Montanans who own homes and/or land received their statewide property tax reappraisal notices about a month ago. To put it mildly, it was quite a shock for residents living in western Montana's valleys. This month, Montanans will receive their tax assessments based on those reappraisal values—and will likely experience an even bigger shock. Already some legislators have asked Gov. Brian Schweitzer to consider calling a special legislative session to deal with the issue. The governor, however, flatly rejected the request, choosing instead to blame Republicans for not sending him better tax legislation at the very end of the '09 legislative session. Partisan politics aside, some Montanans may decide to take the matter into their own hands and launch an initiative, beginning Montana's second property tax revolt in 20 years.
Those new to the state will likely not recall the property tax revolt of 1986 when citizens took to the streets to qualify Initiative 105 for the ballot. Nor will they recall the battle that took place to try and defeat I-105. In a nutshell, I-105 basically said that property values would be "capped at the 1986 level"—a move that opponents predicted would be disastrous for the state and local governments and schools.
Yet, despite the best efforts of the opponents, voters approved I-105 and momentarily believed that the on-going juggernaut of ever-higher property taxes would end. As it turned out, they were wrong in celebrating their electoral victory, because the same opponents to the initiative simply took their battle to the Legislature in ensuing regular and special sessions and, bit by bit, totally eroded both the intent and effect of I-105.
While this may be perceived as a dastardly effort to overturn the will of the people, it was, in fact, nothing new. Taxation has always been a hot topic in Montana's legislative arena and property taxes—and the valuations upon which they are based—have been a particularly thorny issue with which to deal. Montana is a huge state, the fourth largest in the union, and the diversity of landscapes, population concentration and urban and rural settings make it difficult for any "one size fits all" solutions. As a simple example, while property values have been skyrocketing in the western half of Montana, they have generally been declining in the vast expanses of the eastern plains.
The reasons for the discrepancies in property values are fairly obvious. The increases Montana has seen from in-migration in recent decades have primarily occurred in the western part of the state as people are drawn to the scenic valleys. Recreation plays a key part of the attraction, as many of Montana's in-migrants have not come seeking traditional jobs in resource extraction fields, but have either brought their jobs with them or are done with their working lives and looking forward to retirement or living off their investment income. Consequently, the rivers, lakes, skiing, hiking and other recreational amenities of the mountainous area offer almost limitless opportunities for a broad range of recreational pursuits.
Not to in any way discredit the beauty, solitude and unique amenities of eastern Montana, but so far, those remain either undiscovered by the in-migrants or they simply don't find the plains, with their ethereal beauty and uncluttered vistas, to their liking.
During the height of the so-called "housing bubble," it was not unusual to hear tales of wealthy in-migrants who had sold their homes in California or Washington for enormous sums that allowed them to buy a much more modestly priced home in Montana and still leave a chunk of money in the bank. There wouldn't be much to gripe about regarding this trend except for one major thing—because the price discrepancy was so great, in-migrants didn't mind paying more, often much more, for a home here than Montanans were used to paying.
The result was an increase—sometimes a radical increase—in the valuation of property. If someone buys a home in a new, upscale subdivision near you and pays, say, $250,000 or more for their home and lot, suddenly the home and lot you own is impacted by that transaction. In the next property tax reappraisal cycle, you may feel your eyes bugging out to find that the home for which you maybe paid half or a third of what the new in-migrants were willing to pay has suddenly been re-valued at that much higher level.
Simply put, long-time Montana residents often wind up footing considerably higher tax bills based on the skyrocketing valuations for their homes and property. There are many mechanisms that the Legislature can and has used to try to mitigate the property value increases, but overall, if you live in western Montana, you've seen your property taxes continually climb, often doubling, in the last two decades.
The driving factor for what may be the coming property tax revolt is simple. If you live in your home and have no intention of selling it, the "value" assigned by comparison with nearby, recently sold properties is strictly theoretical. If you paid the average price for a home in Helena in 1987, for instance, that would have been $55,000. Today, the average asking price for homes in Helena runs about $260,000. But until you decide to sell your home—and someone actually pays you that $260,000—your home doesn't generate revenue, it consumes it through mortgage payments, maintenance and property taxes. For many, especially unemployed or older Montanans who may be on fixed incomes, the higher taxation levels become an increasingly unbearable burden.
Whether the property tax debate will escalate into a full-fledged tax revolt is unknown, since Montanans have yet to receive their tax bills. But one thing seems certain—partisan bickering and finger-pointing instead of taking action to hold down costs will only fuel citizen anger and frustration. For many Montanans, signing a tax initiative petition may seem more worthwhile than listening to endlessly squabbling politicians.
Helena's George Ochenski rattles the cage of the political establishment as a political analyst for the Independent. Contact Ochenski at firstname.lastname@example.org.