Missoula County unmoved by state lawsuit as school mill debate heats up

Martin Kidston

(Missoula Current) Missoula County on Thursday described the state's lawsuit against it involving school equalization mills as a “smoke screen” that has little to do with school funding and everything to do with padding the state's coffers.

The county will also take a deep look at the Montana Supreme Court's order that all 56 counties submit a response regarding the state's 95 school equalization mills, and why many counties are levying fewer mills than what the state believes it's entitled to.

“We have not yet had a chance to dive into the particulars of this lawsuit with the Supreme Court,” Commissioner Josh Slotnick told the Missoula Current. “What I can say regarding school funding is that our understanding, when the Legislature was in session, that those dollars were set until 2025. Those numbers are set, regardless of what happens with this dispute over the 95 mills.”

Earlier this month, Missoula County officials joined other counties across the state in levying 77.89 mills, not the 95 mills demanded by the state. That has drawn the ire of Gov. Greg Gianforte, who's office told the Daily Montanan that he “wont cut the mills, defund our public schools, harm Montana students and educators, or put the burden on hardworking Montanans.”

But Missoula County and others contend the state's 95 mills are, in fact, placing a heavy burden on Montanans by driving up property taxes in a year that saw the state's appraised value of residential properties jump by as much as 45%.

When such an increase occurs, the value of a mill goes up and, because of it, state law caps how much local governments can levy. A growing number of counties in Montana believe the state is subject to the same law and thus, the 95 mills should be equally capped.

That has resulted in the 77.89 mills levied by Missoula County and others. It also prompted the state to sue Missoula County, though other counties have done the same thing.

“Mill value is reflective of real estate value. We all know what happened to real estate this year,” Slotnick said. “We need fewer mills to get to the same dollar total because a mill is so much bigger now. We're saying that state statute says property tax dollars are subject to a mill cap. We're taking the state at its word.”

Impacts on education in dispute

That has left some education lobbies concerned, including the Montana Quality Education Coalition. The organization has asked the Montana Supreme Court to require all 56 counties to levy the full 95 state equalization mills.

In it's petition to the court, the education coalition said Montana counties have levied the 95 mills every year since 1993. Back then, the price of a home in Missoula County was around $65,000. The median price now stands at around $530,000.

The 95 mills have been pulled into the statewide argument around property taxes, which continue to rise. It's expected to be a large issue in the 2025 legislative session, but that's still 18 months away.

“This has nothing to do with school funding, but everything to do with the state getting more money. Just straight up more money,” Slotnick said of the state's position. “If the state has the full 95 mills, they'll bring in an additional $80 million. That comes right out of the pockets of homeowners and renters. I don't think the state cares where it comes from.”

The Montana Quality Education Coalition is arguing otherwise, saying a reduction in the 95 mills would reduce the Legislature's 2023 revenue estimates. It goes on to argue that the Department of Revenue said a reduction in mills from 95 to 77 will save the owner of a median-priced home “only $45 per year.”

“If (counties) are not mandated to impose the 95 mills calculated by DOR as required by the state equalization status before the Oct. 16 deadline for sending out tax bills, public schools will be irreparably harmed by a disruption in school equalization funding,” the coalition said.

Missoula County and other counties in the state disagree, saying the Legislature has already set school funding for the next two years based on a formula that includes student numbers.

“If we thought for a moment this would jeopardize those dollars, we wouldn't do it. We're super aware of how important school equalization is across the state,” said Slotnick.

He added that rural counties have the most to lose but are also pushing to levy fewer school equalization mills.

“Those are deeply rural counties,” he said. “Missoula has a robust tax base and we might be able to limp by. But if you're in rural Montana, without school equalization, you don't limp by. But those are the counties that have jumped on this. There's no way they'd jeopardize those schools.”