Don't put CI-121 on the ballot

For the last 100 years the Montana Taxpayers Association has served as Montana’s most trusted resource for nonpartisan tax and government spending information. One of the promises of our mission is to encourage equitable solutions, in issues of taxation, that benefit all Montana taxpayers.

As the executive director of MONTAX, I feel it is important to state that our organization believes that CI-121 — a constitutional initiative masquerading as a “cap on property taxes” — does NOT fit that mission. In fact, CI-121 would create tremendous inequity in our property tax system and pit taxpayer against taxpayer and local government against local government.

We ask Montanans not to sign petitions to place CI-121 on the ballot in November.

Proponents of this initiative are claiming that it will limit residential property taxes to the benefit of homeowners. What it really does is reduce the ability of local governments and schools to maintain current levels of service. It is also likely it will cause significant tax shifts to residential properties outside high tax cities and to non-residential properties.

Here are the facts:

• Residential property owners already pay one of the lowest effective tax rates of all property classes in Montana.

Most services funded by property taxes benefit mainly residential property owners.

Decreasing the amount of taxes residential property owners pay will likely lead to an even larger property tax burden on our small businesses and agriculture properties.

• Residential property owners in high-tax cities, and owners of multi-million-dollar properties, will be the main beneficiaries of CI-121.

• CI-121 would amend the Montana Constitution and implement practically irreversible changes in the property tax system.

• CI-121 would hurt families buying their first homes and seniors trying to downsize. When the “protected” properties change hands or are significantly improved, the meaning of which is yet to be determined, they would immediately jump to current market value skyrocketing costs for unsuspecting owners.

• Unless granted by the Legislature, there will be no protection for renters and taxes on rental properties could increase.

This initiative would not only create divisions between Montanans, but it would also generate massive problems and confusion for local governments and schools as they race to acquire the last available tax dollar before the constitutional tax cap is reached.

No one will know which properties are protected by CI-121 until after the initiative is in place and the Legislature defines “Residential Property.” To make matters worse, property owners whose taxes have been capped can still vote for mill levy increases and bond issues – even though they will not have to pay them.

If passed, the state, local governments, and schools could lose over $150 million in current funding. Faced with that significant revenue shortfall, the Legislature will likely allow that lost revenue to be shifted to other properties such as commercial properties and agricultural land. The initiative promises to “roll back” residential properties to their 2019 values, which will place them four years behind those properties not designated residential and all other classes of property.

This will exacerbate the unfair tax discrepancies that already exist between the different classes of property.

Finally, identical homes could be taxed at different levels based on arbitrary reasons such as when the home was purchased or if the owner made “major improvements.” The Department of Revenue will also have to constantly reassess values of residential properties to be able to assign accurate values when ownership changes or improvements are made.

We agree that our tax system needs to be updated but CI-121 is not the answer. It is ill-conceived and offers false hope to many homeowners.

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Bob Story is executive director of Montana Taxpayers Association