fbpx

After High Reappraisals, Tax Increases Hinge On Legislature

By Beacon Staff

Every six years or so, one issue concerns people across Montana, from homeowners and business people, to legislators and municipalities: the possible sting of reappraisals for property taxpayers.

“Everyone out there is wondering how much their taxes are going to go up,” Scott Williams of the Montana Department of Revenue told Flathead County Commissioners last week. “We don’t have an awful lot of information for you right now because we don’t know what the Legislature will do.”

The state’s Department of Revenue is required by the Montana Constitution to reappraise the estimated 1 million properties in the state on a six-year cyclical basis. Reappraisals are intended to update the market value of these properties from 2002 values to what they would be worth on the market now.

The latest reappraisal window, which was set to end on Jan. 1, 2008, was extended six months to July 1, 2008, to account for the recent downturn in the market, Williams said. “We took a look at what was going on in the current market and wanted to try to capture as many of the changes as we could,” he said.

Even then, a preliminary estimate given to the legislative sub-committee this month found that the average increase on residential property in Flathead and Lake County was 73 and 74 percent, respectively.

“There’s been a downturn, yes, but people need to realize that we’re looking at what’s happened since 2002,” Williams said. “They may have dropped recently, but they’re likely still more than they were then for many people.”

Department of Revenue officials stress, though, that those reappraisal increases don’t necessarily mean property taxes will rise by these same percentages.

The averages within counties by classes of property vary widely, and individual parcels of property will too, when those numbers are released later this year. And while market value set by reappraisal is a key factor in calculating property taxes, it’s only one piece.

“Property taxes are like a three-legged stool,” Williams told the commission.

The Revenue Department is in charge of determining property valuations. That value is multiplied by a tax rate, set by the Legislature, to determine its taxable value. Then, the taxable value is multiplied by the mill levies from the local governments – city and county government, school districts and others – to provide services.

After recent reappraisal cycles, the Legislature has taken steps to reduce the cost of increased values for most property owners by phasing in adjusted tax rates and new property values and exempting a certain portion of the property value.

The Legislature seems poised to make similar adjustments this year. Gov. Brian Schweitzer and lawmakers have pledged to not let property taxes, on average, rise statewide because of reappraisal.

“That doesn’t mean that no one is going to see an increase,” Williams said. “It means that the average won’t see one.”

Statewide there’s a huge disparity between county averages, especially between the fast-growing western counties and eastern counties where population numbers are dwindling. Properties that increase by more than the average could wind up owing more in property taxes, while those that increase by less than average may owe the same or less.

Local mill levies for services like schools and city and county government add to the mix. In Flathead County, Bigfork and Hungry Horse have the lowest taxable value, while Kalispell and Columbia Falls have the highest.

As the state grapples with its piece of the process, the dozen employees at the local revenue department office have been collecting field data. This spring, homeowners will be notified what the new market values of their properties are and can appeal informally or formally.

The Department of Revenue is also reappraising value on Montana’s agricultural lands for the first time in 40 years. “It’s something that’s required by state law, but that we’ve never had the financial resources to do,” Williams said.

Agricultural and timberlands are not assessed on market value. With the help of agencies like the Farm Services Agency and the Department of Natural Resources and Conservation and advanced technology like global positioning systems (GPS), the revenue department has been determining field boundaries and soil types and productions.

That information was sent out to local agricultural landowners for review last week.