The Montana Association of Counties said it appreciates clarity in the state Supreme Court’s recent order on a question about property taxes — but MACo said the state can still choose to give property taxpayers a break this year.
In a letter Tuesday to Gov. Greg Gianforte, the Montana Association of Counties said neither the Department of Revenue nor MACo nor the court disputes the number of mills the state has authority to levy for education equalization.
A mill is a taxing value, equal to $1 for every $1,000 of a property’s assessed value.
This year, the state’s authority is 77.9 mills, said the letter — fewer than the full 95 mills historically levied for school equalization, reports the Daily Montanan.
Although counties have levied that full amount in the past, MACo said the state could choose to take less money from property taxpayers and still keep funding for schools intact.
In fact, MACo said the state will still receive an extra $20 million over last year even at fewer mills.
“As such, we again ask the State of Montana to live within its means and levy ONLY the maximum amount calculated by your Department of Revenue,” said the letter, signed by MACo president and Fergus County Commissioner Ross Butcher.
In a statement, a spokesperson from the Governor’s Office said Gianforte is not going to make cuts that harm education.
“If the governor were to cut the public school equalization mills, as wealthy lobbyists and some county commissioners are calling for, the effect would be to defund our public schools and harm Montana students,” said Kaitlin Price from the Governor’s Office.
Reappraisal values are jumping this year, and citizens are displeased with high tax bills.
And with property taxpayers hurting, Butcher said in an interview, the letter is a plea the Governor’s Office help in the wake of the court dispute.
“Please exercise discretion and demonstrate the greater fiscal responsibility you’ve asked county commissioners to demonstrate and levy the current year maximum mill levy calculation of 77.9 mills,” Butcher said in the letter.
This year, Montana property taxpayers saw historic increases in reappraisals, on average 48.5% for residential properties. Unlike previous years, however, the Montana Legislature, with a Republican supermajority, didn’t make an adjustment to neutralize the blow.
With residential property taxes slated to jump this year, counties took another look at state statute, and they came out with a different interpretation than the state of the amount they could levy.
Historically, counties have levied 95 mills for school equalization on behalf of the state.
The money is meant to ensure children have equal educational opportunities in Montana whether they live in richer or poorer taxing jurisdictions.
After scrutinizing the statute, however, most counties in Montana determined they didn’t have to levy all 95 mills, and instead, they would levy 77.9 mills, the current “authority” calculated by the Department of Revenue.
Gov. Gianforte, a Republican, has argued the counties were going to end up hurting education, and the Montana Constitution protects an equal education for children. His spokesperson reiterated his stance on the lower mill amount Tuesday.
“A few large industrial corporations and out-of-staters who have second and third homes in private resort communities would receive a massive windfall, while the average Montana homeowner would get enough to cover a couple cups of coffee a month,” Price said. “As the governor has said repeatedly, we won’t defund our public schools, and we’ll ensure each Montana child has access to a quality education.”
But counties argued that with property values going up, education still would be getting more money than last year, and 49 out of 56 counties levied the lower amount.
The dispute ended up in court, and the Montana Supreme Court said the state was correct, and MACo was incorrect. The court generally defers to state agencies, the order said, and the interpretation by the state, in this case the Department of Revenue, had been “unchallenged for a considerable length of time.”
Butcher, though, said the Supreme Court’s decision is a nod to ongoing practice, but it doesn’t mean the state needs to have the maximum amount levied — thus, MACo’s plea to the governor for reprieve for property taxpayers.
“We still think that our taxpayers are feeling pressured on property taxes, and all the other taxing jurisdictions saw a reduction in the mills levied because the values increased so much,” Butcher said. “The only entity that didn’t see a reduction in mills that they could levy was the state.
“And in a time when people are feeling crunched by property taxes, we thought it was appropriate the 77.9 number be utilized.”
Additionally, he said, everyone needs to be fiscally responsible, and the surplus in the state’s general fund can easily cover its obligation to education equalization — the surplus sat at $2.5 billion in early 2023.
In other words, Butcher said taxpayers shouldn’t have to pay extra given the resources the state already has at its disposal.
Gianforte has said the counties would be shorting schools if they levy a lower amount, and he has also said local governments need to rein in their spending if they want to address high property taxes.
“Most local governments, including counties, are good stewards of taxpayer resources, live within their means, and exercise restraint with property tax increases,” Price said in an email.
“Some, however, are spending out of control, continue to fund their largesse with skyrocketing property taxes, and unreasonably put that heavy burden on the backs of Montana homeowners.”
Butcher said he and the governor have talked, and they don’t want to poke each other in the eye on the issue. However, Butcher also said it’s frustrating for local governments because they have been restricted to levying taxes at half the rate of inflation.
“You do that for 20 years, and your budgets get really restricted,” Butcher said.
The cap means counties rely on new growth for income, and some counties indeed have seen growth, he said. However, other counties don’t see growth, and some that do also have more costs.
“They also have expenses go up with that because there’s more people, more services,” Butcher said.
He said Fergus County is getting ready to send out amended tax bills to taxpayers that say they are going to need to pay the additional 17 mills on their next tab — the difference between the 77.9 mills the county levied and the full 95.
“But it’s in his hands,” Butcher said of Gianforte.
Price from the Governor’s Office said Gianforte and legislators in 2021 and 2023 enacted fiscally responsible, conservative budgets that held the line on new spending, permanently cut taxes and provided Montanans with up to nearly $4,000 in rebates.
“The counties that are spending and taxing at alarming rates should take that page out of the governor’s playbook and rein in their spending and taxes,” Price said.
