Proposed legislative special session would address tax increases in Montana

Helena, Montana – Legislators in Montana will soon determine whether to call a special session early in the next year to discuss tax-related matters, such as a decision made by the state Supreme Court that resolved a disagreement over property tax assessments.

A group of ardently conservative Republican lawmakers known as the Montana Freedom Caucus said last week that its members would formally request to summon a special session on January 15th with an emphasis on tax relief. A representative for the Montana Secretary of State’s Office stated on Monday that the request complied with state law and that voting materials would be mailed to all legislators by Friday.

For the special session to be called, at least 76 members of the Legislature must vote in favor of it.

The members of the Freedom Caucus stated in a press statement that they wanted the Legislature to take four proposed bills under consideration. Two of those are directly tied to the months-long discussion surrounding the school equalization property tax mills, also referred to as the “95 mills”—the one portion of property taxes that the state sets rather than local governments.

Many Montana counties attempted this year to charge fewer equalization mills than the state Department of Revenue ordered, claiming that state law mandated that those mills be capped at the rate of inflation, just like local mills are. The Montana Supreme Court, however, decided this week that counties have to levy the entire amount of mills that the department computed.

The Freedom Caucus demanded that the state legislature amend the legislation to reflect the counties’ preference for capping equalization mills. In an effort to lower tax receipts, they also suggested cutting the total number of mills from 95 to 85.

Freedom Caucus members also demanded a referendum on a mechanism that would automatically return surplus revenue to taxpayers without requiring legislative action, as well as the return of the state’s estimated $230 million surplus to taxpayers.

Following mailing, legislators will have 30 days to retrieve their ballots.

Democratic congressional leaders declared on Monday that they would not support the idea of calling a special session.

This year, 49 out of 56 counties opted to impose equalization mills, which is the amount that county leaders feel would have been reasonable in the event that the state contribution had been capped. Taxes equal to one mill for every $1,000 of a property’s taxable value. The entire assessed value of a property is multiplied by a percentage rate, which is 1.89% for commercial property and 1.35% for residential property, to determine its taxable value.

Charging 95 mills instead of 77.9 would result in about $70 more in property taxes for a $300,000 home. Charging the higher mill rate will generate an additional $80 million in revenue from all property owners throughout the state.

Governor Greg Gianforte issued a statement last week in response to the Supreme Court’s decision.

“I appreciate the Montana Supreme Court bringing clarity to the law around the 95 public school mills which the state collects and returns in full to school districts,” he said. “Today’s decision reaffirms what has guided us: we have an obligation, both constitutional and moral, to ensure each Montana child has access to a quality education, and we won’t defund our public schools. Ultimately, property taxes are too high. In the short term, our $1,350 property tax rebate provides the average Montana homeowner with relief that more than offsets property tax increases this year and next. I remain committed to enacting further long-term reforms that keep property taxes as low as possible, including holding the line on local spending that drives property tax increases.”

Mike McGinley, a commissioner representing Beaverhead County, spearheaded the county’s attempt to contest the state’s property tax computation. He expressed his disappointment with the Court’s decision in an open letter to Gianforte and a local newspaper, but he pledged to follow it.

“It was worth the effort to learn how the state, local, and school districts determine their funding for education through research and understanding,” the man stated.

Gianforte’s remarks, however, drew criticism from McGinley, who claimed that state authorities had unfairly placed the onus of property tax increases on local governments. According to him, Beaverhead County agencies understood that ratepayers would be facing large hikes, so they chose not to levy the full mills that they were authorized to.

“Check your tax bills and you will see all levied mills are less than last year,” McGinley said in his letter. “Now, the only line on your tax that will remain the same is the first line called State School Levy. This is where $600,000 of your property tax dollars will go.”