We need to fix the property taxes

I’m a lawyer and interested in politics. Fortunately, I’ve been able to stay out of Montana tax law for my career, except at a very high level. Is the tax fair? Does it hurt or help those who can least afford to pay? That’s what most democrats ask.

This changed when I, like all other Montana homeowners, got my reappraisal notice from Gov. Greg Gianforte’s Department of Revenue and learned my property values had skyrocketed.

That, itself, wasn’t news to me, as I watched property sales go out the roof post-pandemic, when out-of-state folks with hefty incomes swooped into Montana and bought homes. Heck, they paid cash for these homes, and at prices well over the asking price!

But what did this mean for my property taxes? I didn’t know.

So like other homeowners, I began paying attention. And I’m reeling!  

Here are some basics I’ve recently learned about what the increase in property values means in real tax dollars to me and other homeowners:

1. Homeowner property taxes fund both state and local governments.

2. The Montana Department of Revenue told the governor and Legislature — in November 2022 — how to change the statutory formula so increase in home values would not lead to an increase in homeowners’ taxes. That’s called “revenue neutrality,” necessary when market values go up, to ensure property taxes don’t go up, also.

3. But they failed to act. So, because home values went up and the Legislature didn’t fix the statutory formula, Montana homeowners statewide will be paying $81 million/year in new taxes to state coffers! Forever, absent a legislative fix. This, despite the fact Montana had a $2.6 billion surplus going into the session!

4. In fact, Gov. Gianforte knew this would happen. He took the $81 million/year of new revenue, paid for by Montana homeowners, and put it into his budget to spend.

5. It’s not too late to fix this problem borne by Montana homeowners.

6. The governor can call the Legislature into a special session for one day, to pass one bill, that amends one statute, by changing one formula. The result will save homeowners $81 million/year in new taxes they’ll otherwise have to pay to the state. An increase that will last forever unless changed by statute.

7. Changing the law has another, less obvious, benefit to homeowners. On the local side, Montana law caps property taxes to half the rate of inflation. Because of the increase in the market value of homes, and because local government revenue is fixed, without a legislative fix, homeowners’ property taxes to local governments will go up, while property taxes paid by large corporations and commercial property owners will go down! Yes, absent a statutory fix, homeowners are paying more, while big corporations are getting relief. This, too, continues forever absent a legislative fix. The same fix the governor’s Department of Revenue advised had to be made, back in November 2022.

If the majority party were working for Montana homeowners, they would act now. Instead, they are falling back on temporary property tax rebates. Rebates IF you apply during a six-week window. If you find the application online. If you call and ask to be mailed the state form. If … if … if.

We need a permanent fix now. Montana homeowners shouldn’t have to pay $81 million/year in new property taxes to the state now and into the future.

And don’t forget in November 2024, elections matter! Next we know, they’ll try to pass a sales tax and blame it on homeowners’ property tax increases. When they could change the statutory formula now!

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Ann Brodsky has owned homes in Helena since 1980 and has lived in her current home since 1998. She served as Gov. Brian Schweitzer’s chief legal counsel from 2005-2012 and helped him draft two calls for a Special Session of the Legislature, including his call for a two-day session in 2005 to bring Montana’s school funding formula in compliance with the Montana Constitution. Before attending University of Montana law school, she worked five years for the Legislature as a bill drafter and researcher.