Property tax task force delivers recommendations to Gianforte

HELENA — Gov. Greg Gianforte on Thursday listened to recommendations for property tax reform presented by members of his appointed task force while offering limited insight into his support or disapproval of specific proposals that will likely be debated in the upcoming legislative session.

During the 20-minute meeting in the governor’s wing of the Capitol building in Helena, Gianforte generally praised the group’s final report and its efforts since it first convened in February.

“I charged the task force with addressing rising property taxes and to restrain the growth of those taxes to help Montana homeowners. And that’s what you’ve done,” Gianforte told task force members on Thursday. “We have good work product.”

Gianforte endorsed the pursuit of a “homestead exemption” when the Legislature returns to Helena in January — the only element in the list of recommendations the governor explicitly backed.

The task force’s version of that concept, the apparent centerpiece of the group’s report, would reduce property taxes for Montana houses that are used as primary residences or long-term rentals, while raising taxes on second homes and Airbnb-style short-term rentals in an effort to capture more tax revenue from out-of-state residents.

Specifically, the proposal would adjust the conversion rates that determine how much of a property’s appraised market value is translated to taxable value, dialing the conversion rate down for primary residences and up for homes that aren’t occupied full-time.

“If adopted, this will provide a 15 to 20% permanent property tax relief, potentially, to 215,000 Montana homeowners, 130,000 long-term renters … and 32,000 small businesses,” said Rep. Llew Jones, R-Conrad, who chairs the task force subcommittee that developed the recommendation. “It will fund itself, in the large part, by ensuring that a lot of these folks that don’t pay income tax in Montana participate in providing for some of the services that they consume.”

At the end of the meeting, Gianforte praised that plank of the group’s recommendations.

“I firmly believe that we should move ahead with the homestead exemption to give preference to Montana residents on a primary home,” Gianforte said. “That will provide good long-term relief. It will also ensure that out-of-staters who don’t live here, don’t pay income taxes here, and own second homes here pay their fair share, not only for our schools, but law enforcement, roads and bridges, emergency response.”

The task force report also includes other suggestions that would make it harder for local governments to raise taxes by requiring voter approval for mill levies and rework a portion of the state’s school funding system so property taxes from high-value industrial properties like mines and power plants are apportioned more uniformly.

The governor on Thursday called those proposals “innovative,” but did not ask the group questions or offer feedback about specific recommendations. The group did not take questions about the report from members of the media.

A spokesperson for the governor’s office, Sean Southard, did not directly answer questions emailed by Montana Free Press Thursday about Gianforte’s assessment of other elements of the task force’s proposals. 

In a statement, Southard said Gianforte “will begin reviewing the recommendations with agency directors to identify potential legislation for next year and will work with legislators to get long-term, permanent relief and reforms to the property tax system across the finish line.”

In a separate press conference later that day, Democratic candidate for governor Ryan Busse, accompanied by running mate Raph Graybill and former Democratic Gov. Brian Schweitzer, argued that Gianforte’s task force is a distracting exercise in bureaucracy. 

Busse has said the state should have simply adjusted the conversion rates for residential, commercial and agricultural properties to return their relative shares of tax burden to pre-2023 levels, as past governors have done to avoid increasing taxes on homeowners. 

“These decisions were made on purpose, during the middle of an affordability crisis,” Busse said on Thursday. “We have a governor who should have been attuned to the people of Montana, who are experiencing an unprecedented rise in the affordability of living here.”

Busse said he is open to proposals such as the homestead exemption, or a tiered rate structure for higher- and lower-value properties, but that the basic adjustment of the conversion rate should come first. 

Critics of that approach have argued that a simple rebalancing would produce undue hardship for farmers and small businesses in a state economy where the number of large industrial taxpayers is in decline and the number of luxury residential properties is increasing.

Legislative Democrats on Thursday also highlighted a separate tax relief plan that would lower taxes on modest homes by shifting some burden to more expensive residential properties. Unlike the task force proposal, it wouldn’t treat primary and non-primary residences differently. Like the task force proposal, and unlike the Busse-backed simple rebalancing, however, it would include a provision intended to shield small businesses from paying more as property taxes are shifted off of residential properties.

In a statement Thursday, Democratic lawmakers said their plan would treat low- and middle-income property owners more fairly than the task force’s proposals.

“Our plan lowers costs for Montana’s workers, families, and retirees so that they have the freedom to stay in their own homes,” said Senate Minority Leader Pat Flowers, D-Belgrade, and Rep. Jonathan Karlen, D-Missoula. “Someone living in a middle-class home shouldn’t be paying the same tax rate as someone who lives in a mansion.”