I’d like to provide constituents with an update on my legislative activities this summer. Most recently, I chaired the next-to-last legislative Revenue Interim Committee (RIC) meeting to review our state’s financial updates, the Governor’s Property Tax Advisory Committee’s recommendations, the Department of Revenue’s recommended bill drafts generated by that agency’s Land Classification Study Working Group (LCSWG), and finalizing our 2023-2024 Property Tax Modernization Study.
The Property Tax Advisory Committee provided a comprehensive written report with recommended strategies to reform Montana’s property tax system. Twelve recommendations were detailed in the report and presented to RIC on Aug. 16. The most lauded recommendation was the homestead exemption. It aims to decrease the tax rate for primary residences and long-term rentals, valued up to $1 million, by about 18%. Conversely, the tax rate for homes above that threshold and on second homes would increase to 1.9%, or an estimated 41% increase in taxable value. This proposal will likely be presented during the upcoming session, along with consideration of ramifications to our already-complex tax codes. It could also result in adding more departmental employees.
Other report recommendations include revamping the way local governments present and vote levies to promote higher numbers of residents engaging in the process, and establishing expiration dates on levies. One of the highest increased line items on many of our property tax bills results from approved levies, typically based on “mills” instead of dollar amounts. We, as residents, need to engage with our local governments’ budget proposals because those are what drive the vast majority of our property tax bills.
Other proposed reforms include revising education funding, revisiting the state levy of 95 school-funding mills, reforming tax increment finance (TIF) laws, and possibly changing Property Tax Assistance Program (PTAP) policies. You can review the task force’s full recommendations in its Final Report at https://budget.mt.gov/About/PropertyTaxTaskForce. The legislature will be looking for your input now and during the 2025 Session.
Another topic of interest during the RIC meeting highlighted residential versus non-qualified agricultural land property tax classifications. Three draft bills were presented by the Department of Revenue for consideration. The first one proposed elimination of non-qualified agricultural property. It failed RIC sponsorship after review and citizen input. The second proposal is to revise the valuation of a one-acre ag-land homesite (land only) to be valued at market value with an allowed exemption. The third proposed draft bill would remove automatic ag classification and provide for an application process to confirm ag production, except for grazing purposes. The stated intent of these three bills was to incentivize agricultural production on Montana’s acreages at the appropriate ag tax classification, while identifying those properties currently identified as agricultural despite not being in ag production, resulting in more appropriate tax classifications. The RIC acknowledged that the two drafts put forward will require thorough vetting and likely amendments during the upcoming session.
Finally, the RIC reviewed the 2023-2024 Property Tax Modernization Study, focusing significant attention on residential property taxes due to rising home prices and real estate values in much of Montana. This report responds to a number of voiced concerns from taxpayers last winter when faced with paying increased property tax bills. In fiscal year 2024, Montana property tax collections totaled $2.3 billion, more than half directed toward school funding. Once RIC’s final edits are incorporated in the Study, it will be available online as well at: https://leg.mt.gov/committees/interim.ric.
At the final meeting of the RIC in November, the RIC members will review revenue standings and prepare a Revenue Estimating Resolution to be considered by the 69th Legislative Session in January 2025. When projecting the adequate amount of tax revenues going forward, the health and growth of our private sector businesses and job providers also must be a priority. Montana’s largest sectors of taxpayers include those who pay individual income tax, property tax, business and corporation taxes, natural resources and fees and consumption taxes.
If I am fortunate to again serve in the Montana Senate (in the new Senate District 38), my overall goal continues to focus on minimizing government and taxation burdens, while promoting the success of Montana’s students, our economy and our rule of law. My commitment is to work for the improvement and preservation of our Montana way of life. It has been my honor and privilege to serve the voters of SD 40 and our state. I look forward to continuing the work on our behalf. As always, please feel free to contact me at becky.beard@legmt.gov.
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