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Montana Legislative Session Carries Echoes Of The Last Time GOP Held Power

Montana Capitol building.
William Marcus
Montana Capitol building.

This week, Montana lawmakers gaveled into the second half of the legislative session. Republicans are advancing major conservative priorities, including a tax cut package. It harkens back to the last time the GOP controlled both the Legislature and governor’s office.

“During the session people will put out buttons for their bills sometimes," says retired 43-year government reporter Chuck Johnson as he rummages through drawers and drawers of political buttons in his Helena home.

“This was a button that came out memorializing the passage of deregulation in a bad way.”

It says, “Remember March 18, 1997. RIP MPC.”

MPC refers to the now-defunct Montana Power Company, the subject of a marquee piece of legislation from the last period of unified GOP statehouse control between 1995 and 2004. Republicans hadn’t had such power for 42 years prior.

“It's sort of like, well, now you can do what you want. You got everything. And I think what people have found is it's not as easy as you think,” Johnson says.

Johnson says that era produced major changes to water quality standards, energy policy and tax structure that remain polarizing today.

This session, Republican lawmakers are again tackling tax policy, along with hot button social issues like abortion.

“If you see any buttons, snag one,” Johnson advises.

Excitement is rippling through the Republican caucus after the November election, which expanded GOP majorities in both legislative chambers and delivered control of the governor’s office.

Republicans won the same large House and Senate majorities ahead of the 1995 session, a commanding grip on the Legislature held for most of former two-term GOP Gov. Marc Racicot’s tenure.

Fresh off dealing with a massive budget deficit two years prior, Racicot says the Legislature’s biggest priority during that era was cutting taxes to create more economic opportunity in Montana.

“Good paying jobs and manufacturing jobs and the kinds of things that would be available to the people of Montana that loved living here and wanted to stay here. But never got to the point where we could do it all in one fell swoop. So it was accomplished over a period of six to eight years,” Racicot says.

With newfound control of the Senate in 1995, Republicans also sought to create a more business friendly environment by passing largely along party lines two bills that loosened water quality standards.

Anne Hedges with the Montana Environmental Information Center lobbied against the proposals and immediately remembers the bill numbers during an interview 26 years later.

“Senate Bill 330 and 331... They were a really big deal,” Hedges says.

The legislation was supported by timber, petroleum and mining interests, which said the bills clarified regulatory red tape while keeping standards high enough to continue protecting Montana water from pollution.

Hedges says it was one of the biggest, ugliest fights she saw at the Capitol.

“It was really a desperate attempt to do anything we could to satisfy an industry that was insatiable. People were calling legislators. The phones were ringing off the hook,” Hedges says.

Despite the partisan battles, former state Superintendent and former Montana Democratic Party Executive Director Nancy Keenan says there was more across the aisle collaboration in the ‘90s than in today’s polarized political environment.

Last year, Republican state Superintendent Elsie Arntzen accused former Democratic Gov. Steve Bullock of ignoring her input on managing schools during the coronavirus pandemic, which Bullock’s office denied.

In contrast, Keenan says she used to have impromptu coffee breaks to talk public education with former Gov. Racicot. After mentioning how Democrats and Republicans used to dine together, party together and even play practical jokes on one another, she recalls a state Land Board meeting when Racicot was the deciding vote on a coal lease.

“The vote was 3-2 and he was with us to vote against the renewal of coal leases then he voted for the renewal for 20 years. And I sent him a lump of coal. It was all in good jest. We lost the vote, but dammit I’m going to make a point here. I sent him a lump of coal in a Santa sack,” Keenan says.

Bipartisan collaboration also played a role in one of Montana’s most consequential policies of the 1990s, energy deregulation, which Racicot and many legislative leaders still regret.

“We were wrong and we made a mistake. There's no question about it,” Racicot says.

The 1997 bill allowed the Montana Power Company to buy and sell energy from different sources at market rates, instead of requiring the monopoly to produce, sell and deliver power at a regulated price under the old system.

Although Montana already enjoyed some of the lowest power prices in the country, deregulation, then a national trend, promised even better rates and more customer choice.

Instead, power prices skyrocketed, leading to job layoffs so businesses could cover utility bills. Meanwhile, Montana Power sold its energy-generating dams and coal plants to fund a telecommunications venture that went bankrupt months later, wiping out hundreds of employees’ and retirees’ life savings.

“I think it just would not have been done if there was any kind of inkling of what we know now,” Mercer says.

John Mercer, a four-time former Republican speaker of the House during the 1990s, says the bill may have been too esoteric for time-crunched, part-time citizen lawmakers.

“All this stuff is gushing at a thousand miles an hour where no human on earth can carefully look at it,” Mercer says.

It’s a familiar feeling for this session’s lawmakers, who held marathon hearings on dozens of bills ahead of a key legislative deadline last week.

“I think that the most important thing is that if you don't understand it and you're not comfortable with it, then a ‘no’ vote will never hurt you,” Mercer says.

Nearly all House and Senate Republicans supported energy deregulation in 1997, joined by about a third of the Democratic caucus.

The policy caused what veteran political reporter Mike Dennison called “one of the biggest corporate meltdowns in Montana history” in his book Inside Montana Politics.

It became a national story inspiring a 60 Minutes segment in 2003: “The result exemplified the worst of American capitalism. The cheap electricity, good jobs and life savings of a lot of people are gone now, along with the name Montana Power.”

While Mercer says deregulation never should have happened, then-Republican Sen. Fred Thomas, the primary sponsor, says the policy may have been more successful if it was implemented over a longer period of time: a couple decades instead of several years.

Thomas, a former Senate majority leader who termed out of Legislature last year, says deregulation was a natural move for himself and Republican colleagues.

“You know, it was less taxes, less regulations and less government,” Thomas says.

That ethos dovetailed into what Thomas calls hallmark legislation: a major tax cut passed at the tail end of the GOP’s control of the Legislature and governor’s office in 2003.

It created a capital gains credit while slashing the top income tax bracket from 11 to 6.9%. The top bracket floor also dropped from roughly $82,000 to just under $14,000.

Thomas says the bill couldn’t have come together without former state Department of Revenue Director Kurt Alme, who’s again pushing to cut the top income tax rate as Republican Gov. Greg Gianforte’s budget director. The proposal fits into a suite of Republican-sponsored tax cuts advancing this session.

Thomas says the 2003 tax cut ultimately bolstered Montana’s tax base by making the state more economically competitive with neighboring areas.

“It attracted new filers. It attracted new investments and therefore job growth. So the state’s better off it than it was,” Thomas says.

Thomas’ point is partially contradicted by the Montana Department of Revenue, which concluded state economic growth before and after the tax cut was driven by other factors, including agricultural commodity prices. The department also found that almost half of the tax reductions went to people making over $500,000, more than double the rate initially anticipated.

The bill passed with a razor-thin two-vote margin in the Senate. Longtime lawmaker John Cobb was among the few Republican holdouts.

“Just cutting and then turning around and giving the money to someone with higher incomes, why are we doing that? Where are the opportunities for low-income people to get ahead?” Cobb says.

Cobb made headlines in 2003 for railing on the Senate floor against his colleagues for trying to “cut, cut, cut” the state budget, to the detriment of health programs for vulnerable populations.

Cuts are also central to Gov. Gianforte’s so-called Montana Comeback Plan, except in this case also referring to what the executive calls burdensome regulations.

Now with an ally in the governor’s office, Republican lawmakers aren’t so worried about the veto pen wielded by Democratic executives over the last 16 years. Or the veto branding iron, in the case of former Gov. Brian Schweitzer.

“It’ll heat up a little bit if I have a little bit of encouragement,” Schweitzer said over chants of "Veto! Veto!"

GOP lawmakers today are advancing long held conservative social and economic priorities vetoed during previous sessions, including several bills expanding guns rights and limiting abortion access.

Yet Fred Thomas advises current legislators to avoid letting too many wild-eyed ideas, in his words, become law, for fear of a public backlash.

“And that’s part of the challenge of Gov. Gianforte as well. To say ‘Hey, we’re not going to pass every gun bill in the world that’s been defeated in the last 16 years. We’re going to be very cautious about what we do here,’” Thomas says.

After all, Thomas says the other party could regain power and get rid of laws passed by previous Legislatures.

Kevin Trevellyan is Yellowstone Public Radio's Report for America statehouse reporter.