Legislative committee looking into property taxes in Montana

Helena, Montana – Residents in Montana are beginning to get their official property tax bills, which are being sent out for the first time since an increase in assessed property values was declared earlier this year.

The Revenue Interim Committee of the state Legislature is now researching property taxes, which are still a major concern for many Montanans. Legislators discussed their personal tax bills at a meeting on Thursday, focusing on the difference between the tax rises and the growth in the taxable values of their houses.

That comparison showed a lot of variation. Sen. Greg Hertz, a polson Republican, stated that he owns properties in Sanders and Flathead Counties that saw taxable values climb by over 40%, but only by 3% and 18%, respectively, in taxes. The value of Sen. Becky Beard’s (R-Elliston) Powell County house climbed by 46%, but her tax obligation increased by 59%.

“What is becoming apparent, I think to everybody, is if your property went up 40%, 43%, that doesn’t necessarily equate to your taxes going up,” Hertz said. “In fact, from county to county, there are significant differences in how much tax bills went up, and I think that points to the direction as to what’s going on in that particular county, what local budgets are happening, what’s going on with other taxable values.”

In many instances, local governments decreased the number of mills they assessed on each property as the value of a single mill increased, which prevented property taxes from rising as much as taxable values. A decrease in the taxable value of those classes could result in a larger portion of the tax burden falling on residential property, though, as the value of one mill depends on all classes of property, including things like agricultural land, forest land, mines and utilities, as well as residential and commercial property.

A legal battle between the state and counties over school funding has resulted in 49 counties voting to charge only 77.9 mills for funding, as opposed to 95 mills as in prior years.

Legislators discussed the difficulties in comparing property tax statistics between counties because they don’t all utilize the same systems during their meeting on Thursday.

“We need something that’s more uniform, understandable,” said Rep. Paul Fielder, R-Thompson Falls.

An update on the tax refunds that Montana taxpayers received this year was also presented to the committee. The Legislature authorized property tax reimbursements on Montana homeowners’ principal residences up to $675 each year for the following two years and income tax credits up to $1,250 per individual.

Over 467,000 income tax refunds totaling more than $482 million were reported to have been issued by the Montana Department of Revenue. In order to receive the property tax rebate, property owners needed to submit an application. Revenue officials reported that they had received over 227,000 petitions and had granted approval for about 216,000 of them, amounting to over $141 million.

An early fiscal study conducted during the parliamentary session suggested that approximately 290,000 property owners could qualify for the property tax rebate. The department now feels that estimate was excessive, Revenue Secretary Derek Bell informed lawmakers on Thursday. Bell oversees Revenue’s Business and Income Taxes Division. He said that the estimate of owner-occupied residences in the state came from the U.S. Census, but that figure probably included some properties that weren’t eligible, such as those that were owned by entities rather than by individuals, those who owned multiple properties, and those who hadn’t lived in the house long enough to qualify.

“We think we don’t have a perfect number, and to be honest with you, I don’t know that we ever will have a perfect number, but our suspicion is that 230,000 is probably pretty close to where we think we should be – and again, we’ve received 227,000 applications today,” Bell said.

Bell informed the lawmakers that he was pleased with the efforts made by department staff to assist Montanans with refund inquiries.

The second half of the property tax rebates will be released the following year, however, the state gave all of the income tax rebates at once. According to Bell, revenue executives intend to review the data from this year’s rebates to determine what worked well and where they can make improvements in the marketing and application processes.

“It’s important for us that as we go into next rebate season, we build our successes and then we work on the things that we need to work on,” he said.