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Schweitzer Rejects NMAR’s Request for Special Session

By Beacon Staff

A request by the Northwest Montana Association of Realtors calling for a special session of the state Legislature to address “current inadequacies” in the property tax reappraisal carried out in the 2009 regular session was immediately swatted down by Gov. Brian Schweitzer last week.

The letter, written by NMAR President Barb Funk, notes that 11 counties, including Flathead and Lake, will be “disproportionally affected by higher than expected residential property values,” and asks Schweitzer to convene a special session to immediately adopt a “stop gap” measure to solve current reappraisal problems, and establish an interim committee to deal with long-term property tax issues and draw up a bill for the 2011 session.

“Some property owners may be forced out of their homes due to the unreasonable and unfounded increases in their property taxes which could result in paying excessively higher taxes,” Funk wrote in the letter, which was also sent to Northwest Montana lawmakers. “These types of major swings in property tax increase are unsustainable and will hurt an already hurting economy.”

In an interview with the Beacon, Schweitzer criticized NMAR’s letter for using inaccurate figures and questioned why the reappraisal legislation, HB 658, received the broad support of Realtors during the session and afterward, citing a story that appeared Sept. 29 in NewWest.Net where a lobbyist for the Montana Association of Realtors called it, “a pretty darn good bill.”

The governor also took aim squarely at Republicans, who led the Senate Taxation Committee in crafting the final iteration of the reappraisal bill, saying he would not spend taxpayer dollars at a rate of $80,000 per day, the rough cost of a special session, to bring lawmakers back to Helena when there wasn’t a plan in place beforehand to fix any shortcomings in the current bill.

“These people on the Senate Taxation Committee – they didn’t listen to anybody last time,” Schweitzer said. “Why would we expect that they would come back and do anything different in a special session?”

Property reappraisal is a perpetually contentious issue as the state Department of Revenue conducts its Constitutionally required review every six years, and the Legislature attempts to mitigate the impacts of the drastically increasing values on taxpayers, whose income may have decreased or remained static while their land valuations skyrocketed.

Rep. Mike Jopek, D-Whitefish, carried the property reappraisal and mitigation bill during the 2009 session but eventually voted against it after it was amended by the Senate Taxation Committee. While Democrats wanted the bill to include more provisions for homeowner assistance, Kalispell Republican Sen. Bruce Tutvedt, who sat on the Finance Committee, called the bill that arrived from the House a “mess” that would have over-collected taxes.

Negotiations over the reappraisal bill stretched into the session’s final days, and Schweitzer complained that the bill didn’t arrive on his desk for signing until two days after adjournment, leaving him with virtually no choice but to allow the bill to become law. He did so without signing it.

“They dawdled all the way to the end on purpose and sent me the bill after they had gone home,” Schweitzer said. “Maybe they thought it was good politics but I thought it was poor leadership.”

In the Flathead, where residential land values increased 66 percent on average, property reappraisal is a particularly key issue, as Northwest Montana saw some of the biggest swings upward in the early 2000s, and then endured some of the steepest declines in the recession.

Since notices went out over the summer, Flathead County has led the state in requesting informal reviews of reappraisal values, with more than 7,000 residents questioning the values. (The tax protest deadline is Nov. 30.)

Yet throughout the state, reappraisal does not appear to be generating the shockwaves it has in high-growth Western Montana. Revenue Director Dan Bucks has been quoted as saying roughly 60 percent of Montana homeowners will only see their property taxes change by plus or minus $40 a year, and estimates roughly 7,000 homeowners face increases of more than $200 beginning in November.

But for John Sinrud, NMAR’s government affairs director, the relative success of reappraisal elsewhere in the state is beside the point, and he accuses Schweitzer of “just trying to play politics with this.”

“Even if one individual lost their home because of a reappraisal that had gone awry, is that what we want to do in this state?” Sinrud said. “The Legislature and the governor need to show leadership and solve these problems for the citizens of the state.”

There appears to be little motivation among lawmakers or the governor, however, to make changes to property reappraisal before the next Legislature in 2011. Schweitzer also noted that while he is clearly no fan of the current bill, a September report by the Legislative Fiscal Division showed the average residential property valuation increases in Flathead and Lake counties were less than what was anticipated during the session.

Flathead County’s residential values, anticipated to increase 73 percent, actually rose 66 percent; and Lake County’s rose 67 percent instead of the anticipated 74 percent. Lincoln County’s however, anticipated to rise 36 percent, actually went up 75 percent.

About 81 percent of the revenue collected through the reappraisal bill goes back to local county governments and school boards, Schweitzer said, so communities getting hit hard by reappraisal should exert pressure on their county commissions and school boards to have their local mills reduced.

“If there are counties that, because of the actual appraisal, come in at a higher rate than had been projected, they can fix the problem locally, by adjusting the mills,” Schweitzer said. “That’s why it’s been deathly silent at the county courthouses and on the school boards.”

“Maybe they ought to do what we’ve done in Helena: Cut the cost of doing business and get by with the same or less than they did in the last biennium,” the governor added.

Jopek believes some proposed solutions would need to be put forth so lawmakers could look at them before even considering convening a special session.

“What’s the solution? I want that on the table,” Jopek said. “People who pushed this forward need to put forth a solution, because obviously what they ran through doesn’t work.”

Tutvedt, like Schweitzer, urges people who might be shocked by the steep increases in their property values to actually run through the calculations, available on the Revenue Department’s Web site, to see what their actual taxes may be, and how well they’re mitigated. But he questions why Schweitzer didn’t get more involved in reappraisal during the session while “taking potshots” at Republican lawmakers now.

Tutvedt is inquiring about why the Taxation Committee may have been working with figures that understated the number of property owners in Flathead and Lake Counties who saw big increases, but neither he nor Senate President Bob Story, R-Park City, think a special session is called for.

“I think there’s great angst and it’s appropriate,” Tutvedt said. “We think a special session would be futile, probably just as the governor does.”