State seeks to quell concerns over spike in property tax estimations

An audible groan could be heard among the roughly 300 in attendance at a meeting in Kalispell on Wednesday when state officials said they weren’t able to provide specifics on what property tax bills will look like following a considerable increase in market home values on reappraisal notices sent out earlier this month.

But an increase in taxable value doesn’t necessarily mean an increase in the amounts people will pay on property taxes, they noted.

Dawn Cordone, area manager with the Montana Department of Revenue, said even in years when the appraisal stays the same, taxes can go up or down because of what is approved in local government budgets.

“Just because your value doubled, that doesn’t mean your taxes will,” she offered later in the meeting. “Also, if your valuation were to go down by half as much that also doesn’t mean your taxes would go down by that same amount.”

Property owners have been facing sticker shock as they open their appraisal notices from the Department of Revenue. The notices include the department’s determination of market value and the taxable value for a property that will be used by the county treasurer to determine the property taxes owed for tax years 2023 and 2024.

The estimates of property tax increases in the letters are based on 2022 millage rates, which can change in 2023.

“Historically, we’ve seen the mills [levied] go down when our values go up,” she said. “It’s so unfortunate that we had to send out an assessment that shows last year’s mill levies because I would hope that will not be our tax consequence this year.”

Mills are essentially tax rates. The state annually provides taxing jurisdictions with the total taxable value of property located in each jurisdiction.

When elected officials at cities, counties or school districts adopt their budgets they set the number of the mills they will assess, and could lower the number of mills assessed while keeping the revenue they collect the same given higher property values.

Local governments, however, are generally restricted in the number of mills they can levy as set by the state.

Confusion has resulted as property owners try to understand the connection between higher property values and the impact on their property taxes. The Department of Revenue has been holding public meetings across the state as it aims to explain the property tax process.

The department’s Property Assessment Division assesses property values throughout the state, but the department, Legislature, local governments and schools together determine the property tax amount. The assessed market value, tax rate, any possible exemptions, and mill rate are the components that make up the total property tax paid by an individual property owner, according to the department.

Based on a pie chart provided by the department, property tax dollars are split between several areas with roughly half of tax dollars going to fund county government and school districts. Roughly 18% goes to the state, while cities and towns see a much smaller percentage of the pie at around 11%.

THE MEDIAN increase in market value for residential property in Flathead County was 45%, according to the Department of Revenue, while Lincoln County saw a 59% median increase and Lake County saw 44%. Last November, the state department told legislators that the two-year reappraisal cycle was expected to result in a residential market value increase of about 43%.

The state Legislature sets property tax rates. The revenue department’s report in November estimated that the taxable value rate for residential property at 1.35% would have to be reduced to 0.94% to keep tax bills even.

“It was scary for me too when I saw my appraisal go up 25%, and I know some people saw theirs go up 60%,” Republican Rep. Courtenay Sprunger said in response to a question about how the Legislature has dealt with property taxes. “I’m worried about my mom getting pushed out of her house.”

“We need to find a tax solution that also still makes sure your toilet flushes and the fire department will respond,” she added.

Republican Sen. Bob Nolan, following up on comments from Sprunger to call legislators directly to discuss how each voted, directed people at the meeting to the state Legislature’s website to see how elected officials voted on bills regarding taxes.

“We’re happy for you to see how we all voted,” Nolan said. “We had some property tax bills that didn’t get voted in. And Gov. Gianforte vetoed some – call him also.”

Democrats have called for a special session to address property taxes, but Republicans have said that’s not happening.

AS PART of the reappraisal notices, the state outlined the annual percentage change in taxes from 2013 to 2022. The state saw a 3.47% increase, while the county saw a 2.99% increase. Columbia Falls saw an increase of 5.36% and Kalispell was up 3.86%. Whitefish decreased by 0.64% as a result of the city's resort tax.

Cordone cautioned that when appraising properties the department does not compare cities, such as Whitefish to Kalispell, but rather looks at neighborhoods to determine property values.

“Those two cities are not in the same modeling area,” she said. “You are not going to be compared to a high value, high growth place unless that’s where you’re at.”

Increases in real estate prices have driven increases in the appraised value the state has seen since the pandemic. As taxable value goes up for everyone, however, the share of taxes each home is responsible for may actually go down.

Using a fictional local government budget example of $1 million, Cordone noted that if that government entity collects that amount from more taxpayers then the obligation on each property owner is diminished.

“The more of us on the tax rolls there are, the more we’re going to share the burden,” Cordone explained.

THE STATE does offer several property tax relief assistance programs including for disabled veterans, income levels and for those who have owned their property more than 30 years and meet certain criteria.

If property owners disagree with the department’s determination of value for their property, they may submit a Request for Informal Classification and Appraisal Review (called Form AB-26) within 30 days of the date on their notice. Owners can electronically submit the form, download it, and find more information on the informal review process at MTRevenue.gov.

For details on public meetings and virtual meetings visit https://mtrevenue.gov/pad-town-halls/

Contact information for local Department of Revenue field offices is available by visiting MTRevenue.gov/contact/ or by calling (406)444-6900.

Features Editor Heidi Desch may be reached at 758-4421 or hdesch@dailyinterlake.com.