Property taxes were addressed in the last legislative session through HB 231 and HB 542, creating a new framework for how property taxes are calculated in Montana. HB 231, brought forward by Llew Jones, is a 44-page bill that reset homeowner property taxes into four tiers. On the surface, this sounds reasonable: higher-valued properties pay higher rates. That is the theory.
In practice, however, this approach is deeply flawed.
First, many homeowners have owned their properties for 10 years or more and purchased them when values were 50% or more below today’s assessments. These homeowners set their personal budgets based on the tax structure in place at the time of purchase. They did not anticipate — nor could they reasonably plan for — the dramatic rise in valuations that has occurred. Penalizing long-term residents for market forces beyond their control is neither fair nor responsible.
Second, the assessment process itself is inherently speculative. Assessed value is essentially a best guess of what a property might sell for on the open market at a specific point in time. This system does not account for market volatility. A homeowner may receive an assessment at a market peak that no longer reflects reality six months later. When markets were relatively stable, this was less of an issue. Today’s dramatic swings have exposed the weakness of this approach.
Third, assessed value provides no tangible benefit to the homeowner unless the property is sold. A higher valuation does not increase income or financial security — it does the opposite. Under this system, it actively depletes household budgets by increasing tax burdens without providing any offsetting benefit.
The tiered system ultimately gamed Montanans. Yes, many benefited from lower taxes — and I understand why that was appealing. But not everyone benefited. Those of us in Flathead and Gallatin Counties saw our tax rates increase, not because of any action we took, but because people wanted to move here. Long-time residents were caught in the crossfire of population growth and demand.
Mr. Jones acknowledged this outcome when he stated, “There will be winners and losers.” My question is: what is the justification for deliberately creating losers? Are other counties spending less money than they did last year? Under the previous single-rate system, higher-value properties already paid more by virtue of the calculation itself. Why, then, was it necessary to increase the rate at all?
How do you justify this to homeowners who played by the rules, invested in their communities, and trusted that the legislature would not turn its back on them — only to penalize them for living in a place that has become desirable?
Frankly, I believe this system raises serious constitutional concerns. It treats similarly situated citizens differently, something government should never do.
There is not enough space here to fully address HB 542, the second-home tax, which was designed to deter out-of-state ownership. In reality, it has had devastating impacts on working Montanans — including families now facing exorbitant taxes on long-held cabins. Nor is there room to fully address the effect these bills have had on rental properties, where increased tax burdens are ultimately passed on to renters.
What is clear is this: these bills shifted the burden onto the very people Montana should be protecting — long-time residents, working families, and renters — while claiming fairness that does not exist in practice.
Steven Kelly is a Republican state representative from Kalispell.