Montana Viewpoint: Don’t be dupped by state tax bill, rebates
(A French finance minister of long ago compared collecting taxes to plucking a live goose. The object was to get the greatest amount of feathers with the least amount of hiss. Dogs growl, geese hiss.)
Because of the biennial reappraisal of residential property, most Montanans are faced with huge increases in the values of their homes and the Montana Department of Revenue has done its best to get our attention.
They got our attention by sending us a bill. Well, not actually a bill, they sent us an estimate of what our 2023 Property tax bills would be. In most cases, home values went up dramatically and the Department of Revenue has made sure that we are paying attention by grossly overestimating our 2023 taxes.
That constituted a grave political error. They had neglected to say that the local mill levies would have to be adjusted downwards because the home values went upwards. That is, local taxing jurisdictions could not increase their incomes by more than half of the average rate of inflation for the last three years (which looks like it is about 5.5%) so they will have to lower the mills to follow the law.
What the Department of Revenue had done, as a helpful example, was to show what our taxes would be if the current mills for 2022 were applied to our newly appraised values. That’s where the huge, but hypothetical tax increase came from.
So, the bill would not be nearly as high as in the helpful example. What a relief!
The Department’s helpful explanation did not address an important part of the question; there are mills levied by the state, too (95 mills for K-12 education and 6 mills for the University System).
The state mills account for about 20% of a typical homeowner’s tax bill and these mills would NOT be adjusted. And why not, we might ask, and the answer would be, who knows? There was plenty of opportunity. There was even a new tax rate calculation offered by the Department of Revenue to make it revenue neutral and bring in the same amount as in the previous year.
The Legislature has always changed the rate after an appraisal cycle, but not this time. The Republican controlled Legislature was having none of it and as a result, the state will see an $81 million increase in revenue from homeowners. Renters, too, because landlords pass through tax expenses to the renter.
Let me pause a moment for the dull part, how homeowner’s taxes are calculated. Or not, because it takes a lot of words and is confusing. You’ll just have to look it up here and scroll down for the explanation.
But wait, there’s more! In its willingness to trip all over itself politically the Legislature offers a $500 property tax rebate to bona fide Montana homeowners for the next two years. It could have been just one check for $1000 in 2023, but then we wouldn’t get a second check with the Governor’s name on it just before the 2024 election. Unlike the income tax rebate, we have to apply for this one, and since not everyone will, there will still be a monetary windfall to the state. Of course, if you are merely a renter, you can’t apply for it.
Maybe this is something that Governor Gianforte’s task force on housing should look at because it does seem kind of contradictory to try to make housing more affordable by raising taxes on it.
Well, the Department did itself proud on damage control, they had some 60 meeting across Montana to explain and defuse the situation, including meetings in counties that saw very low increases in home values such as Richland (up 6%), Roosevelt (up 3%), and McCone (up 1%) as well as counties where valuations increased as much as 64% (Meagher County).
Meetings were also held in most counties in Western Montana except for Sanders County which is the home of the powerful House Taxation Committee’s Chairman Paul Fielder. There, the appraisal rate went up 48%.
Montana Viewpoint has appeared in weekly and online newspapers across Montana for over 25 years. Jim Elliott served sixteen years in the Montana Legislature as a state representative and state senator. He lives on his ranch in Trout Creek.