Reappraisal report is a warning shot

Buckle up, Montana homeowners. Yet another tax bill whammy is on the horizon.

A new report from the Montana Department of Revenue warns that the next round of reappraisals will increase the market value of residential properties by more than 21% statewide. 

It's worse for Flathead County, where the average reappraisal spike will be more like 31%. That would equate to a 14% increase in your property tax payment under the current law. 

The report comes on the heels of the devastating 2023 reappraisal cycle that saw the county’s median residential property value increase by roughly 46%. Some homeowners saw their tax bills go up by more than half, forcing Gov. Greg Gianforte to send out two rounds of rebates to help offset some of the increase. Hopefully you filed for both of those disbursements. 

While those checks eased the pain, Gianforte and the Republican supermajority Legislature were cautioned of the looming reappraisal catastrophe well in advance of the last session -- state law requires the Department of Revenue to report on upcoming tax impacts. But instead of adjusting the residential tax rate, as other governors and legislatures have done, they refused to recalibrate. 

All the while, longtime locals, particularly those on fixed incomes, were unfairly faced with tough decisions about whether they could afford to keep living in Montana. That can’t happen again when legislators convene in January for the 2025 session. The Department of Revenue’s report is a warning shot to act on property taxes now. 

In fact, it reinforces why Gianforte established the property tax task force in the first place.  

That group brought forward the so-called homestead exemption plan that would shift more of the property tax burden onto second homeowners and properties used as vacation rentals.  

This editorial board previously endorsed the idea, and Gianforte has since included it in his budget proposal, suggesting it could lower taxes on primary residences by 15%. That would make a significant difference in dampening the projected reappraisal increases. 

Meanwhile, the Department of Revenue report shows how residential property taxes could be reined in by simply adjusting the rate through a neutrality formula. That plan shifts the state’s oppressive tax burden on homeowners to other property classes, such as commercial, agriculture and timber land. 

In Flathead County, the neutrality formula would mean residential properties only pay 6% more in property taxes -- compared to the 14% increase under the current rate. 

The Legislature cannot continue to ignore the effects of unfettered property tax increases on Montana residents who are stuck paying monstrous tax bills just because they live in a desirable part of the country where home values continue to rise. 

Whether it’s through the homestead exemption, the state’s neutrality formula, or both, it’s time to act.