Property Tax Solutions Are Emerging

By Beacon Staff

Republican legislators have sponsored five and attended seven public forums on property taxes and have had numerous meetings with property owners during the last four months. The present property tax process is unacceptable. It is neither predictable nor stable. No one should be taxed out of their home.

Property taxes affect all of us – owners and renters. Voted levies and appraisals both increase property taxes. Some people think that levies do not affect them because they rent rather than own. They have not made the connection between an increase in property taxes and their subsequent increase in rent.

Every six years properties are appraised. The Montana Constitution, since 1972, requires that property taxes be based on market value, which greatly limits the options available to legislators and the Department of Revenue as they work through the process and come up with the final property appraisals. Some legislators don’t read the Montana Constitution, or have the financial or statistical background to understand the math to develop an appraisal bill. Therefore they waste time on unconstitutional options.

Local Republican legislators are working on a bill to change the Montana Constitution to allow better options to develop a property tax process that is fair. This takes a two-third majority vote in the Legislature. Another idea is to switch statewide school mills to another source for funds, which would remove $210 million off the backs of property owners each year ($21 million for Flathead County and $6.3 million for Lake County). Also, natural resource development on school trust land must be increased. Property taxes are too high.

The 2009 appraisal is very similar to the 2003 appraisal that I worked on when I was on the tax committee in the House. In 2003, the number of protested property tax parcels statewide was 7,868, while the number in 2009 is 37,029. Unlike 2003, the 2009 appraisals took place when recreational (high-end) property values were inflated by a bubble of speculation that burst in March of 2008 when the financial meltdown became evident. Over the next few months, the economy slid into a deep recession. Sales are almost nonexistent. This perfect storm has severely impacted the Department of Revenue’s ability to determine the market value of these properties, especially within its one-and-a-half-year appraisal window. Also, the 2003 site specific data that would decrease the value of property was not used in most cases and the transition to a new computer system caused major problems.

Property owners who filled out the AB-26 form are being contacted by the local Department of Revenue. Property owners who did not fill out the form have to wait until next year to do it. About 1,800 of the 7,773 protested appraisals in Flathead County have been reviewed and 600 of 2,337 in Lake County.

Property owners have the burden of proof when they go through the appraisal review process. They must understand what information is available and what research they need to do. If requested, the Department of Revenue will conduct an on-site visit and provide copies of the comparable sales and the 2003 site-specific data. Site-specific undesirable characteristics may be used to lower the appraised value. The risk in this process, especially if the property owner does not do their homework, is that the result can end in an increase in appraised value. However, most property owners do the work themselves and have been able to reduce their appraisals.

Property owners who are dissatisfied with the informal review must appeal within 30 days to the county tax appeal board. An appeal to the state tax appeal board and filing a lawsuit are additional options.

Verdell Jackson is a Republican senator from Kalispell.

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