Panel backs property tax proposal

A legislative panel has endorsed a proposal from Sen. Bruce Tutvedt, R-Kalispell, to alleviate property tax increases caused by the last reappraisal and a sharp downturn in the real estate market.

The joint Revenue and Transportation Committee met early last week in Helena to consider a variety of ways to reconcile reappraisal values based on market conditions prior to 2008 with actual values that have plummeted since then.

Tutvedt said in an interview Wednesday that many of the remedies have constitutional conflicts, according to legislative counsel, and only his proposal was advanced. The committee, which is evenly divided among Republicans and Democrats, endorsed it on an 8-4 vote.

“It’s the one that’s still alive,” he said. “But there are a lot of different ideas.”

Tutvedt proposes that property owners would have one opportunity during the current six-year appraisal cycle to obtain a certified, private appraisal of their property, and if their property value was at least 5 percent lower than the 2008 Department of Revenue appraisal, they would qualify for a tax rate reduction.

The rate reductions would vary, he said.

“This is the one that we felt could pass constitutional muster and would give relief to the homeowner and commercial property owners that have seen a greater than 5 percent drop in value,” he said.

The committee considered reducing the state’s appraised value for properties rather than the tax rate, but that is believed to raise constitutional equity conflicts, because it would apply the appraisal system differently to different classes of property owners.

Tutvedt said Flathead area appraiser Jim Kelley provided valuable testimony at the committee meeting.

According to Kelley’s statistics on Flathead County properties of less than five acres, 84.7 percent of the sales in 2010 were less than their 2008 Department of Revenue appraisal.

By comparison, the numbers for Lake County and Missoula County were 72 percent and 65.9 percent, respectively.

The average Department of Revenue appraisal value in Flathead County was 29 percent higher than 2010 actual sales values. The average was 25 percent higher in Lake County and 11 percent higher in Missoula County.

“Flathead County far and away had the greatest drop in property values in the state,” said Tutvedt, who believes many Flathead County property owners would benefit from his proposal if it is passed during next year’s legislative session.

He said that the property tax issue will be a priority.

“The Legislature is very aware that the process has some flaws in it ... and we are trying to find ways to make equitable and fair,” he said.

It’s possible his legislation could advance as a committee bill, which carries “a lot of weight because it is bipartisan,” Tutvedt said. “It if doesn’t, I will carry it on my own.”

One proposal that didn’t get much traction with the committee was to go from a six-year appraisal cycle to having the department reappraise property values every year or every other year.

In Flathead County, where’s there’s a history of robust real estate market growth periods “that would be to our detriment,” Tutvedt said. “In the last cycle (2002 to 2008) we would have seen our taxes go up very fast on a year-to-year basis.”

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