Montana property-tax panelists: State in a ‘tax revolt’
Keila Spzaller
(Daily Montanan) If people don’t pay their property taxes, the delinquency can result in a lien, and Missoula County Clerk and Recorder Tyler Gernant said he’s worried about more tax liens this year.
“My biggest concern is people are going to not know that their taxes aren’t fully paid,” Gernant said after a panel meeting Monday about residential property taxes.
Property taxpayers already paid a significant chunk, he said, but this year, in most counties in Montana, they’ll get a second bill. Gernant said some people may believe they’ve already settled their bill, and snowbirds might not see their bills until May.
“People with a mortgage won’t notice for the most part, but it will be really unusual for those without a mortgage that escrows their taxes,” Gernant said.
Monday, Gernant, with Missoula County, and representatives of the Montana Association of Counties and the Montana Quality Education Coalition, presented at City Club Missoula to nearly 117 people on one question: “Why are my property taxes so high?”
City Club Missoula is a forum for civic engagement on vital community issues, and it’s at least the second time since August 2023 the organization has focused on increases in property taxes.
(At one point during the presentation, Gernant asked people to raise their hands if their property tax bills had gone down, and one person visible from the back of the room raised his hand and said taxes on his business had gone down. Gernant said not everyone’s taxes are shooting up, but the residential payers who see a decrease are rare “unicorns.”)
Eric Bryson, with the Montana Association of Counties, said the state is essentially in the middle of a “tax revolt,” and a legislative fix is needed. One of the problems for counties is that they can only raise taxes by half the rate of inflation over the previous three years.
“So it’s an artificial choking of local government,” Bryson said.
He said counties can’t even keep pace with inflation unless they’re a growing community. Gernant, however, said counties chase growth, but that isn’t a solution either because growth doesn’t pay for itself; rather, new houses require new fire trucks and police and roads.
Prior to the 2023 legislative session, the Department of Revenue warned that reappraisals for residential property taxpayers were going up — some 46% on average, the Governor’s Office later said — and the legislature could drop the tax rate to mitigate increases on property tax bills.
But the legislature didn’t do so, and for many people, property taxes went up too. Most counties in Montana tried to counterbalance the increases by levying fewer mills — a mill is a taxing rate, the amount payable per dollar of assessed value. But lawsuits ensued, and the Montana Supreme Court said counties needed to levy the full amount on behalf of the state, the 95 mills meant to even out funding among school districts.
The State of Montana and the Montana Quality Education Coalition had argued levying fewer mills would hurt schools. Counties said the state would still collect more at the lower rate because of higher values — and pointed to the $2 billion surplus in the state budget during the session.
At the panel Monday, Bryson said MACo wasn’t intending to hurt schools in going to court, but it was questioning how tax policy doesn’t allow counties to take advantage of increased appraisal values. He said the state has excess money, but “schools are starving.”
“We need to have a different conversation policy-wise about how we prioritize school funding and why we do it on the backs of the local property taxpayers,” Bryson said.
During questions, one parent said her child’s public school was losing an art teacher due to budget cuts. Another parent said behavioral issues are having a significant impact on schools, but behavioral interventionists are being cut as well.
“This is a safety issue for our teachers,” said Sam Schmidt, a parent of two public school students in Missoula County.
Gernant said the argument about taxes needs to be reframed in a couple of ways. For one thing, he said, the roughly $80 million parties were arguing about for schools was just a fraction of the $2 billion surplus that was available.
“Around 4% of that giant budget surplus is what we’re having this huge argument over,” Gernant said. “Maybe we should be having the argument about how we spend the other part of that money to alleviate property tax burden.”
He also said decision-makers have focused on Montana’s ranking when it comes to its property tax burden in relation to market value of homes — and Montana ranks low, around 17th in the nation.
“The problem is that our property taxes as a ratio of our income is actually pretty bad. We’re 37th in the nation,” Gernant said.
He shared additional information after the presentation, such as his concern about the possibility of more liens this year, and also the effects he’s seeing and talking about with taxpayers.
For example, he said, one program that has protected lower income people exempts a portion of taxes for homes worth $200,000, but “you can’t get a $200,000 home in Missoula.” As a result, he said, one man’s tax bill went from $400 to $1,200 in just one year because he had to suddenly pay 100% of the bill with no exemption.
He said the ceiling on that exemption is increasing in the future from $200,000 to $350,000, but in the meantime, some people, like the man now paying triple the amount he paid before, are seeing enormous bills.
“He lives on Social Security, so it is a really big burden for him,” Gernant said.
Doug Reisig, with the Montana Quality Education Coalition, said the 95 mills help evenly spread property taxes around the state to ensure that public school children are provided a quality education, as the Montana Constitution ensures.
He said schools across Montana are grappling with how to handle budget crunches, and Montanans may see safety levies as a result.
Reisig also said public schools have received criticism that they poorly managed federal Covid-19 money, which were temporary funds. However, he said he is unapologetic about the spending because it was used to help children who desperately needed it, including ones who had learning loss and mental health issues.
Reisig also commended Gov. Greg Gianforte for convening a property tax task force to look at alternatives, and he said he hopes the group will be able to submit a good recommendation to the legislature given high taxes: “I look at my tax bill, and it is high.”