End the property tax blame game

The Montana Supreme Court recently ruled unanimously in favor of the state in a complicated dispute about statewide property taxes. The Court ruled that state law requires counties to collect the full 95 mills for the state school equalization tax levy this year, an interpretation that was hotly contested by local governments.

 While the extremely complex legal debate about the statewide 95 mills sure has gotten a lot of attention in the media, the debate centers around only a relatively small portion of your tax bill. The lion’s share of residential property taxes is undeniably driven by your local government and your local school. This was a point made by Governor Gianforte in his reaction to the Supreme Court’s ruling:

“I remain committed to enacting further long-term reforms that keep property taxes as low as possible, including holding the line on local spending that drives property tax increases.”

This year we’ve seen some local government leaders pull every trick in the book to deflect blame for their role in property tax hikes. They’ve blamed inflation, blamed property reappraisals and blamed their inability to levy sales taxes to boost revenue.

 Some leaders have also taken advantage of the legal dispute over the 95 mills to try and put the blame on the state. Here’s how one County Commissioner framed it:

 “Whenever you hear the governor or the state legislature say that property tax keep going up because of greedy county commissioners, remember this case when 49 of the 56 counties tried their best to control these increases” 

This property tax blame game needs to end. When it comes to property taxes, of course counties can’t control inflation, inter-state migration or, as the Supreme Court ruled in this case, the system of statewide education funding. Local governments must accept responsibility for what they CAN control: the growth of their annual budget as a means to enable property tax relief.

There is no such thing as a free lunch in government. The root cause of taxation is government spending. All new government spending must eventually be paid for by the taxpayer, whether in the form of property taxes, “non-tax” special assessments and fees (as Helena Commissioner Sean Logan points out), or some other creative burden.

 Property taxpayers living in counties with governments that have spent lavishly over the last decade face enormous hikes on the county portion of their tax bill this year.

 Missoula County is case in point, with taxpayers suffering large property tax hikes to yet again fund record spending approved for the county’s FY 24 budget. Frontier Institute’s FY 2024 Real Local Budgets report shows that over the last ten years, Missoula County’s budget has expanded by nearly $100 million dollars, exceeding the fiscally conservative benchmark of population growth plus inflation by 37%. Had the County held the line on spending for the last decade, limiting spending growth to no more than the rate of population growth plus inflation, they could have spared residents from $44 million dollars in additional spending.

Meanwhile, Flathead County is able to cut property taxes this year because they’ve kept their budget mostly under control over the years. In fact, over the last ten years Flathead County has grown spending .2% less than the trend of population growth plus inflation. This year, the county actually reduced their budget.

I hope this recent Supreme Court decision will refocus our leaders on scrutinizing their own budgets and, hopefully, increase the pressure towards a long term fix – setting firm limits on the growth of spending at all levels of government to protect taxpayers.

Kendall Cotton is president and CEO of the Frontier Institute, a think tank dedicated to breaking down government barriers so all Montanans can thrive.