Governor's Property Tax Package Seen by Lawmakers.

HELENA – One week before Gov. Greg Gianforte was scheduled to give his State of the State address to the Montana Legislature, a panel of lawmakers tabled and then revived one of the flagship bills in his tax package, which would spend a quarter of the state's nearly $2 billion surplus on property tax relief for homeowners.

In the Legislature's third week in Helena, two key property tax bills got hearings in the House Taxation Committee – House Bills 222 and 189.

Rep. Tom Welch, R-Dillon, is sponsoring House Bill 222, which would deliver $500 million in property tax rebates over the next two years to Montana homeowners. Residential property owners could get up to $1,000 in 2022 and 2023 for one permanent residence.

"Montana homeowners are rightfully concerned about the rising property tax they pay. Their property taxes are too high, and too often the strain of rising taxes is forcing some Montanans to consider selling their homes," Welch said.

At a press conference the governor said he was encouraged by the "lines and lines" of supporters who testified for the bills.

But, on Wednesday, Jan. 18, House Majority Leader Rep. Sue Vinton, R-Billings, moved to table HB 222 and the motion passed 14-7. Gianforte called the press conference the next day and called out the committee for tabling the bill.

"When given a chance to move this critical measure forward, the committee tabled the bill. This held up property tax relief for Montanans," Gianforte said. "Many of these legislators who voted to stall property tax relief are the same ones who came to me in 2021 telling me we had to act on property tax."

After the governor's press conference, the committee removed the bill from the table on Thursday, Jan. 19, amended it to reduce payments by half, and passed it 14-7. The amendment drops the rebate given from $1,000 to $500 each year.

The House Appropriations Committee will now hear testimony on the bill and if passed, it will move on to the full House for debate.

Rep. Mark Thane, D-Missoula, was one of the lawmakers who voted against reviving the bill.

"The rebate's not indexed. It's a one-size-fits-all regardless of one's means," Thane said.

Thane said the legislature should and will do something with property tax relief during the session, but the HB 222 should remain tabled until the committee can review other bills on property tax. He also said the bill doesn't support renters, a category which he said 50 percent of his constituents fall under.

"I think it's important we couple relief with renters' credit," Thane said. "The reason I voted to leave it on the table is we will hear additional property tax measures in the next week or so, and I'd like to be able to compare all."

Welch and supporters of the bill said that looming appraisals and increase in property taxes are forcing residents with fixed incomes out of their homes.

Montana residents will be hit with new property tax appraisals in 2023, following the annual two-year cycle.

"Keeping people in their homes is important," said Sheridan Johnson of the Montana Chamber of Commerce.

Gianforte has said that he wants to allow elderly Montanans that rely on fixed incomes to stay in their homes and age in place.

Several supporters also said the bill would also knock down barriers for potential home buyers, who they say are timid because of high inflation and increased property tax.

"In this time of increasing values and increasing costs of services provided at the local level, the property tax burden on residential folks is a barrier to homeownership," said Sam Sill, the government affairs director of the Montana Association of Realtors. "This bill does provide broad and meaningful property tax relief to residential payers."

Heather O'Loughlin, co-director of the Montana Policy and Budget Center, was the only opponent to the bill in the first hearing. She outlined three concerns that she said the legislation doesn't factor in: Renters, low-income homeowners and no long-term relief.

O'Loughlin said renters pay much of their income on housing costs and property taxes even if they don't own the residence. The tax on rented properties is added chiefly into the cost of monthly rent, she said, which would leave renters still paying for property taxes even if renters were receiving rebates to help pay those off.

"It does not factor in the thousands of constituents that pay property taxes through rent," O'Loughlin said. "It's generally accepted that owners of rental real-estate pass through property tax liability to renters in the form of higher rent."

O'Loughlin also said it would push this issue into the future by two years with no follow-up plan to help ease the property tax burden on Montanans long term.

The opposition urged the committee to look at alternative avenues that would provide more long-term relief on property taxes for Montana rather than making this a one-time expenditure.

HB 222 is part of the governor's plan of giving Montanans $1 billion in tax relief. Other bills in this plan include House Bill 212, which increases equipment tax exemptions for businesses, Senate Bill 15, which provides tax credits to renters and homeowners and Senate Bill 121, which lowers the top income tax rate from 6.5 percent to 5.9 percent.

"This is a priority for Montanans, and they're counting on us to get it done," Gianforte said.

HB 189

Rep. George Nikolakakos, R-Great Falls, is sponsoring House Bill 189, which would give more assistance to homeowners who qualify for the Property Tax Assistance Program, designed to help fixed- and low-income Montanans who make between $21,000 and $28,000 yearly.

Nikolakakos echoed the governor's sentiments that no one should be taxed out of their home, especially elderly Montanans.

"The people most vocal about property taxes were generally elderly," Nikolakakos said. "They were frustrated that others seemed to endlessly smashing them with levies and that out of their control economic forces were pushing up their taxable home values."

The bill would increase the eligibility cap for home values from $200,000 to $350,000 and reduce property tax bills for Montanans who qualify by 20 percent, 50 percent or 70 percent depending on income.

"It's really an adjustment to deal with the rapid rises of appraisals that are pinching people with fixed incomes. I think it is good public policy to keep people in their homes as they are physically able to do so," Cascade County Commissioner Joe Briggs said.

Nikolakakos said the number one issue he heard from constituents when campaigning was the pressure of property tax. He equated the rising property tax shift to a waterbed, saying that when a waterbed shifts too far one way, the water must be shifted back.

The cost of housing eligibility for PTAP increased most recently in the 2015 legislative session from a top home value of $100,000 to the current $200,000.

Darryl James, executive director of the Montana Infrastructure Coalition, said property taxes are crushing the most vulnerable residents and HB 189 creates a more equitable system to help keep those individuals in their houses.

O'Loughlin expressed support of the bill but still had concerns over it not including any support for renters.

No opponents testified on HB 189.

Caven Wade is a reporter with the UM Legislative News Service, a partnership of the University of Montana School of Journalism, the Montana Broadcasters Association, the Montana Newspaper Association and the Greater Montana Foundation. He can be reached at [email protected].