Reappraisal frustration continues

The “outliers” showed up in force to air their frustrations over the state’s property tax appraisal system at a town hall meeting in Kalispell Thursday, and it appears the issue is going to be attacked from multiple directions.

About 150 people turned out at Flathead Valley Community College for a discussion led by a panel of eight local Republican legislators on the state’s system for reappraising property values every six years. This year’s reappraisal resulted in sharp increases for many property owners in Flathead and Lake counties, more than were expected by lawmakers earlier this year.

A bill passed by the Legislature this year was intended to mitigate property-tax increases for most residents with a “revenue neutral” averaging approach. It generally worked for most property owners, but it didn’t for a group of outliers, particularly those who own waterfront or recreational properties.

As a member of the Senate Taxation Committee, Sen. Bruce Tutvedt, R-Kalispell, said the Department of Revenue gave projections during the legislative session predicting that the number of outliers with annual tax increases of more than $200 would number only several hundred in Flathead County.

It turned out to be just over 2,000 property owners, according to an analysis by Sen. Verdell Jackson, R-Kalispell.

“Some of the information we got was not correct,” Tutvedt said. “Looking back, they didn’t do it well enough and they gave us information that was flawed.”

Many who attended the meeting expressed anger toward the Department of Revenue and frustration with the Legislature’s ongoing inability to enact fundamental tax reform.

Dud Mahler, a Whitefish resident representing a group called Montana Residents for Fair Property Taxation, said he testified before legislative panels in 2005, 2007 and 2009 and has been unable to get effective reform.

“What we’ve decided to do is sue you, sue the state,” Mahler told the legislators.

Mahler asserted that the current system is unconstitutional because the state “cannot create a separate class of outliers that pay more” in terms of tax increases than other property owners in the state. He said the state’s mitigation efforts merely have shifted the reappraisal burden from one class of property owners to others.

Several at the meeting described reappraisals that led to tax increases well above $200 a year.

West Glacier resident Jim Malone said he used the Department of Revenue’s tax calculator system prior to receiving his appraisal statement and it projected his taxes would go up 9 percent annually. He said they actually will increase by 20 percent annually.

Whitefish resident Bruce Tate said the appraised value on his property went up 600 percent in the 2003 reappraisal cycle.

“This year I’m getting a break. It’s only 350 percent,” he said wryly.

Tate said he did attempt appealing his 2003 appraisal and came away vowing never to go through the “AB26” appeals experience again.

Somers resident Art Buckley said he will pay three times more in property tax in 2014 than he did in 2008.

“I’m very unhappy with the Department of Revenue and I’m very unhappy with the legislative process,” he said.

A variety of ideas came up to address the problem, including some that would profoundly change the system, such as establishing appraisals based on acquisition values, possibly through a ballot initiative.

But Rep. Scott Reichner, R-Bigfork, said those are the types of changes that historically do not advance in the Legislature, mainly because of resistance from Eastern Montana lawmakers who do not consider the appraisal system to be flawed.

“This is more of an east-west issue” rather than a Republican-Democrat issue, Reichner said.

Mark Holston, chairman of the Flathead Democratic Party, read a statement at the meeting from Rep. Mike Jopek, D-Whitefish, who could not attend because he is traveling out of state.

Even though he sponsored House Bill 658 — the tax mitigation bill that is now considered unsatisfactory — Jopek ended up voting against it because of changes made to it in the Senate that he did not approve of. Jopek followed with alternative bills that did not clear committee.

Joan Vetter Ehrenberg, a former Democratic party chair, asked the Republican legislators why they supported House Bill 658.

“I’ll take that,” said Sen. Ryan Zinke, R-Whitefish. “It really came down to what bill you hated the least.”

Zinke said that House Bill 658 turned out to be the only viable vehicle for property-tax mitigation at the end of the session, and without it, taxpayers would be taking the full brunt of reappraisals up front.

Tutvedt added the state would be collecting $30 million more in tax revenues rather than $7 million.

Reichner said he came away from the meeting intent on rallying Flathead legislators, including Jopek, to develop a legislative solution that would provide relief specifically for outlier taxpayers.

To do that in a special legislative session next year, he said, it will require “a viable solution from both parties and both sides of the state.”

Reichner said local lawmakers will take action by 2011 at the very least. He concedes the state likely will face litigation from groups such as Montana Residents for Fair Property Taxation.

“They’re not fooling around,” he said. “I don’t want to have the state sued. But sometimes that’s how you get the Legislature and the governor to move.”

Reporter Jim Mann may be reached at 758-4407 or by e-mail at jmann@dailyinterlake.com