Property Tax Legislation Passed in 2025 Session Draws Legal Challenge
Senate Bill 542 is at the center of a new lawsuit filed by three Republican lawmakers. Should the bill be deemed unconstitutional, the governor’s office said Montana homeowners’ tax bills would “increase significantly.”
By Mariah Thomas
Two current senators and one former lawmaker filed a lawsuit in Gallatin County District Court Wednesday, aiming to overturn Senate Bill 542, one of two property tax relief bills Gov. Greg Gianforte signed into law following last spring’s legislative session.
Sen. Greg Hertz, R-Polson, Sen. Tom McGillvray, R-Billings, and former Sen. Keith Regier, R-Kalispell, filed the lawsuit over SB 542. It’s against the state, the Department of Revenue and Department of Revenue head Brendan Beatty.
The lawsuit charges that SB 542 violated the state’s constitution for two reasons. First, its purpose was altered or changed during the legislative process. And second, it violates the state constitution’s single-subject rule, which aims to protect against logrolling separate measures into the same piece of legislation.
Both Hertz and McGillvray opposed SB 542 and its companion, House Bill 231, as the laws moved through the legislative process late in the 2025 session. Regier didn’t serve in the most recent session. His son, Senate President Matt Regier, R-Kalispell, has repeatedly stood in stark opposition to the tax legislation.
Rep. Llew Jones, R-Conrad — who is mentioned extensively in the lawsuit’s text and helped craft and shepherd the property tax legislation to passage — said the filing of a lawsuit over the legislation is unsurprising to him.
“I was wondering the tact that would be taken,” Jones said in an interview with the Beacon Wednesday.
The lawsuit’s text charges that SB 542 initially proposed a valuation freeze, aiming to prevent property values from increasing across the board. But as the session came to a close, the bill expanded from a three-page document to more than 40.
In its final version, the legislation had three parts. It established tiered tax rates for homes, small businesses, farms and ranches; offered state funds as a contingency, should cities with charters in conflict with the law, like Billings, see lawsuits over reduced tax rates; and included $90 million in funding for rebates that eligible Montana homeowners could claim for their 2024 property taxes. That rebate proposal had originally taken shape in a separate bill, Senate Bill 434.
It’s those changes, per the lawsuit, that violated the state’s Constitution.
By combining SB 434 into SB 542, the lawsuit states legislators were forced to either “accept the controversial permanent rate restructuring if they wanted to support the popular temporary rebate or reject the popular rebate if they opposed the controversial restructuring.”
The suit also took heavy aim at Jones. The lawsuit’s pages contain messages between Jones and a legislative research analyst discussing bill details. Specifically, their messages show discussion on what to include in the legislation, and what to title it.
The lawsuit characterized the messages as “premeditated deception.” It argued the messages constituted a plan to gut the original version of SB 542 ahead of a public House Taxation Committee hearing on the bill.
“Montanans pride ourselves that our Legislature debates each policy idea on its own merits, with genuine public participation,” McGillvray, the Senate majority leader, said. “We’re not Washington, D.C., where massive bills get cobbled together behind closed doors and shoved down legislators’ throats as ‘must pass’ legislation.”
Per the lawsuit’s text, the House Taxation Committee proceeded to table SB 434 on April 17. On April 18, the committee amended SB 542 with language from the original version of House Bill 231, adding over 40 pages to the three-page bill. In subsequent hearings before SB 542 passed, some legislators voiced concerns the bill was unconstitutional. Dissenting voices included Hertz, one of the legislators suing over the bill.
Jones, for his part, said communicating with legislative researchers during a bill’s process is common practice.
“Your amendment doesn’t arrive on the day that it’s heard,” Jones said.
By that, he means bills are often passed around and amendments proposed during the legislative process. With property taxes, he said three different bills remained under consideration during the session’s final days.
Jones said he was curious to see which one had a broad enough title to contain all the items — the tax rate changes, the insurance for cities, and the rebate, which he said was included to help streamline the process of determining which homes would be eligible for HB 231’s homestead exemption. He viewed it as necessary for all three parts to make it into one bill.
He also pushed back on the idea the bill had too many items rolled into it. While Jones said he could understand how, if an item was picked up that hadn’t been seen before, there could be a basis for calling it logrolling, he said that wasn’t the case with the property tax bills. All the pieces that ended up in the final version saw legislative debate.
“It was debated so much, hell, it got boring debating it on the floor,” Jones said.
SB 542 and HB 231 cleaved the Republican Party during the session. It was a coalition of moderate Republicans that combined with Democrats to pass the tax reform. Legislators’ differing opinions on the reform and its impact have lingered long after the session’s end.
Opponents of the legislation have said it created a tax shift that disproportionately affects some people in the state. The suit states all three legislators involved have seen higher tax bills on properties they own following the bill’s passage. Hertz, who owns lakefront property in Polson, previously told the Beacon his taxes had gone up, alongside many of his constituents.
“Lifelong Montanans are struggling to figure out how they’re going to afford to pay their massively increased property taxes, and many will likely have to resort to selling their homes and cabins that have been in their families for generations,” Hertz said in comments about the lawsuit.
Ahead of the 2025 session, property taxes were a priority for Gov. Gianforte, also a Republican. He convened a property tax task force to tackle the issue in 2024. The homestead exemption, which passed in HB 231, was one of the solutions that task force came up with. Sean Southard, the governor’s director of communications, defended his signing of SB 542 and HB 231 in a statement Wednesday.
“While the governor’s office doesn’t generally comment on litigation, the governor is proud to have signed the only two property tax bills into law that reached his desk, cutting property taxes for 80% of Montana’s homeowners,” Southard said.
“If Senate Bill 542 is struck down, property taxes for Montana homeowners will increase significantly, reversing the relief that 80% of homeowners received.”