Montana Public Radio

Montana Property Taxes Rise To Cover Cuts In School Grants

Nov 30, 2017

This month Montanans saw bigger property tax bills. That’s because this spring state lawmakers cut block grants to schools in order to save the state $29 million amid the ongoing budget crisis.

The elimination of the block grants to schools was spurred by the state’s more than $200 million budget crisis

Schools across the state rely on state block grants to varying degrees to fund a broad array of education needs. Districts that lean more heavily on it will tend to see their property taxes rise more than districts that don’t.

Lance Melton is the executive director of the Montana School Boards Association. He says, statewide, property taxes are expected to increase about $27 million this year.

"There’s a gradual solution here. But in the short term there is unquestionably a relatively significant one-year increase in property taxes," Melton says.

The Association, along with a collaborative of other public school advocates and interest groups, supported the cut to block grants, as part of a compromise. It was seen as a pain for schools in the short-term to help mend the state budget, and eventually provide long term gain.

In exchange for shifting the burden for funding public schools onto local taxpayers, lawmakers agreed to ease the burden of property taxes across the state in future years. That will come in a higher state subsidy for mill levies.

So, some school districts will pay out hundreds of thousands of dollars in additional taxes this year, but by 2021 those same taxpayers will be saving money because of the state’s increased share of the cost.

For example, according to data provided by the Montana School Boards Association, Great Falls Elementary School District taxpayers will be asked to kick in an additional $755,000 this year. That will decrease next year, and each year after until 2021, when taxpayers will end up saving money.

But the net effect of this year’s bill that removes the block grants, Lance Melton says, is that the state will create a more equitable funding source for schools going forward.

Or at least that’s what’s supposed to happen. Melton says some in the public education community have their doubts that the Legislature will honor its commitment.

"You mean are there people that are concerned that the Legislature may roll back its promise? Absolutely. But I will tell you that there was a strong commitment among the legislators that supported that bill, that this only worked if they put that money back in,” he says.

Property taxes across Montana are expected to increase around $27 million this year, and $10 million next year as a result of the legislative change earlier this year. 

According to the Washington D.C. based Tax Foundation, Montana had the 17th highest property tax collection per capita in 2014.  However, Melton says the state tends to be below average in how much of those property taxes go to fund K-12 education.