The rise in property taxes and rent is top of mind for Montanans across the state. Legislators are mulling over a variety of fixes.
The governor’s office has hyped a proposal since before the session started to create a “homestead” tax rate. Developed and sponsored by Republican Rep. Llew Jones of Conrad, it would give a tax break to full-time residents on primary homes in Montana, while taxing second homes at a higher rate.
Jones says part-time residents who don’t pay income tax should be on the hook for state services they use.
“But without a sales tax, it’s fairly difficult to have those folks participate in this economy. So this bill tries to, in the manner of a property tax system, bring them to the table,” Jones says.
The proposal would also extend the reduced rate to 32,000 small businesses. But the state’s largest advocate for business, the Montana Chamber of Commerce, is an opponent to the bill, as it shifts a higher tax burden onto big businesses and agricultural producers.
Todd O’Hair is president of the organization.
“I can’t in good conscience stand before this committee and advocate for increasing taxes on any of our membership,” he said.
Progressive housing advocates also aren’t sold. They prefer a bill that would give property owners and renters an income tax credit based on the proportion of income they pay in property levies.
Democratic Rep. Jonathan Karlen of Missoula is the sponsor.
“This bill is a backstop that ensures our constituents don’t face a property tax burden that exceeds their ability to pay,” said Karlen.
Rose Bender, director of research for the Montana Budget and Policy Center, noted that 29 other states and D.C. offer a similar type of credit.
“No tax cut offers a more targeted solution to property tax affordability problems than tax credits like this one,” said Bender.
Allen Lloyd with the Montana Society of Certified Public Accountants was the sole opponent, saying the group won’t support any bill that complicates the tax code.
Some conservatives want a broader approach. Republican Sen. Carl Glimm of Kila is proposing rerouting tourism tax revenue to offset all residents’ property tax bills, although that saw little support in committee.
Sen. Daniel Zolnikov of Billings is carrying a bill that would further cap local governments’ ability to raise property taxes. Gov. Greg Gianforte’s office was the sole proponent for that bill. The governor has criticized local governments he says have bloated budgets. A long list of county commissioners opposed the bill, saying it would require them to cut law enforcement and firefighting jobs.
Lawmakers have not yet taken action on the bills.
