GOP bills would require re-votes on some local property taxes
A slate of bills advanced by a prominent Republican lawmaker would try to lower Montana property taxes by requiring revotes on some local tax levies while also raising the approval margins required to pass levies and bond measures in low-turnout local elections.
Senate Taxation Committee Chair Sen. Greg Hertz, R-Polson, said at a Wednesday hearing before his committee that he believes rising property taxes are the “No. 1 concern” for many Montana residents and voters.
Hertz added that he’s afraid frustration over rising property taxes will produce a statewide constitutional amendment similar to California’s Proposition 13 in the coming years. Suggesting that legislators consider a statewide sales tax, he said he wanted to start a conversation about how local services are funded.
“Some of us might consider that the cities, counties and schools aren’t as efficient as they could be with their budgets,” Hertz said, noting that many property taxes are authorized by voter-approved levies.
Hertz’s bills would limit some tax levies to five years without reapproval (Senate Bill 125), require new votes for some levies that are currently permanent (Senate Bill 251), and make it harder to authorize new bonds (Senate Bill 291) and mill levies (Senate Bill 292).
The latter two measures would require supermajority votes to authorize property tax increases in local elections where voter turnout is below 40%. Sixty percent of voters would have to vote yes on increases to pass them in elections with 30% to 40% turnout, and proposals would fail automatically if turnout is 30% or less.
As introduced, the bill requiring new votes for currently permanent levies, SB 251, would exempt bond levies and what Hertz called “necessities” — taxes that fund services such as schools, law enforcement, fire departments, water and sewer lines, search and rescue operations and garbage collection. Hertz said Wednesday that, as a result of pushback from the bill’s critics, he intends to amend it so it also exempts libraries, hospitals and nursing homes.
“People are getting levy fatigued,” Hertz said. “And I think we need to allow the citizens to go back and look at what they’ve approved in the past and see if that’s their top priority.”
Opponents argued at Wednesday’s hearing that SB 251 would require reauthorization votes with uncertain outcomes for taxes that currently pay for parks, bus systems, weed control districts, senior centers and local mental health services. Some said they worry that cuts to mental health or homelessness services would end up pushing people to remaining services, like libraries. Others said they worried that ballots would end up crowded with reauthorization votes and that funding uncertainty would make it harder to retain staff in levy-funded positions.
“If a community wants to fund a parks department or an operation of a county fairgrounds, has built a facility for a park and simply wants to maintain it and run it, why shouldn’t local voters be allowed to have a permanent levy to do that?” said Erik Burke, executive director of the Montana Federation of Public Employees.
In part because Montana doesn’t have general purpose sales taxes outside of a few resort communities, cities, counties and schools across the state are heavily reliant on property taxes to pay their bills. A legislative study published last year found that property taxes make up 97% of local government revenues in Montana, compared to a 72% average nationally. (While Montana also collects state income taxes, that money is generally used to fund programs at the state level.)
According to the Montana Department of Revenue, tax collections on residential land and buildings in Montana totaled $1.1 billion in 2022, a 70% increase over 2012. The department has also said it expects the assessed value estimates used as part of the residential property tax formula to rise by 43% on average in the 2023 reappraisal cycle.
Those increases have made property taxes an increasingly hot-button issue in Montana politics, with both Republican and Democratic lawmakers saying they hear from constituents who are afraid rising property taxes will push them out of their longtime homes. A property tax-capping constitutional initiative modeled on California’s much-debated Proposition 13, CI-121, failed to collect enough signatures to make the Montana ballot last year amid opposition from labor unions and business groups, but legislators of both parties have said they expect anti-tax advocates to push similar initiatives in the coming years.
Legislative Democrats have pushed to address rising property taxes by creating programs that offer income tax credits to offset property tax bills for middle- and low-income residents, but those efforts run up against opposition from majority party Republicans who are skeptical about using state tax dollars to address what they consider a problem rooted in local government spending. A Democratic bill, House Bill 280, that would have created a long-term property relief tax credit was voted down after debate on the House floor this week.
Some Republicans, Hertz among them, have also suggested that lawmakers should consider a statewide sales tax. Though that idea has been long-hated by the Montana public, it would let the state add a third major support to its public finance system — one that would collect revenue directly from the millions of tourists who pass through the state each year.
As the Senate Taxation Committee debated his bills Wednesday, Hertz was one of several speakers who suggested Montana should consider implementing a sales tax.
“We have the two-legged stool,” he said. “We’ve got income and property taxes. And that puts a burden on property taxes at the local level. And that’s where we’re at right now, until the citizens of Montana are willing to look at some other form of taxation.”
Eric Dietrich is deputy editor of the Montana Free Press, a nonprofit newsroom based in Helena, and can be reached at edietrich@montanafreepress.org. To read the article as originally published, click here.