HELENA — In the wake of escalating real-estate values in much of Montana, a former state lawmaker is proposing a constitutional initiative to create an “acquisition-value” property tax system – which would prevent big property-tax increases as long as one maintains ownership of the home or business.
The measure also would cap property taxes at 1% of a property’s 2019 assessed value or current market value once it’s sold.
Property taxes could increase because of higher property values only when the property is sold, under the initiative proposed by attorney Matthew Monforton of Bozeman.
“There’s been an unprecedented surge of out-of-state money driving up property values, and therefore driving up property taxes for Montana residents,” Monforton told MTN News Monday.
Monforton also said Republican state Auditor Troy Downing will be co-sponsoring the effort to get the measure on the 2022 ballot and pass it.
They submitted a revised initiative proposal on Monday to state officials for review.
Downing has been committed to the idea of revising the state property-tax system for some time, said his spokesman, Sam Loveridge.
Once wording of the petition is approved, Monforton and supporters will have until next spring to get enough signatures to place the issue before voters in November 2022. They would need the signatures of at least 60,357 registered voters and at least 10 percent of the voters in at least 40 state House districts.
Under current law, the state Revenue Department reappraises all residential and commercial real property every two years, adjusting it to market value. The next reappraisal is scheduled for 2023.
If the value of one’s property greatly increases under the current system, property taxes on that property can increase as well – although state law does limit local governments on how much of that windfall they can collect, through mill levies.
Monforton said the current state constitution doesn’t allow an acquisition-value system because it requires that all property-value assessments and valuations be “equalized.”
Installing an acquisition-value system means people who have lived in the same house for many years would not be subjected to dramatically increasing property taxes, just because the market value of their property increase, he said.
“This is an issue that cuts across party lines,” Monforton said. “Both Democratic and Republican homeowners in Montana are equally and understandably outraged by the kind of property-tax spikes we’re seeing. This is an idea that will sell itself.”
The system also could help moderate rent increases in fast-growing areas, because higher property taxes on rental property are passed on to renters, he added.
And, Monforton said the proposal would encourage “neighborhood stability,” because people who’ve lived there for years would be rewarded for staying, through lower property taxes.
“Out-of-state investors should not be entitled to the same tax breaks that Montana residents who have built up those neighborhoods are entitled to,” he said.