Montana Senate President Jeff Essmann, R-Billings, and Speaker of the House Mark Blasdel, R-Somers, worked and voted for the 2009 property tax reappraisal law. This policy established property tax mitigation policies for homes, small businesses, farmers and timberland owners.
Reappraisal interlaced property tax policy to the real estate boom years of 2002 to 2008.
Both Essmann and Blasdel are well versed in tax code having previously served as chairman of their respective chambers’ revenue committees. These leaders have many years of tax policy experience from their terms of service.
Flathead saw the highest increases in the state due to the tax policies in the 2009 property reappraisal law. The free market spiked Flathead values. But the past Legislatures solely used mitigation policies, which worked for Eastern Montana.
The city of Billings charter also has a “mill cap” provision for levying property taxes. Services in Billings grow primarily with a growth of property valuations. And as mill levies and valuations set local taxes across the state, details matter.
The 2009 Montana Legislature placed the highest obligation of paying for statewide property tax services like schools and universities onto the 2002 to 2008 growth areas of Montana.
No place grew faster than Flathead during the late 2000s. And no other community saw property valuations plummet faster due in the worldwide real estate speculation crash.
Back in 2009, Blasdel privately supported property tax caps for people who live in their homes. Neither Essmann nor Blasdel offered meaningful property tax reform last session. Their 2009 reappraisal tax policy appears permanent.
Montana could afford to abate, and backfill for education, the final phase of reappraisal given the sizeable budget surpluses left by former Gov. Brian Schweitzer. Gov. Steve Bullock’s budget now includes a $100 million refund for homeowners.
Lawmakers though appear obliged to permanently distribute property tax relief across all sectors of the tax base. It’s policy that will allocate meager savings onto homeowners who pay the vast bulk of statewide services like public education.
Of the 36,000 homeowners who requested a formal review from the last tax reappraisal, nearly one-third live in Flathead and Lake counties. Four times more homeowners asked for a revaluation in the 2009 cycle than during prior reappraisals.
The next two tax years enact the last one-third of the 2008 full property valuations phase-ins. The next two years will set homeowner tax values and tax bills to the boom-year valuations of 2008. Homeowners should expect this final phase-in to be meaningful.
This session is the last opportunity for the Montana Legislature to intervene and cap the taxes for people who live in their homes before the boom-year valuations are fully applied onto homeowners.
The Legislature is prone to inaction. Flathead homeowners may simply realize how future reappraisals see the past high-growth regions of Montana to simply stabilize in valuations, while oil boom places will suddenly spike in growth. That’s hardly a solution. But it again favors Eastern Montana.
Rep. Brian Hoven, R-Great Falls, recently sponsored a bill through the House floor to increase the income tax credit for elderly homeowners and renters up to $1,500 annually. The bill awaits revenue allocation in the House Appropriations Committee.
For a political party that has little public appetite for taxes, the state’s eastern versus western policy divide is embodied by the Legislature’s current leadership. But it’s been sometime since the Flathead held such a powerful leadership post in the Legislature.
Blasdel may yet push for a tax fix for people living in their homes. And with any luck, Essmann’s provincial style of politics will allow a solution before the last one-third of tax valuations are fully phased and permanently hit the pocket books of Flathead homeowners.