A Push For Property Tax Reform

By Beacon Staff

After a heated ‘07 legislative session, our elected representatives saw fit to return $400 to homeowners as a form of “property tax relief.” In a year in which we (Montana) anticipated a $1.4 billion surplus, this so-called “property tax relief” amounted to less than $400 million, or less than 29 percent of the total surplus. The balance ($1 billion) was spent.

Property tax reappraisals occur every seven years. The next cycle for property reappraisals starts in 2009. Property will be reappraised and tax liability will be adjusted. If, for example, you own a house in a high growth area such as Flathead County, and the value of your home has increased, the reappraisal will reflect that change. In some cases, property values have doubled (or more) in these areas. For these property owners, your property tax liability will also double. Any increases in tax liability will be phased in over the course of that tax cycle. As an example, a property in a high growth area in which the value has doubled, and the current annual property tax liability is $1,000, your property tax will increase by $142 annually. In seven years you will be paying $2,000 in property taxes. If additional local mill levies are voted on and passed, or the state or local government increases its mill, your tax bill will increase even more dramatically.

Our governor has promised he will support some form of property tax reform in the next legislative session. However, the last legislative session failed to control spending, instead increasing it substantially (23 percent). This increased spending was led (at least partially) by our governor. Is it reasonable to believe our governor and Legislature will control themselves with our money during the next session?

An outline of a proposed initiative to limit property tax increases was sent to every Montana lawmaker and the governor via e-mail last May. Few bothered to respond, and fewer yet expressed any interest. However, with an election year coming, tax reform/reduction is always popular with voters so statements from the governor’s office regarding tax reform should not come as a surprise. This proposed initiative is moving forward. A copy was sent to the Montana secretary of state and is now under review at the office of the Legislative Services Division. This is part of the process for any legal petition for initiative before signatures can be collected.

The amendment limiting residential property tax increases, as written, will protect and ensure tax increases for owner occupied homes are kept to a minimum (1.5 percent per year). It ties a reappraisal to the selling price and at the same time guards against an unscrupulous buyer and seller from reporting a fictional (low) selling price. It will tie the growth of local and state government to the growth of the tax base. As a Montana county or city grows, and homes and business are built, the budget will increase proportionally. It will encourage local and state government to promote growth and protect private property rights since any diminished property value will also diminish their budget. It will encourage local and state government (including school boards) to be more inventive in fundraising efforts for special projects without solely relying on taxpayers. I should add a note of caution here. Traditionally, if one form of taxation is limited, another is formed to substitute (sales tax).

Undoubtedly, there will be stiff opposition to this initiative from organizations within and outside the state. There is no budget for distribution, to gather signatures, collect petitions or advertise. But as one determined taxpayer, I consider it’s worth some effort. This is not a one-man effort. We will need help. Once the petition is approved, it will be posted to a Web site with hopes that the word will spread throughout the state. The petition, in its final form, could then be downloaded and printed. Anyone wishing too, should talk to friends, neighbors and relatives in Montana, collect signatures and or, support. We will need signatures from 20 percent of registered voters (45,000 total) in every voting district before this initiative will appear on the ballot (general election ’08). The deadline for a petition initiative will fall in June. I may be fantasizing, but Montanans are tough and smart, I believe we can overcome an expensive campaign against this initiative by word of mouth, without spending much money or time from each of us. For questions, or comments, e-mail [email protected]

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