Lakeshore tax-relief bill gets first look

HELENA — Citing the sharp growth in property taxes paid by homeowners along the shores of Flathead and Whitefish lakes, a Flathead legislator is pushing a bill to provide relief for some Montana homeowners whose property-tax bills have spiked in recent years.

Sen. Keith Regier, R-Kalispell, will present Senate Bill 94 to that chamber’s tax committee today. In a Tuesday interview, Regier said the bill is designed to provide relief to full-time residents who are struggling under the burden of escalating land values, while maintaining current tax rates on part-time residents and owners of high-end homes around the lakes.

“You get around Flathead Lake, the lakeshore area … then all of a sudden you get these homes where the land is valued a whole lot higher than the improvements on it,” Regier said. “When I met some of those people and the homes they live in, the homes were very modest yet they were paying $20,000 to $30,000 per year in property tax.”

The proposal, dubbed the “Intangible Land Value Assistance Program,” would apply only to primary residences where the appraised land value is more than 75 percent of the value of the home and other improvements on the property. That land value would then be capped at 75 percent of the value of the other improvements.

However, if that calculation were to cause the taxable land value to drop below the statewide average per acre, the taxable value would be set at the average.

Regier said linking the tax proposal to the value of improvements on the land would mean that owners of mansions are still taxed at the full rate, with the program restricted to homeowners of more modest means.

“It’s a partial exemption,” he said. “They’re still going to be paying property tax, but they’re not going to be soaked.”

Additional provisions in Regier’s bill restrict the tax-relief program owners of single-family, residential homes located on no more than five acres of land. “Primary residence” is defined under the bill as a home in which the owner spends at least seven months per year.

AS WITH any proposed tax cuts, however, the amount of state revenue that would be lost under the measure will likely be a central point of contention — especially as lawmakers wrangle with a tight two-year budget this session.

The Department of Revenue estimates that Senate Bill 94 would drop the state’s projected tax collections by $2.3 million during the next two fiscal years, followed by a $2.1 million drop in revenues in fiscal year 2020 and a $2.4 million decline in 2021.

Regier objects to that estimate, which is based on the department’s calculation that more than 48,000 properties in Montana would meet the qualification based on the ratio of land values to improvement values.

“That surprised me it was that many, but then it goes on to assume that 75 percent of those are primary residences, and that’s what I question,” he said. “There’s a lot of Canadians and a lot of out-of-staters that own property, especially in the Flathead, so the fiscal note would be lower, should be lower.”

Regier believes a more accurate assumption would account for half of those properties meeting the primary-residence requirement. He also questioned the department’s estimate that it would have to hire five full-time employees to administer the program for the next three years, at a total cost of more than $270,000 per year.

The Senate Taxation Committee will hold a hearing on House Bill 94 in Room 405 of the Montana State Capitol on Friday at 10 a.m.

Reporter Sam Wilson can be reached at 758-4407 or by email at swilson@dailyinterlake.com.