Auditors say state property tax rolls have missed $1.2 billion of new construction

The Montana Department of Revenue, responsible for maintaining the property listings used to calculate property tax bills, is losing track of hundreds of millions of dollars a year in new construction as it struggles to keep its data updated, according to a study published Thursday by legislative auditors.

The auditors say the department’s approach to tracking new development and property-value-boosting renovations, which relies primarily on reviewing building permits, is failing to ensure that construction activity is quickly and accurately reflected in the tax rolls. That means lower tax bills for people who own newly built or renovated properties, but less money collected for public services and higher bills for other taxpayers.

Auditors suggest that the department improve its efforts to reliably track building permits filed with other state and local government agencies and also expand its efforts to use aerial imagery to identify development that isn’t captured via building permits. They also say the revenue department can do a better job of managing in-person property inspections that help keep its data current and do more to retain field office staff.