The constitution of the state of Montana is something I hold in great reverence. My grandfather was one of the 100 delegates to the 1972 Constitutional Convention that crafted Montana’s guiding document. Those 100 citizens, forever leaders in our state’s history, wrote a constitution which is highly respected throughout the nation as a model of self-governance.
Recently it has been proposed that voters amend our constitution to place hyper-specific restrictions on property taxes, forever limiting the state legislature’s ability to provide meaningful tax relief. There is no doubt that Montana’s tax system is broken and over-reliant on property taxes but attempting to “fix” it with CI-121 will do nothing to solve these problems and will shift the tax burden from residential to commercial and agricultural property owners, from urban areas to rural, and from those who need help the least to young families and first-time homebuyers.
Proponents of CI-121, modeled after California’s historically detrimental Proposition 13, are attempting to frame this as property tax relief. The truth is, the wealthiest homeowners in Montana will experience the most tax relief while many Montanans, especially those living in rural areas bordering urban population centers, will likely see their tax burden increase rapidly. This is because our property taxes are not determined by one entity, but rather a combination of city, county, school, voter approved bonds, and University mills.
The constitution is not the place to codify these nuances or sort out who or what gets priority, and CI-121 doesn’t appear to even contemplate how the system will be impacted. Even if C-121 was not fatally flawed, it would still be a bad idea. As time goes by, first time home buyers and young families will carry far more than their fair share of the tax burden. A system where those who own residential properties longer pay less than their new neighbors will magnify Montana’s already glaring housing shortage by discouraging resales and housing market churn. This will penalize seniors who choose to downsize to single level homes, forcing decisions between their artificially low tax bill on their current house and a higher tax bill on the house that fits their needs.
Montana aspires to keep our best and brightest here, and in fact, our Governor is actively recruiting former Montanans to come back home and work in our great state. But why would young Montanans want to stay or return to a place that is intentionally expecting them to happily pay more taxes than their neighbor simply because they are new homeowners?
In California, data has shown that Proposition 13 led to tax increases in every other form including income taxes and sales taxes. Montana has been proudly sales tax free, but it is naïve to think limiting property taxes won’t bring tremendous pressure for school and local government revenue from other sources. If we allow our constitution to be amended for this tax rule, what is to stop a well-organized pro-sales tax group from doing the same thing?
The sponsors of this initiative claim it will not impact safety services such as police and fire, or education. The simple truth is that there is no way it won’t. Police and fire salaries and supporting services make up over 50% of most city budgets, and teacher salaries make up well over 50% of most school district budgets. If their revenues are cut, county commissions, city councils, and school boards will have no other option but to make cuts that will impact police officers, fire fighters, and teachers. At best it is naïve to suggest otherwise, and frankly, it is misleading.
What else can we do? The legislature is studying property tax relief options during the interim session. There are many ideas geared towards keeping seniors and low-income residents in their homes, including property tax circuit breakers that can cap property taxes based on a person’s ability to pay. Or the Legislature can stop kicking the can down the road and truly reform Montana’s tax system.
One thing is for certain, once we change the constitution, it is nearly impossible to undo it. CI-121 is bad for Montana. Please decline to sign any petitions to place CI-121 on the ballot.