final Status: Became Law Effective Date: April 5, 2013 Summary: In order to stay the execution of a judgment pending appeal, Montana law requires the defendant to post an “appeal bond” for the full amount of the judgment, plus estimated costs for the appeal and interest. Montana is one of the few remaining jurisdictions with no limit on appeal bonds. Since 2000, at least 38 states have enacted legislation or adopted rules to limit or waive an appeal bond. Seven other states do not require an appeal bond. The bond limits in other states range from $1 million to $150 million. Initially, we were recommending a two-tiered appeal bond cap: 1) $1 million for businesses with 100 or fewer employees; and 2) $50 million for all other businesses. The initial proposal passed through the House. In Senate Judiciary, we worked with committee members and the Trial Lawyers to amend the bill to just a $50 million cap. There was general concern that companies with large gross receipts but few employees would only have to post a $1 million bond to appeal. Next session we can look at a lower cap based on gross receipts. The amended version passed nearly unanimously in the Senate and House and was signed by Governor Bullock. HB 225 Revise interest payments in civil cases Sponsor: Rep. Cary Smith (Billings) Final Status: Died in Process (vetoed) Summary: Plaintiffs in Montana who win favorable verdicts are usually entitled to recover interest on the damages awarded. Montana last established the interest rate in 1985 at 10 percent. Unless otherwise agreed to by the parties in contract, that is the interest rate applied to awarded damages. Such a high interest rate discourages defendants from appealing a judgment and provides a windfall to plaintiffs. Similar to numerous states, HB 225 proposed to set the rate at the federal prime rate plus two percentage points in tort cases. Governor Bullock proposed amendments to the bill that increased the interest to prime plus four percent and applied it to all civil cases, not just tort cases. The House rejected the amendments while the Senate accepted them. The bill went back to Governor Bullock as initially passed in both chambers and he vetoed the bill. HB 232 Strengthen exclusive remedy in work comp Sponsor: Rep. Austin Knudsen (Culbertson) Final Status: Became Law Effective Date: July 1, 2013 Summary: Montana’s work comp law provides that in return for the right to receive work comp, an employee relinquishes his right to sue his employer for damages in tort. This is referred to as the “exclusive remedy doctrine.” However, Montana law specifically provides for an exception to this exclusive remedy for intentional acts that cause injury (MCA 39-71-413(1)). The courts have adopted a broad application of the exception that encourages tort suits in addition to the no-fault remedy of our 1 work comp system. Strengthening exclusive remedy would go a long way toward improving Montana’s business climate while also protecting employer’s from frivolous lawsuits that often lead to large settlements or damage awards. HB 232 accomplished this goal by establishing an evidentiary standard – “clear and convincing evidence” – to determine whether an act was intentional or deliberate. Doing so should facilitate summary judgment in such cases and avoid unnecessary jury trials. Strengthening exclusive remedy would in no manner limit an injured worker’s right to work comp benefits. The amended bill passed unanimously in the House and 32-16 in the Senate. Governor Bullock signed the bill. HB 268 Generally revise income tax laws Sponsor: Rep. Greg Hertz (Polson) Final Status: Died in Process (tabled in committee) Summary: Under current law, the Montana Department of Revenue (DOR) can audit a corporate tax return and assess additional tax on returns that were filed within the last three years or that are being audited by the IRS. The income tax statute of limitations at the federal level is three years for all classes of taxpayers. However, for individuals and sole proprietors in Montana, the DOR can reach back five years. There is no reason for the state taxing agency to treat individuals and sole proprietors differently from corporations for auditing purposes. The federal government does not. The five-year reach back is just another disincentive for wealth and capital to come to the state. The Chamber proposed to equalize the statute of limitations to three years for all classes of taxpayers in Montana. The sponsor and stakeholders visited with DOR Director Mike Kadas and agreed to have the bill tabled to work on the idea over the interim and get it in the Governor Bullock’s next biennial budget. HB 472 / SB 96 Reduce the business equipment tax Sponsor: Rep. Jerry Bennett (Libby) / Sen. Bruce Tutvedt (Kalispell) Final Status: SB 96 Became Law; HB 472 Died in Process Effective Date: May 3, 2013; Applies to property tax years beginning after December 31, 2013 Summary: Over the past 20 years, the Legislature has incrementally reduced the business equipment tax (BET) rate from a high of 12 percent in the 1980s. The BET discourages capital investment and, as is typical, renders Montana’s tax policy uncompetitive with other states that do not have it, including North Dakota, South Dakota, and Wyoming. The $20,000 threshold exemption currently in statute simply is not tax relief when many small businesses easily exceed the threshold and pay the tax on the entire value of their equipment. Short of outright repeal, the most effective way to reduce the BET burden on businesses is to establish a high exemption. With HB 472, the Montana Chamber initially recommended a $250,000 exemption, which would have exempted about 85 percent of Montana businesses – in particular small businesses – from the BET. After the hearing in Senate Taxation, it was apparent that the committee would table HB 472, which it eventually did. House Taxation in turn amended the $250,000 exemption into SB 96, different business equipment tax reduction that proposed raising the top threshold to $10 million and lowering the rate to 1.5 percent. The Senate rejected the House amendments and the bill went to a conference committee, which adopted a $100,000 exemption, a top threshold of $6 million, and a lower 1.5 percent rate. Equipment valued under $6 million is taxed at 1.5 percent. If that threshold is exceeded, the rate is three percent. The free conference committee report was approved 34-16 in the Senate and 84-16 in the House. Governor Bullock signed the bill. SB 139 Require small business impact analyses prior to adoption of administrative rules Sponsor: Sen. Ed Walker (Billings) Final Status: Became Law Effective Date: July 1, 2013; sunsets July 1, 2015 Summary: SB 139 sought to protect small businesses from the costs of complying with rules and regulations. The federal government and 42 states require agencies to analyze how a proposed regulation would economically impact small businesses before it is adopted. These laws also require agencies to consider whether there are less-burdensome solutions that will still accomplish agency rulemaking goals. SB 139 creates an affirmative duty for state agencies to analyze “direct and significant adverse impacts” to small business before adopting new rules and regulations. Like the federal law and similar laws in other states, the agency has to consider less onerous rules and regulations if an adverse impact is identified by the analysis. SB 139 defines a small business as one with 50 or fewer employees. House Business and Labor amended the bill with a two-year sunset provision and with a bar on any cause of action based on the content of the small business impact analysis. The Senate concurred with the House amendments and the bill was transmitted to Governor Bullock. He proposed an amendment that would further bar any cause of action if an agency opted not to conduct a small business impact analysis on a proposed rule. The Montana Chamber and other supporters believed that adopting this amendment would neuter the bill 2 because agencies would simply ignore the requirement. The House (60-40) and Senate (31-17) rejected Governor Bullock’s amendments. After the bill was returned to him, Governor Bullock subsequently signed the bill without his amendments. SB 148 Limit awards in Wrongful Discharge Act Sponsor: Sen. Llew Jones (Conrad) Final Status: Died in Process (vetoed) Summary: Currently, Montana’s wrongful discharge law allows a wrongfully discharged employee to be awarded lost wages and fringe benefits “for a period not to exceed 4 years from the date of discharge, together with interest on the lost wages and fringe benefits” (MCA 39-2-905(1)). How long the employee worked for the employer is immaterial in statute.