Legislators strive for property tax reform

HELENA — The Flathead legislative delegation is pursuing reforms and relief in the property tax appraisal system from a wide range of angles, but they are faced with the usual obstacles in achieving them.

What they are trying to correct is a system that often produces exaggerated and unbearable tax increases on some properties, particularly waterfront properties, every six years.

The 2008 reappraisal cycle was onerous for many Flathead and Lake county property owners because it was based on real estate market trends prior to the market crash that took full shape that year.

There are an estimated 2,000 so-called “outliers” in Flathead County whose appraisal values went up sharply. But it is an issue the Legislature has struggled with for years before then.

Rep. Mark Blasdel, R-Somers, contends that sweeping changes in the way the state appraises and taxes property will require citizen-driven constitutional amendments because of constitutional restrictions requiring taxes to be equalized across the state.

But the Flathead delegation, which participated in a series of town hall meetings on the issue in the months leading up to the session, has an array of bills aimed at helping outlier property owners.

There was a hearing this week on a bill that would base property appraisals on acquisition values, with a 2 percent annual increase, through a constitutional amendment.

Bill Myers, who owns property on Bigfork harbor, testified in support of the bill, telling the House Taxation Committee that by 2014 he will be paying 600 percent more in property taxes than he did in 2002.

Myers told the committee that is an exorbitant increase and he said that property owners who choose to sell their properties usually are faced with capital gains taxes as well. He made a direct appeal to committee members from other parts of the state.

“It’s the people on the east side that don’t understand,” he said afterwards.

Blasdel, who chairs the committee, agrees.

“The problem we have is that there’s only about a dozen House districts and six Senate districts that are truly affected by this,” he said.

Blasdel said there is a series of bills aimed at putting some parameters on the state Department or Revenue that would work in the favor of affected property owners.

One would allow property owners to appeal every year as their appraisal increases are phased in over the six-year cycle. As it is now, they must file their AB-24 form within 30 days of receiving their appraisal notice.

Another change would make it so that a signature on an AB-24 form would be a consent for disclosure, requiring the department to produce comparable property sales that were used  in developing the appellant’s appraisal.

Rep. Scott Reichner, R-Bigfork, wants to take it a step farther by shifting the burden of proof in an appeal from a property owner to the department.

Reichner also has a bill that would require the department to take into account property foreclosures within an appraisal jurisdiction. Currently, the department does that only if foreclosures account for more than 20 percent of transactions in the jurisdiction.

But Reichner contends that rather than “cherry picking” the most expensive sales in an area for developing appraisals, they should be accounting for lower priced sales involving foreclosure properties.

“Why pick the top and the let the bottom go?” he asked during a Taxation Committee hearing on his bill this week.

“Flathead and Lake counties have the highest rate of foreclosures in the state and we don’t use the data” in the appraisal process, he said.

Blasdel said there will also be a push for “circuit breakers” to help property owners, based on factors such as income.

The Department of Revenue has, for instance, an Extended Property Tax Assistance program that provides relief to burdened taxpayers who make less than $75,000 annually. But Blasdel referred to a report indicating that only a fraction of qualified property owners participate in the program.

Blasdel also anticipates legislation that will call for constitutional amendments to address the equalitization issue, and possibly to impose a cap on property tax increases, regardless of how much property appraisals increase.

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