Work still taking place, lawsuit unfolding on residential property taxes
Keila Szpaller
(Daily Montanan) Did you get skunked out of a property tax reduction?
If so, you’re an outlier, but the 2027 Montana Legislature will work to help outliers, said Rep. Llew Jones, a Conrad Republican and House Appropriations Committee chairman who pushed through property tax relief bills in 2025.
Jones pointed to seniors on set incomes as one example of those who need a fix.
In 2025, many lawmakers considered their top priority addressing skyrocketing residential property taxes, and they passed legislation that reduced bills for 80% of Montana homeowners.
But the work isn’t done.
Sen. Greg Hertz, a Polson Republican who led the Senate Taxation Committee, said many more people in Lake County — and other counties with higher property values — saw increases than projected.
For example, Department of Revenue estimates predicted 895 residential property taxpayers in Lake County would see increases, but in fact, 3,907 did. The median increase was 33%.
Hertz advocated for continued use of the homestead exemption, which benefits Montanans who live in their homes, and single rates as opposed to the tiered property tax structure.
“We need to get back to a less complicated property tax system,” Hertz said.
One bill from 2025 is tied up in a legal battle, Montanans have floated property tax ballot initiatives that are stalled, and those taxes are expected to be a topic of interest in the 2027 Montana Legislature.
Here’s an update on continued efforts to address rising residential property taxes.
Lawsuit over Senate Bill 542
Senate Bill 542 was one of a pair of bills the legislature passed to reduce residential property taxes.
But in a lawsuit, Republicans Hertz, Senate Majority Leader Tom McGillvray, and former legislator Keith Regier argue the bill is unconstitutional.
Hertz said Thursday the case is about protecting the legislative process — regardless of what anyone thinks about property tax reductions.
“The bottom line is simple: Montana’s Constitution sets rules for how laws are made,” Hertz said in an email. “We believe SB 542 violated those rules, and we’re asking the court to uphold the Constitution. If constitutional procedures can be ignored for one bill, they can be ignored for any bill.”
The group sued the state of Montana and the Department of Revenue.
In a response last week, the defendants argue the plaintiffs confuse the method of addressing high property taxes in the bill — a property valuation freeze — with its objective, “general property tax relief.”
All along, the bill was about providing property tax relief, the defendants said.
Property tax relief meant $400 rebates and significant reductions in bills for many Montanans.
Lawyer Matthew Monforton, representing the legislators who filed the complaint, said the senators are not asking for the money back.
“There’s going to be no clawback by the state government of any benefits that have been received thus far,” Monforton said. “This is strictly looking to the future in the hopes that this brazenly unconstitutional bill is struck down, and the legislature can quickly pass a constitutional and meaningful property tax bill.”
The case is pending in Gallatin County District Court.
Ballot initiatives
Three possible ballot initiatives to address property taxes are off the table.
Monforton had submitted two constitutional initiatives, but he said Thursday neither one will receive enough signatures to qualify for the ballot.
One would have limited the annual increase in valuation of a primary residence to 2% when assessing property taxes. The other would have done the same for “real property,” or land.
“It’s virtually impossible nowadays to qualify constitutional initiatives without paid signature gatherers,” Monforton said.
Last week, Sen. Wylie Galt, R-Martinsdale, announced he was suspending an effort to put a constitutional initiative on the ballot to cap local property tax increases to 2% per year per parcel.
In a statement, Galt said people were enthusiastic, but the timeframe to collect signatures was short. The cap would have applied to all classes of property, including residential.
“After feedback from businesses, public officials, and other individuals, I’m asking the ballot committee to suspend further signature gathering efforts in order to allow for a more holistic solution to be considered in the upcoming Legislative session, Galt said in a statement. “I’m more than willing to work with anyone who’s committed to achieving meaningful property tax relief.
“If substantial relief for Montanans doesn’t get done in the upcoming session, we may be back.”
Galt noted the effort would have protected schools “by excluding public school levies from the cap.”
Property taxes in the 2027 Montana Legislature
Any time the state implements a major policy change, it needs tweaks, Jones said. And he said that’s the case with property tax legislation from 2025.
“You never get it perfect,” Jones said.
For example, average seniors 65 and older are wealthier than working Montanans under 65, he said. But the 65 and older crowd isn’t homogenous.
“We do have the recognition that (for) the bottom couple deciles, depending on where you live, the property taxes could become oppressive,” Jones said.
Jones isn’t named in the lawsuit over SB 542, but he was one of the architects of the property tax bills, and his statements are quoted in the complaint.
In 2027, Jones said tax policies and assistance programs need to be fine tuned for people who are lower income and live on fixed incomes.
He said long term rentals were left out of the rebate, and mobile home parks need to be helped too.
The Montana State News Bureau reported in October 2025 that one bill mistakenly increased a tax rate for multifamily parcels for the year, with downstream impacts likely for renters.
“I’m quite confident saying the program worked well for the vast majority of people,” Jones said. “But the vast majority of people always leaves outliers.”
Now, he said, it’s time to identify those outliers and see if it’s possible to help them.
Hertz has a different perspective.
He said property tax relief passed with the idea that a certain number of people would see increases, but in some counties, including Lake and Flathead, many more residential payers got hit.
In Flathead County, the Department of Revenue estimated 3,220 residential taxpayers would see increases, but 11,074 did. The median increase there was 25%.
Hertz, who provided the data to the Daily Montanan, also said the median increase is one thing — but some people saw a 100% hike in their residential property tax bill.
He said small businesses, retailers, hotels and banks also saw significant property tax increases.
Hertz said legislators are working on bills for the 2027 session to address some of those issues, but he also said it’s challenging at the state level to treat each county similarly.
“Every county is so different when it comes to the makeup of their taxpayers,” Hertz said.
Gov. Greg Gianforte, a Republican, supported the property tax package in 2025, and a spokesperson said his focus in 2027 will be on income tax.
“The governor is proud of his work with the legislature to secure permanent property tax relief for 80% of Montana homeowners,” said Gianforte spokesperson Kaitlin Timken. “In the upcoming legislative session, Gov. Gianforte looks forward to working with legislators to secure a flat income tax.”