Billings legislator files suit, alleges state overtaxing by $80M
BILLINGS (KPAX) — A Republican state senator from Laurel is explaining why he's suing the state of Montana over tax bills.
State Sen. Brad Molnar, R-Laurel, filed a complaint against the Department of Revenue (DOR) in Yellowstone County District Court on Tuesday.
He said the state is charging some taxes that go above the limit and the law allows local governments to do that, but not the state government.
Molnar invited other elected state and local officials to a news conference on Wednesday, Sept. 27, 2023, on the Yellowstone County Courthouse lawn.
Only news outlets showed up, but Molnar is adamant about the need to pay attention to this conversation.
"This is the first real pushback over taxation of rank and file property owners," Molnar said about the lawsuit.
Molnar alleges the agency is misinterpreting state law and in doing so, is overcharging Montana property owners on their tax bills to the tune of at least $80 million.
"This should be a nonpartisan issue," said Matthew Monforton, Molnar's attorney. "Every Montanan and Democrat, Republican, Libertarian, Independent should be for the rule of law, especially when it comes to the imposition of taxes.":
Monforton is also a former state representative, serving one term in 2015.
In the suit, he says Montana is limited to charging no more than one-half the rate of inflation for the prior three years and states Montana has incorrectly interpreted the law since 1989, by allowing itself to bank unused mills, the rate at which property is taxed, to apply in the future when needs arise.
"At issue, Department of Revenue shows that with statutory caps, the mill should be a little under 78," said Molnar.
He adds that the suit will not impact schools because the legislature is constitutionally bound to fund education.
In 1999, the legislature put a cap on the number of mills, which limited property tax increases. Then in 2001, the legislature passed an act allowing a local government entity to carry forward mills to a subsequent tax year.
The suit states that because the DPR has no authority to impose mills, it has no authority to bank mills.
MTN reached out to the governor's office and the DOR for a reaction to the lawsuit. Neither would comment but Gov. Greg Gianforte, R-Mont., did recently discuss the issue on a statewide radio talk show.
"We don't have an option," Gianforte told Voices Of Montana host Tom Schultz on Sept. 12. "This was implemented in statute. The 95 mils was established by the court 30 years ago, enacted by the legislation. It has not changed in 30 years. This is how we fund our public schools. We can't defund our public schools.
In addition to the lawsuit, Montforton also proposed a ballot initiative to cap property taxes at 1% of their assessed value. The Montana Supreme Court Tuesday sided with the State's Attorney General and blocked that initiative.
Monforton said he will rewrite that initiative and resubmit it to the state.