HELENA — Property taxes were a major topic at the Legislature Wednesday, as the Montana House and Senate each gave initial approval to multiple tax-relief bills. However, there’s still a long way to go before we’ll see the full, final picture of what the legislative property tax plan is going to look like.
“This is a difficult problem to make work,” said Rep. Llew Jones, R-Conrad.
(Watch the video for more on the property tax bills moving forward.)
Together, the two chambers endorsed five bills – though in some cases, lawmakers made clear there was still more work to do.
“We can't talk about doing something for years, come up here and vote against bills because they're not perfect, okay?” said Sen. Forrest Mandeville, R-Columbus. “We need to do something, we promised to do something – let’s do something starting today, by voting yes.”
The House advanced three bills Wednesday, including House Bill 231, the “homestead” bill that’s been Gov. Greg Gianforte’s top property tax priority.
“Is this bill perfect? No,” said Jones, who’s sponsoring HB 231. “I wish I could have figured out how to do a perfect bill, I don’t know how. It does do good work.”
HB 231 would give lower tax rates to most Montanans’ primary residences, long-term rentals and smaller commercial properties, but raise rates on properties that don’t qualify for those homestead rates.
The House rejected several proposed amendments from Rep. Terry Falk, R-Kalispell. Falk argued the bill as it currently stands doesn’t do enough to account for rising property values, and he proposed adding $90 million a year in rebates to property taxpayers.
“I just appeal to you: Let’s give some real help here; let's respect our taxpayers,” he said.
Jones urged lawmakers to reject the changes. He said keeping HB 231 moving forward would allow them to make a separate decision on whether to consider rebates.
“We going to have the rebate conversation, I don't disagree with the good amendment sponsor – but that $250 million could also build a prison, it could repair roads, it could do all sorts of things, including a rebate,” said Jones.
HB 231 has been amended to tie it in with another bill, House Bill 154 – a priority proposal for House Democrats. If HB 154 doesn’t pass, HB 231 would lower tax rates even more for primary residences that are less than twice the value of the state’s median residential property.
HB 154, sponsored by Rep. Jonathan Karlen, D-Missoula, would create a “housing fairness” income tax credit. Montana homeowners and renters would be eligible for the credit to offset some of the property taxes they paid, or a “renter equivalent” of taxes paid, if their household income was below $150,000. Karlen said all the other property tax proposals didn’t take into account a resident’s ability to pay.
While speaking to reporters Tuesday, House Minority Leader Rep. Katie Sullivan, D-Missoula, explained her support for linking these two bills.
“I think many legislators want to see more than one bill continuing – not just have one thing be the final thing, and we all just say that's fine,” she said. “And so this is kind of our way of forcing conversation, you could say.”
The House also endorsed another Democratic proposal, House Bill 155, from Rep. Mark Thane, D-Missoula. That bill would create a graduated tax rate for residential property – increasing gradually on higher home values. Thane said the proposal was designed to reduce the share of the property tax burden that falls on residential property – a share that has grown in recent years because of the spike in home values.
Meanwhile, the Senate advanced one bill on a unanimous vote – and to applause from members. Senate Bill 90, sponsored by Sen. Carl Glimm, R-Kila, would take some of the money from Montana’s taxes on hotels, campgrounds and rental vehicles and use it to fund a property tax credit for primary residences worth less than $1 million.
The Senate also gave initial approval to Senate Bill 32, sponsored by Sen. Jeremy Trebas, R-Great Falls, which would set the property tax rate for almost all types of property at 1.65%. There would be a lower 1.25% rate for owner-occupied residences. It would also change the requirements for how a local government can increase its tax collections to account for inflation.
Currently, the property tax rate varies widely for different classes of property: from 1.35% for residential and 1.89% for commercial to 12% on things like pipelines and electrical utilities’ transmission systems.
Since his State of the State address, Gianforte has repeatedly called on the Legislature to move HB 231 quickly, so that homeowners can start seeing relief from it this year. He asked for the bill to be on his desk by mid-February – a goal that is now past.
This week, Senate President Sen. Matt Regier, R-Kalispell, told reporters that he expected lawmakers would take their time looking at all of the different property tax concepts.
“There's going to be, a roundtable conversation that happens at the end for property taxes – that’s just my crystal ball,” he said.
Each of the bills that advanced on Wednesday will have to pass a final vote before moving over to the other chamber.
