Time to reappraise tax system
Montana’s system for reappraising property values is a tyranny of the majority, and the time has come to change it.
Every six years, the Department of Revenue sizes up property values, and every six years, the Montana Legislature is challenged to do something to ensure that the reappraisal does not have a disproportionate impact on some property owners. Well, it never really works out that way. The so-called mitigation legislation passed by the Legislature this year was aimed at ensuring the reappraisal would have “revenue neutral” results as opposed to the state getting a tax-revenue windfall because of robust real-estate growth through most of the last decade.
Most residential property owners in Flathead County saw only modest increases in their property-tax liabilities and some even saw reductions in property values. But the legislation did not work for more than 2,000 “outliers” in Flathead County, mostly waterfront or recreational properties that had exorbitant tax increases as a result of much higher valuations.
These property owners didn’t get the sympathy they deserve, largely because of what can appropriately be called “the tyranny of the majority.” Most taxpayers don’t view the reappraisal system as being flawed, because they are not adversely affected by it. Legislators representing low-growth Eastern Montana districts have historically been unsympathetic, because they are effectively subsidized by valuation increases in economically active Western Montana districts.
In a reverse way, this is vaguely reminiscent of the school-funding litigation that carried on for years in Montana, led by rural school-district officials who argued they were not getting equitable treatment under the state’s school-funding formula.
A similar argument will likely come forward in litigation that hard-hit property owners are certain to bring against the state over this year’s reappraisal.
“What we’ve decided to do is sue you, sue the state,” Dud Mahler of Montanans for Fair Property Taxation told a panel of state legislators at a recent town hall meeting in Kalispell.
Mahler said he believes it is unconstitutional for the state to create a separate class of property owners who are exposed to far greater tax increases than other taxpayers.
There are likely to be other lines of attack in litigation that could come from more than one group. The way that the state appraises properties from one area to the next, for instance, may be vulnerable to legal challenge.
Of course, it would be preferable if the Legislature could develop effective remedies for problems with the reappraisal system without a lawsuit as incentive. But they might need the extra push.
Rep. Scott Reichner, R-Bigfork, got it right when 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.”