Lincoln County votes to lower school property tax mill collection

Lincoln County has joined several Montana counties that are going against the state in collecting mills for local school funding.

At the Oct. 4 commissioners meeting, the vote was unanimous on a resolution to reduce the mill levy from 95 to 77.9 mills for fiscal year 2024.

Local schools are not affected, according to Commissioner Josh Letcher, because the state will fill in the rest of the money with general fund dollars. Letcher was at a Montana Association of Counties conference last week where he learned more about the situation.

“There are two avenues,” Letcher said. “Individuals would pay their tax bill under protest and then file a district court complaint suing the county because they were overtaxed. Or the county levies a lower amount and the state sues the county.

Commissioner Brent Teske said, “Are we going to overtax just because the state wants more money? I’d rather fight with the state than burden our taxpayers.”

County Attorney Marcia Boris questioned what would happen if a future court ruling goes against the county.

“The big concern is where does the money come from if we get an unfavorable ruling?” Boris said. “But if we just have to send another bill to taxpayers that alleviates that concern.”

Gov. Greg Gianforte and school advocates say that 95 mills is the correct amount that should be levied based upon state law and that reducing it could put future school funding in jeopardy.

But according to information from the Montana Taxpayers Association, the state Department of Revenue calculated that 77.8 mills would collect the proper amount of revenue.

County Superintendent of Schools Suzy Rios attended the Oct. 4 meeting and said there was no concern from area schools over the funding.

According to an Oct. 2 Montana Free Press story, the Gianforte administration filed a lawsuit against Missoula County that seeks a ruling on a dispute with county governments over whether the state has the authority to require the full collection of a school funding property tax.

Several counties told Montana Free Press they intend to have their treasurers collect less than the full 95 mills of taxes that have been collected as part of property tax bills for decades to help fund the state’s school equalization program, which balances funding between tax-base-rich and tax-base-poor districts.

Property taxes rates are based on mills. Each mill equates to $1 which is levied per $1,000 of a property’s taxable value. When a property’s value increases the amount of tax revenue from the property also increases due to the mill rate increase.

An effort by the counties to ask Attorney General Austin Knudsen for a legal opinion supporting their position was rebuffed last week, with Knudsen’s office saying it believed the matter would be more appropriately handled through a court case.

In an op-ed last month by Montana Taxpayers Association Executive Director Bob Story, he explained that in 1999, the state Legislature passed a law limiting how much property tax collections can grow without a vote. The law limits cities, counties and the state property tax collection growth to one-half the rate of inflation over the three previous years plus revenue from newly taxable property.

In Story’s op-ed, he wrote that due to the massive increase in the value of residential and commercial properties, the Department of Revenue calculated the state should assess 81 mills. At that rate, state property tax collections would still increase by $8 million.

With more than $14 million in taxes from new property, the state would have $22 million in new revenue. Story wrote that if an additional 14 mills were assessed, bringing it to 95, it would receive $65 million. He said that about two-thirds of the money would come from property owners, including homeowners, landlords and small businesses, that saw the increase in value after the reappraisal.