The rotunda of the Montana State Capitol in Helena on Wednesday, April 26, 2023. (Photo by Mike Clark for the Daily Montanan)
Gov. Greg Gianforte wants legislators to move fast on at least part of his property tax relief plan, but Montana lawmakers gave no guarantees Tuesday, either on the centerpiece of his proposal or the speed of their work.
In his State of the State address on Monday, Gianforte said he wants to see a proposal that cuts property tax rates for people who actually live in Montana — as opposed to those who “drop in” to ski — as soon as next month.
One day later, Republican and Democratic lawmakers pointed to some of their own ideas and concerns around tax relief proposals, and at least one Democrat said tax legislation shouldn’t be rushed.
Rep. Mark Thane, D-Missoula, said Democrats introduced last week their own version of a homestead exemption — which actually provides an exemption, he said, unlike the rate cut plan from the governor — but a hearing on it has yet to be scheduled.
Legislators want to see the specific proposal from the Governor’s Office, which hasn’t been introduced yet, and it’s only fair they have adequate time to compare and contrast it with their own, Thane said.
“I am a little concerned about the ambitious timeline, simply because this is a complex issue,” Thane said.
Senate President Matt Regier, R-Kalispell, on the other hand, said he believes the homestead exemption is a good conversation to have — it includes an exemption for commercial properties too — but he pointed to a different idea to return money to Montanans as one he likes for sure, this one with bed tax dollars.
Regier said he believes Senate Bill 90 is cleaner. Depending on the moving parts of the more complex bill, Republican leaders said the budget might accommodate both, and Regier pointed to the state of affairs in government coffers.
“We are taking too much money out of Montanans’ pockets in a lot of different ways,” Regier said.
One year ago, in response to concerns about high property taxes, Gianforte formed a task force to come up with ideas for how to shift the increases away from single family homes. In August, it delivered 12 proposals to him.
The star player is a homestead, “agstead,” for agricultural land, and “comstead,” for commercial property, exemption, which the task force said would cut taxes by at least 15% for 345,000 homeowners and long-term rental owners and 32,000 business owners. For example, it would cut the rate for primary homes worth up to roughly $1 million from 1.35% to 1.1%, along with other cuts.
The Montana Legislature is taking up proposals from the task force. House Minority Leader Katie Sullivan, D-Missoula, said Tuesday she doesn’t agree with the way taxes have skyrocketed under Gianforte’s watch, and Democrats have better alternatives for addressing the problem.
“Our plan is one that we believe will provide relief that everyday Montanans will feel in their mortgage and in their rent,” Sullivan said.
Thane described House Bill 155, sponsored by him and other Democrats, as one fix. Instead of cutting the rate across all residential properties at the same level, currently 1.35%, the bill would offer a graduated approach.
The first $50,000 of market value would be taxed at 0%, the next $50,001 to $500,000 would be taxed at a rate of 1%, and properties valued at greater than $2 million would be taxed at 2%, as proposed.
Residential payers have been shouldering more and more of the property tax burden in recent years, Thane said. They’re currently paying 59% of it, and if the Legislature doesn’t act, they’ll be paying an even greater share, he said.
“We need simply to rebalance the tax burden across the 15 classes of the property, and our bill would accomplish that,” Thane said.
The bill would provide an exemption for commercial properties as well, for the first $200,000 of market value, in a bid to help “main street” businesses, he said.
Democrats also discussed House Bill 154, which would link property taxes and income taxes. Rep. Jonathan Karlen, D-Missoula, said the “housing fairness” tax credit addresses a concern legislators often hear on the campaign trail.
“Their property tax burden doesn’t reflect their ability to pay,” Karlen said.
The bill, also sponsored by other Democrats, would cap a property tax liability at an affordable portion of a person’s income, he said. Karlen said the bill would also apply to renters too; it states that “rent-equivalent property tax paid” means 15% of gross rent.
Renters also are bearing the brunt of property tax hikes, and the bill guarantees they experience direct relief as well, he said.
Republicans touted a couple of other bills, including SB 90. Regier said that bill, to return some lodging and car rental tax to Montanans, makes sense for a couple of reasons.
For one, he said, some of the money goes toward advertising Montana, and the Department of Commerce wasn’t able to spend all the money it collected. Second, he said, it addresses a concern among many Montanans.
“I think there’s a big sentiment in Montana of, ‘Why are we spending millions of dollars to attract more people to move in and buy the house next door and raise your property taxes?’” Regier said.
If it passes, Senate Majority Leader Tom McGillvray, R-Billings, said it would give a credit of an estimated $400 to $500 to all homeowners.
Republican leaders in the Senate discussed those bills in a press availability Tuesday, and Democratic leaders in the House and Senate did the same in their own weekly press conference.
Senate Minority Leader Pat Flowers, D-Belgrade, said it might make sense to make changes with bed tax money, but the tourism industry is one of the biggest components of the state economy.
Like any business, he said, it needs to be nurtured.
“We have to be very careful how we treat that portion of our economy,” Flowers said.
Although Democrats said they are waiting to see some specifics in a bill supported by the governor’s office, Flowers said he appreciated a phrase Gianforte used in his State of the State address, a “crisis of affordability.”
Flowers said Democrats would be evaluating legislation through a consistent lens: “Is it actually benefiting lower- and middle-income Montanans trying to make their ends meet?”
Regier, on the other hand, said the state is pulling in way too much money, an estimated $522 million more than it needs to operate, and he isn’t keen on any of them — “I don’t like income tax. I don’t like property tax. I don’t like sales tax.”
He said he sees property tax as the worst of the bunch, though, and quoted a colleague: “Basically, you’re renting your own house from the government.”