Governor’s property tax package seen by lawmakers

By Caven Wade | UM Legislative News Service, University of Montana Journalism School

HELENA — A week before Gov. Greg Gianforte was scheduled to deliver his state of the state speech before the Montana Legislature, a panel of lawmakers introduced and then revived one of the key bills in his tax package that would spend nearly a quarter of the state 2 Billion dollars surplus on property tax breaks for homeowners.

In the third week of the Helena Legislature, two key property tax bills were heard in the House Taxation Committee – House Bills 222 and 189.

Rep. Tom Welch, R-Dillon, sponsors House Bill 222, which would bring homeowners in Montana $500 million in property tax breaks over the next two years. Residential property owners could get up to $1,000 for permanent residency in 2022 and 2023.

“Homeowners in Montana are rightly concerned about the rising property taxes they pay. Their property taxes are too high, and too often the burden of rising taxes forces some Montanans to consider selling their homes,” Welch said.

At a news conference, the governor said he was encouraged by the “lines and lines” of supporters testifying for the bills.

But on Jan. 18, Representative Sue Vinton, R-Billings, the House Majority Leader, moved to Table HB 222 and the motion passed 14-7. Gianforte called the press conference the next day and summoned the committee to present the bill.

“When the committee had an opportunity to move forward with this crucial measure, it introduced the bill. This delayed property tax breaks for Montanans,” Gianforte said. “Many of these lawmakers who voted to hold up property tax breaks are the same ones who came to me in 2021 and told me we needed to act on property taxes.”

After the governor’s press conference, the committee removed the law from the table on Jan. 19, amended it to cut payments by half, and passed it 14-7. The change will reduce the discount provided from $1,000 to $500 per year.

The House Budget Committee will now hear testimony on the bill, and if passed, it will be sent to the full House of Representatives for debate.

Rep. Mark Thane, D-Missoula, was one of the lawmakers who voted against revitalizing the bill.

“The discount is not indexed. It’s a one-size-fits-all, regardless of means,” Thane said.

Thane said lawmakers should and will do something about property tax relief during the session, but HB 222 should remain pending until the committee can review other property tax bills. He also said the bill does not support renters, a category into which 50 percent of his constituents fall.

“I think it’s important that we combine relief with tenant loans,” Thane said. “The reason I voted to keep it on the table is because we’ll be hearing additional property tax measures over the next week or so, and I want to be able to compare all of them.”

Welch and supporters of the bill said looming appraisals and a rise in property taxes would force residents on fixed incomes out of their homes.

Montana residents will be affected by new property tax estimates in 2023 following the annual biennial cycle.

“It’s important to keep people in their homes,” said Sheridan Johnson of the Montana Chamber of Commerce.

Gianforte has said that he would like to allow older Montanans who depend on fixed incomes to stay in their homes and age in place.

Several supporters also said the bill would also remove barriers for potential home buyers, who they say are shy because of high inflation and increased property taxes.

“In this era of rising values ​​and rising costs for local services, the property tax burden on residents is a barrier to home ownership,” said Sam Sill, the director of government affairs Montana Association of Realtors. “This law provides for a broad and meaningful relief of property tax for private payers.”

Heather O’Loughlin, co-director of the Montana Policy and Budget Center, was the only opponent of the bill in the first hearing. She outlined three concerns she says the legislation fails to address: renters, low-income homeowners and no long-term relief.

O’Loughlin said renters pay a large portion of their income in housing costs and property taxes, even if they don’t own the home. The tax on rented properties is mainly added to the cost of the monthly rent, she said, which would mean renters would continue to pay property taxes even if renters got rebates to pay them off.

“It doesn’t account for the thousands of voters who pay property taxes through rent,” O’Loughlin said. “It is generally accepted that rental property owners pass property tax liability on to tenants in the form of higher rents.”

O’Loughlin also said it would push this issue two years into the future with no follow-up plan to help ease the long-term property tax burden on Montanans.

The opposition urged the committee to explore alternative avenues that would provide Montana with longer-term property tax relief, rather than making this a one-time expense.

HB 222 is part of the governor’s plan to give Montanans $1 billion in tax breaks. Other bills in this plan include House bill 212which increases device tax exemptions for businesses, Senate bill 15which provides tax credits to renters and homeowners; and Senate Bill 121reducing the top tax rate from 6.5% to 5.9%.

“This is a priority for Montanans and they are counting on us to get it done,” Gianforte said.

HB189

Rep. George Nikolakakos, R-Great Falls, sponsors House Bill 189, which would provide more assistance to homeowners who qualify for the Property Tax Assistance Program to help high-income and low-income Montanans who earn between $21,000 and $28,000 annually to earn.

Nikolakakos echoed the governor’s opinion that no one should be taxed from their home, especially older Montanans.

“The people who spoke out the loudest about property taxes were generally the elderly,” Nikolakakos said. “They were frustrated that others were seemingly endlessly crushing them with levies and that runaway economic forces were inflating their taxable home values.”

The bill would increase the claim cap on home values ​​from $200,000 to $350,000 and reduce property tax bills by 20 percent, 50 percent or 70 percent for Montanans who qualify, depending on income.

“It’s really an adjustment to deal with the rapid rise in reviews that are putting pressure on people on a fixed income. I think it’s good public policy to keep people in their homes if they’re physically able to,” said Cascade County Commissioner Joe Briggs.

Nikolakakos said the main problem he heard from voters during the campaign was property tax pressures. He equated shifting rising property taxes to a waterbed, saying if a waterbed shifts too far in one direction, the water must be shifted back.

Housing eligibility costs for PTAP last increased in the 2015 legislature from a peak home value of $100,000 to the current $200,000.

Darryl James, executive director of the Montana Infrastructure Coalition, said property taxes are crushing the most vulnerable residents and HB 189 is creating a more equitable system to keep those individuals in their homes.

O’Loughlin expressed his support for the bill but still had concerns that it didn’t include support for renters.

No opponents testified on HB 189.

Caven Wade is a reporter with the UM Legislative News Service, a partnership of the University of Montana School of Journalism, the Montana Broadcasters Association, the Montana Newspaper Association, and the Greater Montana Foundation. He can be reached at [email protected]

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