Major property tax proposals advance, legislators raise concerns with both

With a maximum 11 days left in the session, legislators advanced two major but conflicting property tax relief proposals on Tuesday, one in the House and one in the Senate.

Within minutes of each other, House Bill 231 passed in the Senate, and Senate Bill 542 passed in the House.

Speaker of the House Brandon Ler, R-Savage, said many options have been flying around the Capitol, and SB 542 melds together ideas from other bills into one that isn’t perfect, but needs to pass.

“We want to get something across for our constituents, and we want to be able to say that this legislature at least took a stab at lowering property taxes,” Ler said.“Is this bill going to do everything … that everybody in this room wants it to do? No. Does it do everything I wanted to do? No. But what it does do is it actually makes a difference in property taxes.”

SB 542 includes a tiered rate drop and a one-time rebate among other provisions.

Minority Leader Katie Sullivan, D-Missoula, said she had concerns about the bill, but it’s “past time” to do something for residential property taxpayers, more than just a rebate.

“People will notice this,” Sullivan said. “Our constituents will open their bill, and they will say thank you. You guys dropped some rates for us.”

HB 231 is a 43-page property tax bill so complicated Senate Majority Leader Tom McGillvary quipped on Tuesday that “nobody really knows what this bill is doing besides three, or four, or five us in the room.”

The bill has gone through months of amendments, including two more added on the floor Tuesday that addressed an issue with taxation limits in the Billings and Sunburst city charters that has complicated property tax discussions. 

House Bill 231 looks to shift property taxes onto second homes, but has met resistance from some legislators who live in districts with large numbers of second homes and short-term rentals.

Both bills still need a final vote in their respective chambers, and as both have been heavily amended, they will need to get another approval from their original chamber to pass.

How legislators choose to push either or both forward to the governor’s desk will unfold in the last days of the session.

Reducing property taxes for residential payers has been a priority for the 2025 Montana Legislature because bills have increased significantly — more than 20% on average in the state in the most recent 2023 reappraisal, and are expected to increase again.

 House debates ‘Frankenstein’ bill, worries about lack of current fiscal analysis

Ler said SB 542 takes pieces from other bills, including a major proposal from Democrats, House Bill 155, and marries them into “what the media now calls ‘the Frankenstein property tax bill.’”

It also takes pieces from HB 231, a proposal supported by the Governor’s Office,.

Rep. Llew Jones, R-Conrad, said residential property tax bills will decrease 14.5% statewide in the first year, and those payers also will receive a one-time $400 rebate.

Also in the first year, Jones said commercial properties will rise 4.6%, centrally assessed properties, such as railroads, will increase 10.7%, and agriculture will be up 4.3%.

In year two, he said, bills for residential homes would be down 25.6% on average.

After killing all but one amendment in a debate that ran nearly an hour-and-a-half, the House approved the bill on a bipartisan 80-20 vote.

The only amendment that passed was proposed by Rep. Katie Zolnikov, R-Billings.

Legislators have said the bill could cost the city of Billings millions because of an apparent conflict with its charter, which caps mills levied without voter approval.

 Zolnikov said if the city of Billings gets in legal trouble as a result, the amendment requires the state to pay any legal fees.

“I don’t think anybody’s intent is to, you know, bankrupt the city of Billings,” Zolnikov said.

Ler said the bill already protected the city of Billings and its unique situation, but the amendment was friendly. It passed with 99 votes and none opposed.

After the House passed the bill, though, a fierce debate followed over whether to send it to the Appropriations Committee, which reviews significant spending proposals.

Some legislators argued the House shouldn’t take shortcuts, especially because lawmakers didn’t have a current analysis of the bill’s cost. 

Rep. Zooey Zephyr, D-Missoula, said legislators need to work quickly, but they need to complete all their work too.

“This is the process. We shouldn’t skirt the process just because we waited until day 79 to pass property taxes,” Zephyr said.

Rep. Bill Mercer, R-Billings, said it was a weighty piece of legislation, and he wanted to know who the losers were before he voted.

He said he didn’t believe all of them had been identified, nor did he want to vote on legislation without a current fiscal analysis.

“I am not wild about voting on this without a new fiscal note,” said Mercer, who voted no on the bill.

However, Jones, chairperson of the Appropriations Committee, said the committee already had seen the bills that are part of SB 542, so the committee had a good handle on cost, and time was of the essence.

“I want to make sure that a tax bill crosses into the Senate before the Senate goes home,” Jones said.

The House agreed to bypass the review in the Appropriations Committee.

Senate debates, worries about impacts on non-residential payers

HB 231 “picks winners and losers,” Sen. Carl Glimm, R-Kila, said on the floor Tuesday.

HB 231 includes a property tax rebate on taxes paid in 2024. Someone who applied for the rebate also automatically qualifies for the homestead exemption built into the bill, a major piece of policy the governor has pushed.

The bill passed on a narrow 26-24 vote, with a single Democrat in opposition and nine Republicans in support. 

Glimm’s comments echoed the sentiments expressed by Sen. Greg Hertz, R-Polson, and Senate President Matt Regier, R-Kalispell. 

Hertz, Glimm and Reiger have all been in support of Senate Bill 90, which directs tourist dollars toward property tax rebates as part of their property tax solution. But they didn’t support HB 231.

In the final comment before bill carrier Sen. Dave Fern, D-Whitefish, closed on HB 231, Regier explained his reason — first to the legislature, and then to the people of Montana.

He noted to the legislature it was spending general fund money, which has been a common discussion point in the chamber. And then, saying he was speaking directly to the public, he said tax rates, especially for agricultural communities, were going to go up if House Bill 231 passed.

For second home properties and short term rentals, that increase could be over $300 million, according to a fiscal note for HB 231.

“There are a lot of options that actually do provide property tax relief,” Regier said. “This is not it. So please, watch this vote, and hold those that vote for and against accountable.”

Fern, though, said the bill would provide middle-class property tax relief, saying that “for most folks, it will be a substantial tax decrease.”

He also pushed back on the idea second homes were a major issue, saying that when he knocked on doors during his campaign, “I’m going to guess 98% of them didn’t have second homes.”

However, Fern added HB 542 may end up being the vehicle for property tax relief and pointed to the urgency.

“Over the last couple sessions, we, the legislature and the Governor’s Office failed to deliver property taxes, and so it compounded,” Fern said on the floor. “Then we had a very volatile situation where appraisals and values went high. The system was not built to mitigate it in an easy way.”