Local protests against reappraisals have grown louder in recent weeks, while the way in which the formula for deciding these disputed property taxes came to be is all but forgotten. Every six years, Montana’s citizen Legislature is charged with coming up with a plan that determines how much the state collects from its citizens owning land. Here’s what happened in 2009:
In March, when there was still plenty of time left in the session to iron out any potential differences, the House-Senate Joint Select Committee on Property Reappraisal approved a bill championed by Rep. Mike Jopek, a Whitefish Democrat. On paper, it aimed to mitigate property increases by strengthening programs that would help keep those with skyrocketing values in their homes.
Not everyone thought the budget could support Jopek’s bill, mainly Republicans in the Senate. That may have been the case, but an alternative failed to emerge as the end of April and the session’s adjournment approached.
It had been estimated that property values statewide had increased 55 percent on average, while in the Flathead the figure was much higher, at 73 percent. Jopek protested loudly as his legislation, House Bill 658, was stripped of funding for programs that he argued would lessen the impact of high reappraisals.
“It’s bad for all high-growth counties,” he said, before eventually voting against it.
On the last day of the session, the Democratic-led House and Republican-led Senate passed a reappraisal formula that was essentially unchanged from previous years. It was estimated that property taxes were expected to increase, on average, by 7 percent over the next six years. But when some Flathead homeowners began receiving their bills, the results were staggering.
One Whitefish couple on a fixed income who inherited a lakefront home saw the value of it, pegged at $374,654 in 2002, rise to $1.8 million in 2008. Their taxes were expected to increase to $13,000 annually by 2014. The numbers mean they can no longer afford to live there.
Reports out of a recent meeting on reappraisals hosted by lawmakers in Bigfork indicate the increases are widespread. But whether politicians will be able to find a remedy to appease taxpayers is unclear. What’s apparent is that legislators agreed to pass a bill that many of them didn’t fully understand.
Clearly, the math behind property reappraisals is complex. But I doubt the Department of Revenue is maliciously charging higher property taxes than the Legislature intended, as has been alleged. While the Northwest Montana Association of Realtors has called for a special session to address “current inadequacies” in the reappraisal process, not long ago a lobbyist for realtors statewide called it a “pretty darn good bill.”
Gov. Brian Schweitzer said he won’t call a special session and has blamed Republicans for passing a bad bill.
“These people on the Senate Taxation Committee – they didn’t listen to anybody last time,” Schweitzer said. “Why would we expect that they would come back and do anything different?”
The governor may be playing politics, but he certainly has the upper hand in this argument.
To be sure, not everyone thinks the reappraisal process is catastrophic. Montana Department of Revenue Director Dan Bucks says the process is working. And the vast majority of Montanans won’t see a major change in the amount of taxes they pay. But those who do, and are outraged, should direct their anger at the appropriate party.
It’s not the governor, nor the DOR’s fault. It’s a bipartisan group of 94 legislators in the House and Senate who signed off on a bill that is raising taxes more than they said, or thought, it would.
And while interim committees may scrutinize the issue in high-growth counties next year, nothing concrete is going to be done about the tax increases until the next Legislature, in 2011.