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Property taxes skyrocket across Montana

Posted at 10:01 AM, Apr 12, 2024

BOZEMAN- When Bozeman resident Deborah Newville opened her latest tax statement, she was shocked. At first.

“It threw me such a curveball,” she said.

After the shock wore off, worry set in.

“I don’t know, it’s a question mark," she said, adding, “We are now at $12,000 for the year, so approximately a thousand a month in property taxes."

Across the state, many Montana property owners are in the same boat, trying to find out why their property taxes increased so much, and how they're going to pay them.

Not everyone is in the same boat. An MTN analysis of property-tax records showed that one residence owned by Gov. Greg Gianforte in Helena actually saw a decrease in property taxes this year, unlike properties owned by others in the same neighborhood. Another of the governor's properties in Bozeman saw a smaller increase than neighboring properties, largely because of its agriculture designation.

State revenue officials say a reappraisal resulted in the tax decrease for Gianforte's Helena property, but neighbors in both areas say they're frustrated by a system they fear is pricing more Montanans out of their homes.

Meet Tony and Deborah Newville

Deborah and her husband Tony grew up in Bozeman but have spent the last few decades living in Oregon raising their daughters and fulfilling career goals.

Tony likes to call themselves economic refugees, because when the couple left Bozeman after graduating from Montana State University, he says the job market was bleak.

Tony worked for years as a public defender; Deborah was a forensic scientist.

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“My parents ended up buying this property in 1968,” she said.

While they currently own a home in Portland, where their children still reside, Deborah’s childhood home on Manley Road in Bozeman was gifted to her by her father with the intent of keeping it in the family.

So that was her plan, until the doom and gloom of increased property taxes hit Montanans.

“To have something special like this to stay in the family,” said Deborah. “I had no idea when my dad passed. I didn’t even get the responsibility of what was going on.”

After the pandemic, Montana saw record growth, and home prices soared to levels few could have anticipated.

The Newvilles' 1980s-era home on Manley Road, with its retro green countertops and 10 acres of land, increased in value to over $2 million.

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So naturally, the property taxes increased on it. That’s because every two years, properties are automatically re-evaluated in the state, according to Republican state Sen. Brad Molnar.

He says lawmakers and Republican Gov. Greg Gianforte were warned that this year, the increase in values could be much bigger because so many people were relocating to Montana.

“The Department of Revenue came in and said, you are going to be hit with some pretty historic tax increases. If you don’t want to do that, what we have done historically is change the multiplier and lower the impact,” said Molnar.

But lawmakers and state leaders failed to do so.

Deborah couldn’t believe the increase on her Bozeman property, so she started asking questions.

“Our immediate neighbor next door, which happens to be the governor, theirs seemed to go up just a bit, maybe a couple thousand. Whereas ours went up $5,000.”

What is the ag tax exemption?

Gianforte purchased his 11-acre property on Manley Road in the 1990s.

A spokesperson for his office, said the governor and his wife, Susan Gianforte, own land in ag production there, saying the land rotates between irrigated barley and alfalfa. It’s also used to board horses and mules.

The governor’s property taxes increased by 19% because of the Montana agriculture exemption.

As Missoula County Commission Josh Slotnick explains, an ag exemption must be met through certain criteria.

“No one is abusing this but I believe the rules need to be updated,” said Slotnick.

In Montana, land over 160 acres automatically gets an agriculture designation, which is taxed at a lower rate. However, if your parcel is less than 20 acres you need to meet certain criteria to qualify as agricultural. One way is to produce $1,500 of ag product, which, if documented, can be consumed by people or livestock.

“All the people I know who are involved in agriculture are playing by the rules,” Slotnick said. “People who I know who pay taxes play by the rules. These rules were written a long time ago, and the rules related to an ag exemption need an update specifically around small-scale ag in Western Montana.”

The Newvilles said they asked about getting an agriculture exemption on their property too, but they determined the cost to start up could be as much as $100,000.

In addition, they’d have to clear out the natural cottonwood trees on their property, which they say serve as a wildfire corridor.

Deborah says she has much respect for Montana farmers, but the Newvilles don’t believe Gianforte is a farmer.

“We were here in the 80’s when all the farm repossessions went on. These are family farms,” said Tony Newville. “That’s what that ag exemption was, for family farms to be passed to the next generation. It wasn’t designed for multi-millionaires land developers and speculators.”

How property taxes are determined 

Those with the governor’s office say property tax bills are contingent on two primary elements, property appraisals and mill levies.
 
A spokesperson said while properties across jurisdictions may see similar increases in value because of re-appraisal, property tax bills may vary based on a jurisdiction's spending decisions.

It’s something everyone in the property tax game can agree: the issue is complicated to understand.

Property taxes don't go to pay for state government. They are used to pay for county, city and school budgets, among others.

“Every action item that was taken by Republicans, by the governor, on taxes was all tax cuts,” said Kyle Schmauch, communications director for Montana’s GOP Senate majority. “When we have a huge influx of value and residential development and a decrease in industrial that ends up shifting a lot of the tax burden over to the residential side."

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Schmauch says if Montanans are looking for blame for their property tax increases, they can look at several different factors.

“Almost all property tax in Montana goes to three things, county government, city government and schools,” he said.

He says it’s unfair to blame the governor or legislative leadership, because of how hard Republicans worked this past session to bring taxes down.

“Income taxes are what fund state government,” he said. “The biggest difference between properties is the differences between spending between cities and counties.”

Schmauch said counties with more frugal tax policies, such as GOP-leaning Yellowstone and Flathead, saw lower property-tax increases than others, including Missioula, Gallatin and Lewis Clark, which have the state's highest concentration of Democrats.

What’s with the governor’s Helena property taxes?

It seems those living across the street from the governor's home in Helena, are also paying more in taxes than him.

MTN News spent hours poring over public tax documents of close of dozens of homes in Helena’s historic district, where Gianforte owns property at 618 Madison Ave.

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Of those homes in that neighborhood, most all, except for a few, saw sizable increases in their property taxes, anywhere from 11% to 40%, according to the MTN analysis.

MTN spoke with a man in his late 80s, living in the same historic district in Helena on a fixed income who saw an increase of 62% in property taxes.

Meanwhile, the governor’s Helena home saw a decrease of 6.92% in property taxes.

The Department of Revenue said the property's value was assessed at around $770,000, and it's currently on the market listed for $2 million.

The governor’s communications team never responded to our inquiries about that specific property, but the Department of Revenue said the reason for a decrease in property taxes is due to the governor’s house being reappraised at a higher value, but still by less than his neighbors.

Molnar has been a vocal critic of Gianforte's handling of property taxes, even suing the state and saying the amount of tolerance on the issue, is used up.

The Laurel Republican doesn’t believe there’s wrongdoing, instead a system in desperate need of revisions.

“I don’t think in my heart of hearts that the governor tried to get a special deal,” said Molnar.

A spokesperson for Gianforte said the governor delivered historic tax relief for Montanans, handing out $675 in property tax rebates to Montanans and $1,350 in income tax rebates this year.

In addition, he supported laws that allow homeowners to pay their property tax bills in seven equal payments through the year rather than in November and May.

While each Montanan's situation is different, for the Newvilles those rebates, had they qualified for them, wouldn’t cover their property tax increases.

“So, it’s a question mark every day,” said Deborah. “We will see how it goes.”

For now, she like many, are hoping for a more permanent and affordable property tax solution.