At the end of the month homeowners and small business owners will again pay their property taxes. The rapid market escalation brought plenty of sticker shock to many local homeowners.
Montana reappraises home property valuations every couple of years. Home tax values keep rising just like the real estate market and the Constitution requires the state “appraise, assess, and equalize the valuation” of all taxable property.
Property taxes are the second largest source of revenue for Montana, currently producing nearly eight times the income as oil and natural gas revenues statewide.
Traditionally Montana mitigated the market valuation increase due to reappraisal. The state typically collected the same amount of revenue it did the cycle prior. But Montana stopped property tax mitigation, opting to pocket any increases to spend on general fund expenditures.
Many locals went on social media after receiving this year’s tax bill. It shocked some homeowners, though lawmakers knew about the uptick last spring. Some homeowners in the Flathead indicated that their property taxes went up by $400 to $600 annually. That’s a lot.
One friend on social media wrote that five years ago her property had a tax valuation of $300,000 and today it’s at $975,000. That’s plenty of new wealth if she sells her home but also a whole lot of new taxes for just living. Any homeowner can protest state valuations.
The largest homeowner tax expense are public schools. Homeowners pay an increasing portion of all dollars going to universities, community colleges, local high schools, elementary schools, state school aid and general statewide schools.
The portion homeowners pay increases when the Legislature allocates a smaller percentage toward education funding. Local property taxpayers typically pick up the balance. That homeowner shift is old, seemingly ongoing, but accelerated in recent time.
Most of us gladly pay our fair share for public education. Education is an equalizer and everyone wants kids to get great schooling. As my elderly neighbor taught me decades ago, if it’s for the kids she’d pay.
County government accounts for around one-third of the taxes collected from rural homeowners. With ever-increasing growth and people moving into the valley we’d hope new development pays the way. Hardly.
Every year county services get more expensive as new fees and levies intend to keep people safe, healthy, and the roads and landfill in decent repair to accommodate the valley’s rapid growth.
Montana enacted a Land Value Property Tax Assistance Program to help homeowners if the value of their land is disproportionately higher than the value of their home and the land has been in their family for three decades.
Homeowners can also apply for the Property Tax Assistance Program, which helps select taxpayers by reducing the tax rate. Fixed income elderly homeowners and renters can also claim an income tax credit to abate a portion of this year’s property taxes next year.
Homeowners across the valley should anticipate that valuation increases will continue to drive property taxes higher, significantly in recreational places like the Flathead. The Legislature refused to mitigate these increases, opting to let homeowners pay extra for services.
The biggest cause of homeowner property tax increases lays within the chambers of the state Legislature. The Legislature allocates too little funding from other income streams for public education while it simultaneously refuses to mitigate the cyclical effects of property tax reappraisals.
If Montana mitigated reappraisal like it has historically done, and funded public schools appropriately like the Constitutions says it should, then homeowner property taxes would be lower.
Montana reduced taxes to entice people nationwide to move into town and voters willingly keep sending the same cast of characters back to the Legislature expecting different results. Montana should get real and keep property taxes affordable for people who live in their homes.