In tax year 2006, the property taxes collected throughout Montana surpassed $1 billion. By tax year 2016, property tax collections exceeded $1.5 billion.
Today the property taxes paid by homeowners and small businesses is nearing $1 billion and account for nearly two-thirds of all statewide property taxes.
Fifty million acres of Montana’s agricultural lands contribute less than 5 percent of total statewide property taxes while nearly 4 million acres of forestlands contribute less than 0.2 percent.
Homes and small businesses are market appraised while forestland and agriculture is taxed based on land production. Most homeowners will indicate that their property values and their property taxes have grown over the decades.
The Flathead is witnessing another boom construction cycle. New construction in places like Kalispell nearly hit $130 million last year. Property valuations have increased noticeably over the past few years.
Missoula built $250 million worth of construction last year with economic analysts projecting another $500 million worth of commercial projects over the next few years.
The last Legislature’s reforms reappraise farms, commercial and residential properties throughout Montana every two years versus the traditional six-year cycle.
For growth areas like Northwestern Montana that means higher property valuations and higher taxes unless the Legislature enacts a fix for this November.
Sen. Keith Regier introduced a familiar approach, a bill that caps the tax valuation of land at 75 percent of the value of the dwelling on the property.
State fiscal analysts predict that Regier’s bill would affect over 27,000 properties with a combined market value of over $3 billion. The proposal cuts state property tax revenues from $1.5 million to $1.9 million annually. Loss of state revenue is from the 95 mills for equalizing education plus the 6 mills levied for university.
Statewide, total market value for residential land and improvements are more than $89 billion, that’s fortunately grown three-fold from $28 billion the decade prior.
Using Regier’s approach local property tax reductions, some four-fold of state revenue losses are shifted to the other 15 classes of property in the local taxing jurisdictions. That’s mostly homeowners as local taxing jurisdictions levy mills equally.
I am among many locals living in the growth areas of our state, who support policy that caps property taxes to inflationary adjustments for people living in their homes.
This is a fast-growing region of our state. The Flathead tops the state in residential valuations and represents 15 percent of total statewide home values.
The chairman of the Montana Republican Party is carrying House Bill 29, which significantly increases property taxes on the smallest Montana farmers, orchards, and vineyards by stripping the land of its agricultural classification.
Rep. Zac Perry introduced a bill expanding the local property tax abatement offered to new and expanding industry from 50 percent to 75 percent.
Perry’s bill offers a five-year abatement phase out until properties return to full market valuation.
Sen. Dee Brown has a bed tax bill for short-term vacation rentals like Airbnb and VRBO. Brown’s approach applies the statewide accommodations tax onto the emerging vacation rentals created by homeowners, offering rooms or apartments to tourists, to help pay the mortgage.
Construction is visibly on the uptick in many parts of Montana while natural resource development is projected to increase dramatically according to Republicans who now control the presidency, Congress, and most state Legislatures.
With coal and oil headed back toward boom cycles, state revenues are headed toward a possible uptick. Maybe. Who knows? It’s a very political Legislature that establishes statewide revenue projections and determines budget surpluses.
With any luck lawmakers will assist people living in their homes with a cap on property taxes. Hopefully policymakers allow the smallest of Montana farmers to keep the hard earned productive valuation that’s currently offered by law.