Legislative referendum on sales tax to fund education
Summary
HB 842 is a legislative referendum that would ask Montana voters to authorize the Legislature to create a sales tax of up to 4%. The tax could be used only to reduce property taxes that support public schools and the Montana University System. The bill does not itself impose a sales tax; instead, it proposes a constitutional or statutory authorization to let the Legislature enact one later, subject to voter approval in the 2026 general election.
The measure also directs that any future sales tax should be structured to minimize repeated taxation by applying primarily to final goods and services. It specifically contemplates exemptions for housing and utilities, groceries, transportation and agricultural fuel, health care, and financial and insurance services. The bill would be codified in Title 15, and it would take effect only if approved by the electorate.
Impact
If enacted by voters, HB 842 would change Montana law by giving the Legislature authority to adopt a sales tax capped at 4% and dedicate the revenue to lowering property taxes tied to K-12 public schools and the Montana University System. It would not itself create the tax rate or implement the tax structure, but it would open the door for future tax legislation and potentially shift school and university funding away from property taxes and toward consumption taxes.
Sentiment
The available voting history suggests the bill was not broadly advanced in the process, despite no recorded opposition in the referenced committee vote. The 21-0 vote to table in the House Taxation Committee indicates the measure was set aside rather than moved forward, and the bill ultimately died in process. That pattern suggests limited legislative momentum even though the concept of property tax relief may have had some appeal.
Contention
The main point of contention is the proposal to authorize a sales tax in Montana, a state that does not currently rely on that tax as a broad-based funding source. Supporters appear to frame the measure as a property tax relief mechanism for schools and higher education, while likely critics would be concerned about expanding the tax base, the burden on consumers, and the potential regressivity of a sales tax. The exemption list also signals policy debate over which necessities should be shielded from taxation, especially housing, groceries, fuel, and health care.