HELENA — Gov. Brian Schweitzer has vetoed his first bill this session, saying the measure would put into law the flawed practices of past administrations that improperly gave cellular telephone companies millions of dollars in reduced property taxes.

However, bill sponsors and cell phone lobbyists disagreed. They warned that Schweitzer’s veto will at least double taxes on cellular phone companies, raise customer charges and slow down the expansion of cell service in Eastern Montana.

Both the House and Senate are expected to try to override the veto, a move that require two-thirds’ majorities in both chambers. The bill passed the House 82-16 and the Senate 42-8.

Schweitzer vetoed HB469 Friday but issued it publicly late Monday afternoon.

The bill’s title said it would clarify that property owned by commercial mobile radio service providers is taxed as Class 4 commercial property and Class 8 personal property, and it will not be centrally assessed for property tax purposes. Class 4 and Class 8 property is taxed at rates around 3 percent. The Revenue Department contends that these companies’ property belongs in Class 13 where the tax rate is 6 percent.

“Rather, under the guise of ‘clarifying’ existing law, HB469 would actually reverse existing law and codify the improper practices of past administrations, which failed to correctly implement Montana’s tax codes as enacted by the Legislature,” Schweitzer wrote in his veto message.

Schweitzer said the legislative auditor concluded that Montana law requires the central assessment of wireless phone company property, just as other utility, railroad and airline property is centrally, rather than locally, assessed.

“It was a mistake for past administrations to grant millions of dollars of tax breaks to wireless telephone companies, contrary to Montana statutes and at the expense of homeowners, farmers, ranchers and other businesses,” Schweitzer wrote.

The governor concluded, “Montana needs to value and tax comparable property equally. HB469 is bad policy, bad precedent and both legally and financially risky to Montana taxpayers.”

In response, the bill’s primary sponsor, Rep. Walter McNutt, R-Sidney, said the veto, coupled with a move by the Revenue Department, would more than double taxes on cell phone companies.

“If he wants to campaign on that issue, how he raised taxes, that’s up to him,” McNutt said of Schweitzer. The lawmaker predicted companies will be forced to raise their customer charges.

McNutt said Revenue Director Dan Bucks told him Thursday Schweitzer might issue an amendatory veto, setting up a two-tier tax system — with one for rural nonprofit telephone companies with lower tax rates and one with higher property taxes for private for-profit cell companies like Verizon and Alltel.

In response, McNutt said he questioned the legality of that two-tier tax system.

The bill’s Senate sponsor, Sen. Kim Gillan, D-Billings, said, “I have concerns that this will negatively affect the build out in Eastern Montana of cellular service.”

Gillan said she respects the governor’s prerogative to use his veto power, but she called the bill “a legislative policy statement.”

She sponsored the 1999 bill that first placed wireless companies under Class 8 for property taxes where they were locally accessed and taxed at 3 percent.

“I think everyone is wanting the cell phone coverage to grow, and doubling their taxes is not going to help,” said Mary Whittinghill, president of the Montana Taxpayers Association.

She said the bill was intended to clarify existing Revenue Department practices concerning the assessment of cellular telephone companies. The bill was introduced because Bucks announced the department was changing its past tax policy on cellular telephone companies.

Bucks has claimed HB469 would result in a loss of property taxes and a shift to other taxpayers, Whittinghill said, but in fact this property has always been assessed as Class 8 property. She quoted testimony by Terry Johnson, the Legislature’s chief revenue forecaster, who testified that HB469 would have no fiscal impact because “if you leave the property in the same class of property, there is no impact.”

Wireless companies have never been subjected to central assessment of property, she said. Whittinghill said the whole issue of central assessment of property needs to be reviewed by the Legislature.

“HB469 reflects what the Legislature wants,” she said.