HELENA — Six months after a statewide task force held its first meetings to discuss possible long-term changes to Montana’s property tax system, they’ve unveiled a set of 12 recommendations that could be debated in the Montana Legislature next year.
Governor Greg Gianforte announced he would convene a task force last December, and he issued an executive order creating the Governor’s Property Tax Task Force in January.
The task force presented their final report to Gianforte Thursday morning at the Montana State Capitol. Click here to read the full report (PDF).
One of the most significant proposals would be establishing what leaders called “homestead and comstead exemptions” – raising the baseline tax rates on residential and commercial properties, but then creating lower rates for primary residences, long-term rentals and smaller commercial properties. Supporters said the effect would be to shift the tax burden toward second homes – including those owned by out-of-state residents – as well as short-term rentals and larger taxpayers.
Rep. Llew Jones, R-Conrad, chaired the subcommittee that produced that recommendation. He said initial estimates show the proposal could reduce property taxes on 215,000 Montana homes and 32,000 small businesses and indirectly benefit 130,000 renters.
“It will fund itself in a large part by ensuring that a lot of those folks that don't pay income tax in Montana participate in providing for some of the services they consume,” he said.
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Rep. David Bedey, R-Hamilton, chaired a subcommittee on property taxes and their impact on school districts. One of their main recommendations is to set base education levies – mandatory minimum funding levies currently set at the district level – at the same level for all districts in a county. Bedey said the impact would be to make property taxes more equal within a county, and to move some of the burden from districts with low taxable value to those with higher taxable value.
“That is a big move forward in the equity department, once again, in order for us to meet our constitutional mandate to provide that basic education to our students and to distribute the tax burden in an equitable manner,” he said.
Eight of the recommendations came from the third and final subcommittee, which focused on local government – which receives the majority of property tax revenue. The proposals include several changes to voted mill levies: requiring levies to get 60% of the vote in order to pass, requiring voters to reapprove levies after 10 years and restricting governments to asking for a fixed dollar amount instead of a specific number of mills.
“It won't allow for a big windfall, and it'll keep property taxes more stable for voters and taxpayers across the state of Montana,” said Sen. Greg Hertz, R-Polson, who chaired the local government subcommittee.
This meeting came on the same day that the state began accepting applications for the second round of a property tax rebate. Homeowners can claim up to $675 on their primary residence.
Gianforte and other state leaders have pointed to the rebate as a short-term response to Montana’s spike in home values and property taxes, and to the work of the task force as a longer-term response.
“These are innovative tools, and we can use them to address rising property taxes – we have to use them. Montanans are really counting on us,” Gianforte said.
As the task force presented their recommendations, Democrats in the Legislature released a statement, saying they would benefit the wealthy more than everyday Montanans. They unveiled their own plan last month, and criticized the task force’s proposals for not directly targeting lower- and middle-income residents or renters.
Democratic gubernatorial candidate Ryan Busse also held a news conference Thursday to highlight his own plan for tackling property taxes – saying the simplest solution would be to lower the residential property tax rate, so that the taxable value homeowners are charged on would return to where it was before the jump in property values. Busse said the task force's plan was complicated and wouldn't deliver immediate relief.
