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Residents Propose Litigation to Solve Reappraisal Problems

By Beacon Staff

Valley lawmakers found themselves in the sights of angry residents at Thursday’s “town hall” meeting on property reappraisal, and many legislators present placed the blame for high tax increases on the state Department of Revenue.

The antagonism arose after the latest cycle of Constitutionally required property reappraisal increased some Flathead residents’ taxes by thousands of dollars. The Legislature passed a law attempting to mitigate the effects of reassessing property values on Montanans during the 2009 session.

And for many state residents, the mitigation worked. But for those in areas where the property value increased dramatically over the past six years, landowners saw a mirrored increase in their reassessed values. The average residential property values increased across Montana by 55 percent. In Flathead County, residential property values increased 73 percent.

Now the same lawmakers who passed the mitigation law are taking flak for the high increases and several said at Thursday’s meeting at Flathead Valley Community College that they unknowingly based their votes on inaccurate information from the Department of Revenue. There were no representatives from the department at the meeting.

It all comes down to a group called the “outliers.” The majority of Montanans fit in the bell curve of plus-or-minus a couple hundred dollars on their tax bill, but the outliers would experience more drastic changes. According to several legislators, they voted on the measure thinking that roughly 300 landowners would be outliers. The actual number provided on later data, they said, is closer to 3,000.

“It was completely hidden when I looked at the chart, otherwise I never would have voted for it,” Sen. Verdell Jackson, R-Kalispell, said. “I am very unhappy with what happened.”

Rep. Janna Taylor, R-Dayton, explained to the crowd of over 100 residents that she and other lawmakers based their votes on the information provided by the Revenue Department because the legislators themselves cannot come up with the same information.

“I don’t think there’s a single person up here who has an appraiser’s license,” Taylor said, referencing the panel of nine legislators at the meeting.

Some lawmakers said there wasn’t a better alternative to the current law presented during the session. Sen. Ryan Zinke, R-Whitefish, said he couldn’t vote for alternative bills because they exempted too many people from paying their taxes.

“The bill is bad, I think, but there wasn’t a bill on the floor that was better,” Zinke said.

The public expressed anger at the Revenue Department as well. Several people said it is a conflict of interest for the same government body to be responsible for reappraising values and collecting the taxes afterward.

Others said the Legislature seems powerless against the state agencies when it should be protecting Montanans from the government.

“We do not represent the Department of Revenue,” Taylor said. “We fight the Department of Revenue and we are as angry at the Department of Revenue as you are.”

As well-attended as the meeting was, Sen. Bruce Tutvedt, R-Kalispell, pointed out that many people in Montana are pleased with the mitigation. He said the bill was effective for the average home, but people living in recreational areas and on waterfront property are being hit the hardest. Tutvedt also said the law had largely achieved its goal of being revenue neutral.

Lawmakers said partisan differences are not a factor in changing the reappraisal process, but instead it is a struggle between the eastern and western parts of the state. Many counties in the east saw property tax decreases and their legislators are not as motivated to change things up, said Rep. Scott Reichner, R-Bigfork.

Only a few of those at the meeting who voiced their problems were from landlocked areas, such as Coram and West Glacier. Nearly all the others were from waterfront properties in Whitefish, Bigfork, Lakeside or Somers.

The meeting eventually turned to finding solutions to fix the problem. Reichner said legislation, lawsuits and Constitutional amendments are all ideas that have gained ground since the November town hall meeting in Bigfork.

Whitefish resident Dud Mahler presented his plan to sue the state over the reappraisal process, garnering applause from the crowd. His group, Montana Residents for Fair Property Taxation, considers the current system unconstitutional because it creates a separate class of outliers that are taxed more than others, Mahler said. Suing could provide an opportunity for the Legislature to fix the whole system, he said.

“I think the system is broke and that unless we do something to make it impossible to use the same mitigation technique that they’ve been doing we will never get a revised bill,” Mahler said.

Other proposed solutions included: higher licensing standards for state appraisers; removing the state from the reappraisal process and contracting it out to private companies; amending the state constitution to remove some reappraisal language; and eliminating property taxes all together and adopting a sales tax.

Another popular solution would be adopting an acquisition-based system for property tax, meaning that when an owner buys property, its value doesn’t increase and the taxes increase at a steady rate until the property is sold.

As for a cap on tax increases, former state Sen. Bob Depratu said it again comes down to east versus west. In order for the cap to work, there would also have to be a cap on decreases to balance it out, he said. That idea has been unpopular for lawmakers whose counties see property values decrease by 50 percent at times, Depratu said.