Under-the-radar bill floats toward the top of property tax discussion

House Bill 528 has flown under the radar, Rep. Ed Byrne said on Thursday.

The Bigfork legislator’s bill isn’t that way anymore and has become a property tax option for the Montana Legislature.

“It was beautiful, because nobody in the House knew it was coming, except the coalitions we built around it,” Byrne said in an interview with the Daily Montanan. “So the support I had throughout the whole thing, building at this for two months to get the votes.”

HB 528 drops agricultural land to a property tax rate of 1.7% from 2.61%, while residential properties less than $1.5 million would be taxed at 0.76%, currently at 1.35%.

Residential property at more than $1.5 million would be taxed at 1.35% and commercial property in Class 4 would be taxed at 1.35%. Currently, residential property more than $1.5 million and commercial property in Class 4 are taxed at 1.89%.

Two major property tax bills — House Bill 231 and House Bill 154 — were tabled in the Senate Taxation Committee on Wednesday as debate continues on a fix for homeowners across the state.

HB 528 has bipartisan support, and Byrne, a Republican, worked with Sen. Mary Ann Dunwell, D-Helena, on the legislation. It passed 12-11 out of the appropriations committee on Tuesday.

It previously passed the House on a 88-9 vote on March 21.

Byrne’s bill adjusts property tax rates on agricultural, residential and “Main Street” commercial properties, Dunwell said. It’s similar to SB 189, which was brought by Dunwell and tabled in the Senate Taxation Committee on April 1.

The hope was that either Byrne’s or Dunwell’s bill would gain traction in the Legislature.

“And at the end, if it’s not the vehicle, which it very well may not be, at least the meat of it would be in there, because our bills were simple, no complications,” Dunwell said.

Dunwell also said their bills could be implemented immediately, giving Montanans access to property tax relief sooner.

Byrne stressed the bipartisan nature of the legislation, noting how he watched then-speaker Sen. Matt Reiger, a Republican, work with Democrats, Rep. Mary Caferro and then minority leader Kim Abbott, last session, as they worked on problems they had with the Governor’s budget.

“When you can work bipartisan on the budget issues, you still don’t agree on the social, moral issues, you’ve got to put all that aside,” Byrne said. “It’s not personal, and you come in to fix what’s right on fiscal and taxes. And our biggest mandate here was taxes.”

‘It’s not over ‘til it’s over’

HB 231, brought by Rep. Llew Jones, R-Conrad, would have shifted some of the tax burden onto those who are not residents of the state, but own property in Montana. 

Jones called HB 528 the “preferred bill for implementing tax cuts” in an email to lobbyists on March 28. The bill also ran into trouble in Billings and Sunburst.

During the bill’s Senate hearing, Billings officials said HB 231 would shrink the tax base by about 12%. 

Sunburst and Billings have a unique charter, which has specific stipulations around how many mills they can levy without voter approval. Leaders there say they would have to go back to voters in their towns to raise taxes for critical services, like police and fire.

HB 231 was supported by Republican Gov. Greg Gianforte, and the legislation came to be known as the “Homestead bill.” Gianforte said he was disappointed in the tabling of the legislation, “the fairest approach,” during a Thursday press conference.

“It’s not over till it’s over, but we collectively, including myself and the legislature, we can’t leave here without implementing permanent property tax relief for the people of Montana,” Gianforte said.

HB 154, brought by Rep. Jonathan Karlen, D-Missoula, was a tax credit seeking to give direct help to renters and middle class property tax payers. HB 231 and HB 154 were both tabled.

“So, of course, it’s disappointing, but tabling a bill is not permanent,” Karlen said. “We take bills off the table all the time. We can blast bills in the Senate. So by no means I view it as the end of the line.”

Republicans have also brought a steady flow of rebate bills. Those aren’t the whole answer, Karlen said.

“My take on a rebate is that it’s like putting a band aid on a very deep wound that needs surgery,” Karlen said. “And so I think that any place for rebates should be to augment structural tax reform.”

Senate Bill 90, brought by Sen. Carl Glimm, R-Kila, sought to use lodging and rental car tax revenues to provide relief, but was tabled in the House Taxation Committee on Thursday morning.

Other property tax bills have also been discussed. Sen. Daniel Zolnikov, R-Billings, has SB 117, which puts limits on what government property tax increases local municipalities can do and changes the inflation limitation for calculating property tax levies.

Both bills were cited by Senate President Matt Reiger as part of the solution for property tax relief. However, Reiger also said two bills from Sen. Greg Hertz, R-Polson — SB 204 and SB 205 — would have completed the needed fix. SB 204 failed on a third reading in the Senate and SB 205 was indefinitely postponed.

“It was always going to be difficult, because anything that we do in Montana is just shifting taxes from one taxpayer to another,” Hertz said to the Daily Montanan. “And that’s a very difficult thing for anybody to raise somebody else’s taxes.”