AERO KUFM Commentary

Mike Jopek

Equitable Tax Reappraisal for Montana

May 4, 2006

Some thirty-five years ago Montana first re-appraised homeowner property values. Reappraisals calculate how much a home would sell for on the current local housing market and adjust property taxes accordingly. Montana re-appraises property every six years, thought its timeframe changes with Lawmakers.

In 2008, homeowners will see their seventh reappraisal.   That reappraisal will hit homeowners hard, particularly those in the Flathead, Gallatin, Missoula and Yellowstone Counties.

Flathead County pays the highest school taxes in Montana, but comprises only 8 percent of Montana's homes. However, 1 in 6 new homes built in Montana are built in the Flathead. Our growing pains are paying for schools throughout Montana.  

Why is that growth happening in these four counties of Flathead, Yellowstone, Missoula and Gallatin? Because people want to be a part of Montana’s Great Outdoors.

It’s critical to preserve Montana’s Great Outdoors as an asset to attract high quality growth. Locally, we have got to do it right. Our Great Outdoors is not only the engine of our local economy, but also the fuel for Montana’s schools.

Whitefish contains the fastest growing level of property wealth in Montana. People are flocking here because of our open public lands and clean water. Whitefish’s tax base grew by 63 percent between 2000 and 2004. That’s a whopping 12 times Helena’s pace of growth

As a result of booming real estate values, long-time Whitefish homeowners have seen property value increases of 40 percent per year in recent years. That translates to a potential 240 percent tax increase for some. That’s just unreasonable.

Whitefish is growing so fast that the vast majority of workers cannot afford a home in the community they serve. In our growth counties, taxes have doubled the past decade or so due to reappraisals.

Increasing property taxes are not the fault of Republicans or Democrats. No one is to blame for the international market forces that impact local housing prices. But, elected officials are responsible for introducing non-partisan solutions to the problem.

A solution that offers homeowners some relief from rising property taxes is a cap on increases in property tax appraisals. In 2009, Montana households earning less than $75,000 annually can apply to have their tax appraisal capped at 6 percent and pro-rated down to 4 percent, based upon income. This law is a good start, but it needs to be expanded and expedited.

Montana ’s constitution requires the legislature to spend no more than the state has coming into the bank. As a legislator serving during the 2005 session, I saw a lot of good ideas get the axe because neither party wanted to raise taxes to pay for them.

It’s wrong to cap state spending without addressing the root cause of homeowner tax increases; reappraisals. Doing so eliminates services at the local and state level without ever acknowledging that most tax increases are due to growth and market conditions beyond homeowners’ control.

Rather, we need to recognize that homeowner property taxes for Montanans’ in both fast and slow-growing areas are out of control.

Low-growth communities suffer because local market conditions are not producing sufficient growth to pay for services. These communities must increase taxes or stop providing services such as police and fire protection.

Fast-growing communities face a similar quandary, as newcomers demand expanded services and city infrastructures burst at the seams. Our current taxation system fails both fast and slow-growing communities.

Capping state dollars for schools and universities will force mill and tuition increases on all Montanans’. Homeowners would still pay increased taxes due to reappraisals but suffer a loss in quality local services.

What we need is to cap homeowner taxes due to reappraisals, not state spending on schools, universities and local services.

Montana ’s current oil and gas boom offers an opportunity. It's bringing in a lot of tax dollars. With this money, we should focus on tax relief for Montanans’ and we must at the same time foster our schools and other local services.

We can invest that money in funding for our schools and universities and stop over-taxing homeowners. Montana homeowners deserve to have quality government services as well as property taxes they can afford.

Communities across Montana should look at the lessons learned in Whitefish as we nurture the relationship between state lands and local schools for long-term return.

Our trails and conservation projects will add millions of needed dollars into our school system and tune the engine of our local economy.

Montana homeowners deserve a better deal on their taxes, and quality government services. Montana should work for Montanans’.  

I’m Mike Jopek for the Alternative Energy Resources Organization. AERO welcomes your comments and perspectives. AERO is a grassroots membership organization working to help create farm, food, energy and growth solutions for communities throughout Montana. For more information about our programs call us in Helena at 443-7272.