Taxpayer Revolution for Property Tax Reform

By Beacon Staff

The time is nigh for the people of Montana to demand a permanent property tax system that is simple to understand, equitable for all, and provides predictable revenue from residential, commercial and agriculture property owners. Our Legislature should put an end to the reappraisal panic every six years, the inequities of phase-in and our method of “mitigating” the impact of abnormal market value increases. We need a full reappraisal no later than 2012 to avoid over taxing Class 3 and 4 property owners.

Montana Residents for Fair Property Taxation (MRFPT), based on eight years of trying to work within the Legislative system and proposing another state’s proven approach, has lost confidence that our Legislature will do anything meaningful to reform property tax and will continue with the current law. Our governor has distanced himself from the reappraisal problem and has shown no interest or compassion for our plight in this economy.

Our present property tax system or law has failed. This economic recession is not the time to increase taxes for anyone from reappraisal. Montana, however, increases the tax liability for every property with market value increase above the statewide average just to offset the amount of decrease for owners below the average. Not one dollar goes to increase state 101 mill revenue or county/city/district operations; only the tax burden shifts to the areas of largest growth. The mitigation solution also creates a separate class of owners called “outliers” whose increases are very large and not affordable for the average Montana resident.

Phase-in of market value increases over six years in arrears is not in compliance to the Montana Constitution requirement for “Equalization of Value.” Phase-in of decreased taxable value causes the owner to pay more tax than he would without phase-in; also a violation of the constitution.

The Legislature has shown some understanding or compassion. Owners with income less than $75,000 can limit property tax increases to 6 percent per year. The irony of this is the state county and cities/districts increase the taxes of residential, commercial and agriculture owners without the limit to make up the loss of revenue. In my opinion, this is unconscionable. The concept of fair and equal treatment has been ignored, but if you consider that this exemption with its cost is not necessary if Montana would just come into the 21st century.

Here is our travesty in the making: 1. Most, if not all, Flathead Valley residents believe their market values from the 2008 reappraisal are overstated as much as 25 to 45 percent. (These numbers are validated by comparing adjustments given to people who appealed their reappraisal.) 2. Many owners of property, some for several generations, cannot afford the assessment increase and will be forced to sell their homes. 3. There are very few buyers or sales in the valley and no one is able to sell for the reappraised value, so property values are falling rapidly and the current market value is not being updated. 4. Every property owner is paying more tax than he would if the property had been properly appraised in 2008 and reappraised again in 2012 and 2014. 5. Montanans who would like to buy in the valley cannot because the values/prices are too high. 6. If we wait until 2014 to reappraise, the decrease in tax base will be very large and cause increases in tax as a percent of market value (mills), which means owners that had decreases 2008-2014 will pay more tax.

What can we do to protect our way of life? MRFPT believes the only way we can get this Administration and Legislature to reform property taxes is to overturn HB 658, the current law, in court. We intend to file suit during the 2011 Session.

We will have a bill sponsored by Flathead Valley legislators that could solve our problems, but we doubt there will be serious consideration unless the governor intervenes with the Legislature and the Department of Revenue. Our feeling is that the majority of the legislators of both parties do not care about the high growth areas. You could contact every legislator and the governor and plead for them to do the right thing.

Dud Mahler lives in Whitefish.

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