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The 95 mills question

by Brad Molnar
| November 16, 2023 12:00 AM

The top issue in Montana is property taxes. Attempts to reform were stymied by “government first” legislators and lobbyists. The 95 mills question never came up. 

Today’s debate concerns the proper calculation of our state property tax, aka “95 mills.” Reporting on the issue is shallow. Partisans prefer obscuring legal facts with emotional arguments. Make no mistake. This is not state departments versus the counties. It is Gov. Greg Gianforte suing property owners.

The question: May the state government levy 95 mills on all property using “banked mills”? In 2020, the Interim Revenue Committee was informed that the collection of 95 mills, using banked mills from prior years, was probably outside the law. However, “the courts often give difference in statutory interpretation to departments so the outcome of litigation is not guaranteed.”

This spring the Department of Revenue calculated the amount to be collected from property tax payers at 77.9 mills. They then instructed the counties that they “may” collect the full 95 mills. Forty-nine county commissions, 49 county attorneys and 49 county treasurers found that the legal amount to collect was 77.9 mills. 

Gianforte countered that he had the ability to save uncollected mills from years when the amount levy-able was greater than 95 mills. Neither Gianforte nor his allies, the Montana Quality Education Association and the Montana Federation of Public Employees, have been able to state the statute that confirms this. They argue that Gianforte can tax greater than the formula (base plus 1/2 of the average of inflation over three years) because other governors have done so. 

I can hear my mom’s echo, “If the other governors wanted to jump off a bridge…”

The Montana Constitution is clear, Article 8 Section 1 “Taxes shall be levied by general laws for public purposes.” Therefore the power to tax must be explicit, not implicit. “We fear a shortfall” or “but the other governors did it” are not legal arguments. They are prayers for judicial activism.

The Montana Supreme Court ruled that school spending had to be equal regardless of source of revenue. The 95 mills is deposited into the general fund and the general fund sends the equalization money to the schools. The 95 mills is less than half of the amount needed for equalization. School equalization is funded by lottery money, fines, penalties, electricity taxes, state property taxes, etc., but mainly income taxes. When the time comes will the Montana Supreme Court recognize their own words?

When the Office of Public Instruction was asked if school equalization was at risk, if the counties collected 78 mills instead of 95 mills, the answer was “No”. 

During the session, Gianforte suffered night sweats that an economic downturn might force budget cuts, after tax rebates, going into the next election. So the budget was designed to withstand a 20-year financial collapse. The ending fund balance was increased from $250 million to $515 million. 

Various funds were allocated more money than ever expended. Then Gianforte vetoed SB 442; add $50 million. Many people did not collect their “property tax rebate”; add $40 million. Reduced Medicaid rolls; add $40 million and counting. Higher than forecasted income tax collections, etc., created a surplus waiting for the next legislative session approaching $1 billion. 

Rep. Llew Jones argues that NorthWestern Energy will pay $4 million less in taxes so you should pay the full 95 mills. In fact NorthWestern customers would pay $4 million less in rates. Customers always pay a business’ taxes with their purchases. And the $80 million will be put into the base. So you will pay it in your property taxes and purchases from now on; plus inflation adjustment.

Should the counties lose their suit, and if I lose my suit, you lose. If Gianforte wins, you get a 27% increase in your state property taxes carried forward. 

Do you live in one of the counties that levied the 78 mills? Thank your commissioners. 

If you live in Madison, Broadwater, Meagher, Teton, Anaconda Deerlodge, Toole or Glacier counties, which levied the 95 mills, and want to make them defendants in my suit, contact me at brad.molnar@yahoo.com. I am sure they want the opportunity to explain themselves. 

Sen. Brad Molnar, R-Laurel, serves on the Senate Taxation Committee.