Northeast Montana News

In Montana, state law prevents property tax increases in the state to be greater than one-half the rate of inflation, and they have stayed within these confines. Tax collections for new development and measures approved by voters are the only exceptions. 

While some local governments say that the cap prevents them from getting all the funds they need from property taxes, some local government officials wonder if it is too much. 

For instance, localities can put voluntary tax increases on the ballot, which is one exception of the property tax increase cap. This can cause an unsustainable situation. 

“The concern is that voter fatigue will result in denial of funding requests as we rely too much on property taxes to fund essential local government services,” Montana Association of Counties Executive Director Eric Bryson recently told the Northeast Montana News. “Police, fire, elections, roads, bridges, prosecution, public health, and emergency services are all paid for by local property taxpayers.” 

Over the past 16 years, residential property taxes have risen faster than inflation in 53 or 46 counties on a per capita basis, according to a Montana Free press analysis. The analysis shows that, on average, residents paid $395 per capita in 2002 compared with $806 in 2018. 

Montana is one of only five states without a statewide sales tax, making property taxes an important revenue stream. 

In 2019, the Montana legislature approved a study looking at state and local tax policies, to look at rising tax rates and if the local governments are relying too heavily on residential property tax revenue. The study is in process and should be complete by the 2021 legislative session. 

“Any change to the tax system would require legislative approval and or an initiative/referendum process,” Bryson said. 

It is unclear if there will be any new legislation in the 2021 session, but the study provides essential information for legislators to consider. 

 “I’m not sure if we’ll get to a major overhaul this time, but I think we’re going to get a lot of data put together,” said Sen. Mark Blasdel, a Kalispell Republican serving on the study committee, at a press briefing earlier this year.