Senate Votes Down Bill to Force Revotes on Local Property Tax Levies

A bill that would have forced revotes on some currently permanent voter-authorized property tax levies was voted down on the Senate floor Tuesday, knocking down a measure that supporters had pitched as a way to give Montana residents a chance to rein in local government property taxes.

Senate Bill 204, sponsored by Sen. Greg Hertz, R-Polson, had its roots in  a recommendation from Gov. Greg Gianforte’s property tax task force, which argued that voters should have a chance to decide whether they still want to pay for previously authorized services. Even with that endorsement, however, the measure took a turbulent path through the Senate.

The bill was initially voted down 5-6 in the Senate Local Government Committee on Feb. 19, then was “blasted” onto the Senate floor for debate before failing an initial vote on a narrow 24-26 margin Feb. 27. Senators then reconsidered that defeat, endorsing an amended version of the bill on a 30-20 margin March 1 before knocking it down again 24-26 Tuesday in what would have been the final vote it needed to pass the Senate.

The Senate’s procedural rules mean the latest vote could, in theory, also be reconsidered. Asked by text message Tuesday whether that was likely, Hertz responded with a shrug emoji.

As it was originally introduced, SB 204 would have specified that local governments must hold new elections once a decade to reauthorize voter-approved mill levies for local government services such as libraries, schools and police departments. Bond measures that authorize higher property taxes to repay loans for construction projects like new schools or police stations would have been exempt.

An amendment added to the bill on the Senate floor scaled it back to exclude levies that fund education, law enforcement, fire protection and ambulance programs.

Hertz argued during the bill’s March 1 floor debate that it’s fair to give voters a periodic chance to re-evaluate their tax priorities, noting that newer residents haven’t necessarily had a chance to weigh in on votes that took place before their arrival.

“It’s just like the rest of us — we sit around our dining room tables, our businesses and we have to look at our budget. And what we did 10 years ago may not apply today, because other things become a priority,” Hertz said.

The measure has been opposed by local government leaders, who worry revotes could jeopardize previously permanent funding for programs. Even with the amendment, voter-funded services like libraries, parks departments and senior centers would have been subjected to potentially fraught revotes.

“We are going to christen a brand-new library in March,” Belgrade Mayor Russ Nelson testified during a Feb. 5 committee hearing on the bill. “If this has to be revisited, we may not be able to keep the brand-new library open for the hours we anticipate.”

The bill is one of several under consideration this session that aim to address rising property taxes by scaling back local government revenues or making it harder to raise property taxes in the future.

A sister measure also sponsored by Hertz, Senate Bill 205, would have raised the thresholds required to pass voted bonds and mill levies, adding voter turnout requirements and requiring supermajority votes for elections where voter turnout is below 50%. It failed on a 25-25 vote on the Senate floor Feb. 27.

Another bill, Senate Bill 117, would rework the state’s statutory cap on how fast cities and counties can grow property tax revenues that aren’t explicitly authorized by voters. As currently written, the statute limits city and county commissions to growing their property tax collections at half the rate of inflation, with an exception for taxes levied on new construction.

Local government leaders have long argued that statute squeezes their operations when the expenses required to operate public services increase at the full rate of inflation. In its current form, SB 117 would bump the tax cap to the full rate of inflation but scale the new construction exception back by half — a shift that, in theory, would mean new development would pick up some of the tax burden carried by existing property owners.

A fourth local government tax bill, House Bill 20, would require most new voted property tax levies to be authorized in terms of dollars instead of mills, the unit of property tax that equates to $1 in taxes for each $1,000 in a property’s taxable value.

Because mill-based taxes scale up as property values increase, HB 20 advocates argue that requiring voted levies be pegged to dollar amounts would provide taxpayers with more predictability. Local government opponents, however, have worried that change would keep levies from being able to scale appropriately with inflation or when new development adds extra strain to local services.

HB 20 passed both the House and Senate on comfortable, bipartisan margins, 63-37 and 34-16 respectively. It is currently awaiting a reconciliation vote in the House that is necessary because of an amendment added in the Senate.

This story originally appeared in the Montana Free Press, which can be found online at montanafreepress.org.