Property Reappraisal Mitigation Requires Accurate Information
Prior to the 2009 legislature The Department of Revenue advised that property values for homeowners in the state were likely to increase by 40 to 50 %. Big increases in valuations were also forecast for small business commercial property and agricultural and forest lands. Without a bill to maintain revenue neutrality, homeowners and small business people would see big increases in tax bills and the state would receive a tax windfall. The Republican Leadership made a promise in the early days of the session that we would support a bill to maintain revenue neutrality by class of property on a statewide basis. We made that promise, and we intend to keep that promise. The Governor made the same promise. The special bipartisan subcommittee worked on that approach throughout the session.
It becomes more obvious every day that the recent Property Tax Reappraisal will result in an increase in state property tax revenues. That was not the intention of the Legislature. In fashioning a mitigation bill to maintain revenue neutrality, and avoid allowing the state to receive a windfall the 2009 legislature relied on data provided to it by the Department of Revenue. However, the Department recently revealed that property valuations on commercial, agricultural and forest properties have experienced increases higher than the estimates they gave to the legislature during the session. In fact, the final figures varied widely from the early estimates provided by the Department. As a result, the owners of farms and ranches, forest lands and commercial property, most of which is owned by mom and pop small businesses, will be paying higher taxes than they should be, instead of benefitting from legislation that was intended to be revenue neutral.
However, recent remarks from the governor show that he may be willing to break his promise and keep the extra money. His comments appear to attempt to divert the attention from himself, and his appointed Department of Revenue Director who is responsible for the appraisal values that are supplied to the legislature.
It is puzzling that, although the Governor had made the statement early on that "there will be no net increase in property tax collection because of re-appraisal" and the legislature totally agreed, he made no effort to work for a solution, and late in the mitigation effort he even suggested a 5% increase cap on all properties and continue the work 2 years down the road. That suggestion not only violates the constitution, which requires equity in taxation to all Montanans, but it was contradictory to his own earlier promise to the people of Montana.
The recent newspaper editorial by Rep. Mike Jopek attempts to "blame the GOP" for the increases because of reappraisal. His tirade about the bill being "hijacked" is about as far from the truth as you can get. His suggestions were to either cap the payment of property taxes to a percent of the individuals' income, or cap the increases in high growth areas, or defer the enactment of the reappraisal, or appraise only when property changes hands. These proposals were either unconstitutional or would have caused big shifts in taxes from a majority of Montana taxpayers to benefit a few favored groups.
All property taxation must be equal, with no special favors for yourself, your friends or your district to improve your chances of getting re-elected. Rep. Jopek's claim that "60% of Montana Homeowners will see their property taxes increase by up to $200" is absolutely false. Over 80% of the property taxpayers in Montana may have a decrease or will have no greater than a 6% increase. It is totally irresponsible to suggest otherwise.
Taxation is a very difficult issue; those of us who are deeply involved understand that. Above all, we must follow our Constitution. The equal protection clause in both the Montana and Federal Constitution does not allow anything but equal and fair treatment of all citizens. We must not vary from that promise to all taxpayers. Anyone who believes or acts otherwise does not live up to the oath we take when we are sworn in as your representative.
The Montana Department of Revenue, and its Director who is appointed by the Governor, has the responsibility to appraise all property in the State, and provide to the Legislature a report of that appraisal. For the legislature to make the necessary adjustments in tax rates and deductions we must have accurate information.
We simply ask the Governor and his agents to respect the taxpayers of Montana with correct appraisal data, and for him to honor his promise to all Montanans, that re-appraisal will not result in additional state revenue.
We are more than willing to work with the Governor and the Director of Revenue to find a solution to this recent revelation. Our small businesses, agriculture and forest property owners cannot afford an inflated property tax payment, especially in these difficult financial times.