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Making sense of Montana’s property tax blame game

Christy Hays Pickett with her dog in her Walkerville home. Hays Pickett is among many Montanas feeling the impact of rising property taxes and she's  noticing a lot of finger pointing in the public arena to explain away or place blame for the growing residential tax burden.<br/><br/><br/>
John Hooks
Christy Hays Pickett with her dog in her Walkerville home. Hays Pickett is among many Montanas feeling the impact of rising property taxes and she's noticing a lot of finger pointing in the public arena to explain away or place blame for the growing residential tax burden.

Property tax sticker shock swept through Montana this fall, with many homeowners opening bills to find a spike of 20% or more.

Since then, a blame game has erupted between lawmakers, counties and the governor over who — or what — is responsible for the surge.

Montana Public Radio’s Austin Amestoy and Edward O’Brien and Austin Amestoy took a look at the state’s tax policy rules and who is responsible for the tax hikes.

AUSTIN AMESTOY: Ed, property tax is a complicated system. But it has uncomplicated outcomes – a bottom line on a tax bill that is setting many people back this year.

EDWRD O’BRIEN: It certainly is. These sky-high bills are impacting people like Christy Hays Pickett, who lives in Walkerville, near Butte.

CHRISTY HAYS PICKETT:“Now, where would I have put that?”

O’BRIEN: Hays Pickett’s shuffling through paperwork to find her most recent property tax statement.

HAYS PICKETT: “Oh yeah, here it is.”

O’BRIEN: Hays Pickett and her husband own three houses in Walkerville. She runs a writers-in-residence program called ‘Dear Butte’ and one of the properties houses visiting writers. Another is a rental and the other is the Picketts’ primary residence.

AMESTOY: So that property tax bill?

O’BRIEN: Hays Pickett says taxes on their home and the house for visiting writers have steadily risen over the past few years. Taxes on their rental nearly doubled this fall.

HAYS PICKETT: “It was just like, completely overwhelming. I was pissed.”

O’BRIEN: Hays Pickett is noticing a lot of finger pointing in the public arena to explain away or place blame for Montana’s ever-growing residential property tax burden.

HAYS PICKETT: “It’s so confusing for everybody.”

AMESTOY: Yeah Ed, the question of who’s to blame is big right now. Governor Gianforte has repeatedly said local government spending is “out of control.” But some county commissioners and politicians are pinning blame on the governor for suing the counties to collect more in tax than they believe state law required of them.

O’BRIEN: Help us make sense of it.

AMESTOY: Well Ed, leaders at all levels of government in Montana have the power to impact your final tax bill. But, keeping that final bill in line has to be a group effort — think of it like a rowing team. Everyone has to row at the same pace, or the boat can careen off-course.

I’ve identified four main players in the property tax whodunnit game: the state department of revenue, the Legislature, the governor and local governments. Let’s go player by player to explain the impact they have on homeowners’ final bills.

O’BRIEN: Ok, Let’s start with the Department of Revenue.

AMESTOY: That was the agency that thrust property tax into the limelight this summer when it sent out those reappraisal notices that showed home values had skyrocketed. Because the value of other property types hadn’t risen as quickly, homeowners ended up paying for a bigger slice of the pie this fall.

O’BRIEN: Is the department to “blame” for that big increase in value, then?

AMESTOY: Experts say, not really. The revenue department has to rely on market values when it determines how much your property is worth, and as a lot of listeners likely know, home prices in Montana have been skyrocketing as more people have wanted to move here over the last few years.

OBRIEN: OK, so how about the state Legislature — can we blame lawmakers?

AMESTOY: Well, based on my research, lawmakers did have some warning from the state that residential values were likely to rise this year. The Republican majority opted for short-term relief — namely, those property tax rebates that homeowners could apply for.

But, agreement on any long-term solutions was hard to come by, and now the Legislature has a real quagmire on its hands.

O’BRIEN: How come?

AMESTOY: I want to bring in Rep. Llew Jones, a Republican from Conrad, to help me explain that. He’s been working on state revenue and tax issues for nearly two decades.

LLEW JONES: “What makes this one of the more difficult times to address, is if you look at the eastern probably 40% of Montana versus the western 60%, it’s like you’re in two different states.”

O’BRIEN: “Two different states” – what’s he talking about, Austin?

AMESTOY: Well, Montana’s western half, with cities like Bozeman, Missoula and Kalispell booming with new development and interest from out-of-state, generally saw a greater increase in values and taxes paid.

Jones says that difference is important because it makes a one-size-fits-all solution to rising property taxes impossible. For example, if lawmakers choose to just cut the property tax rate for homeowners like some have suggested, Jones says the tax burden could shift to other payers — like people who own mom-and-pop stores.

O’BRIEN: And then a whole different group of people would be furious.

AMESTOY: Exactly.

O’BRIEN: That brings us to Governor Greg Gianforte. What’s his part in this?

AMESTOY: Normally the governor has almost nothing to do with your final property tax bill. But, this year, we saw Gov. Gianforte wade in to a dispute over one tax the state controls. It’s called the 95 mills — basically, it’s a property tax counties collect and pay to the state. Then, the state distributes the money to schools across Montana to help even out their funding.

This year, counties said they wouldn’t collect the usual rate requested by the state. Instead, they argued a lower rate could still generate a similar amount of funding because property values had risen.

Gov. Gianforte disagreed, and said counties had to collect the full tax or else schools would be “defunded.”

O’BRIEN: Well, how did that debate shake out?

AMESTOY: Well, Rep. Jones told me the counties were technically correct — school funding wouldn’t have been impacted this year because school budgets were already locked in. But, the state supreme court agreed with the governor that the state had the authority to tell counties how much tax to collect.

Montana Free Press estimates that the 95 mills make up about a third of the increase in property taxes collected this year.

O’BRIEN: I think we’ve just got one more player, Austin – the counties. Is the governor right when he pins rising property tax bills on “reckless spending” by local governments?AMESTOY: Well, the counties certainly don’t share that view. The Montana Association of Counties told me the annual growth of county budgets is technically limited by state law.

Spending in some counties has ticked up in recent years. But Montana Taxpayers Association executive director Bob Story told me the data the governor cites to demonstrate reckless spending is flawed.

BOB STORY:“The problem with the state’s data collection is there’s no way of determining how much of that increase is because people voted for it, how much it’s because you’ve got new property, and how much of it is because of the, ‘half of the rate of inflation.’” 

Story is referencing the legal limit on how much county budgets can grow. I asked the governor’s office to point out specific counties it believes are spending “recklessly,” but it didn’t do so.

O’BRIEN: Wow. It sounds like everyone shares a little blame for the residential property tax boom this year, Austin. Is that our takeaway?

AMESTOY: I know it’s such an unsatisfying answer, but it’s also the truth. The property tax system is way more complicated than the decisions of any one player — though, they all have some part to play. But, the biggest factor this year – home values skyrocketing faster than other property types – was out of anyone’s hands. Montana housing is in high demand.

The experts I spoke with all shared one interesting perspective, including Bob Story again.

STORY: “The real answer is off of this topic, and that is, you’ve got too many people depending on the property tax system to fund services and goods. You need another source of revenue, which we don’t have.”

Property tax funds a huge array of services in Montana, from schools and city roads to fire departments and libraries.

Diversifying our local governments’ revenue streams would likely help, but taking away or reducing one tax often means adding or increasing another. And that would mean a whole other political argument.

What about our example homeowner in Walkerville, Ed? How is Christy Hays Pickett contending with her property tax bill?

O’BRIEN: For one, Hays Pickett’s been a touring musician for most of her adult life and until recently was cutting back on those dates. She tells me she’s again picking up more gigs to help cover these costs. What’s more, she can’t imagine how people on fixed incomes - older adults for example - are making ends meet these days.

HAYS PICKETT: “It seems that there's just an unfair amount of burden on the general population of Montana. And I hope that that's looked at and restructured.” 

AMESTOY: Well, I do have a small bit of good news for Hays Pickett : the big players in the property tax game generally agree action is needed. And, we’re likely to see some proposals in the coming year, before the Legislature meets again in 2025.

Long story short — this is not a problem with a quick fix. Whatever answers our local and state leaders come up with, remember — they’ll all need to be rowing in the same direction if they intend to go anywhere at all.

Copyright 2024 Montana Public Radio. To see more, visit Montana Public Radio.

Austin Amestoy
Edward F. O'Brien