TOWNSEND — Earlier this year, many Montanans took notice when they received letters announcing their property’s assessed value has increased significantly. In recent weeks, the Montana Department of Revenue has been holding informational sessions across the state to answer property owners’ questions about how the valuation changes will affect them.
On Wednesday, department representatives held two sessions in Townsend, with a total of more than 100 people attending. Many of the residents were concerned and frustrated about the increased valuations, but organizers stressed that the jump in assessed value isn’t an indication that property taxes will necessarily increase by that amount.
“Everybody got their assessment notice, they saw the big increase in the taxable value, but there’s a lot out there to prevent any taxing jurisdiction just to take everything out there,” said Jason Boggess, Revenue’s Region 2 manager.
Each parcel’s taxable value is its assessed value as determined by Revenue, multiplied by the state tax rate for that category of property – currently 1.35% for residential property. The actual amount of property taxes charged is the taxable value multiplied by the “mill rate” that each governmental jurisdiction charges. Each mill is $1 per $1,000 of taxable value.
The state generally charges property owners 101 mills – 95 to equalize funding among Montana school districts and 6 to support the Montana University System. However, the majority of property taxes goes toward local governments, including counties, cities and towns, school districts, fire districts and other special districts. Those jurisdictions vary their mill rates year to year.
When the total taxable value in an area increases, that means a local government can raise more money from one mill – so they are able to assess fewer mills on each property and bring in the same amount of revenue. State law caps how many mills local jurisdictions can impose. They’re allowed to assess enough mills to bring in the same amount of property taxes as the previous year, plus half the average rate of inflation over the last three years. Voter-approved levies don’t count toward that cap.
Because of those rules, leaders said it’s likely most people’s property taxes won’t rise as quickly as the taxable values did.
Revenue says the median assessed value for residential property in Broadwater County rose by 55% over the last two years. For homes, those assessments are generally based on the real estate market – estimating value by analyzing the prices that similar homes nearby have sold for.
Phil Fingar owns two properties in Broadwater County. He told MTN his property on the east side of Canyon Ferry was valued 40% higher in the most recent assessment, while a home he owns in Townsend rose by nearly 80%. He said he’s concerned about the impact of any property tax increase.
“I'm retired and I'm on a fixed income, and it just is making things a little bit more difficult to consider,” he said.
Fingar was one of a number of residents in attendance Wednesday who pointed to people moving into Broadwater County as the cause of spiking real estate values and warned it could have a negative impact on long-time residents.
“It's just killing the local people,” said Fingar. “People who’ve been in their house for 40 years, ten years, 20 years, living on fixed incomes aren't going to be able to afford the taxes.”
Several property owners said Wednesday they wanted to see some form of cap on property taxes for people remaining in their homes.
The assessment letters property owners received included a number for “estimated 2023 general taxes,” but leaders say that’s not a good indicator of what someone’s actual tax bill will look like. The number is based on if all jurisdictions kept the same number of mills – which isn’t likely to be the case.
Boggess said the department understood people were frustrated about the estimated tax number.
“If we didn’t put the estimated taxes on there, you guys would assume we’re hiding something,” he said. “We’re trying to be transparent and do what the law says.”
Revenue will inform counties of their new total taxable values on Aug. 7. After that, county leaders will have 30 days to determine how many mills they will impose. Property tax bills are likely to go out from counties in the fall.
Lindsey Richtmyer, a Broadwater County commissioner, was in attendance and told homeowners the county has already set its budget for the next year, and they should not expect a tax increase similar to the rise in taxable values.
If property owners disagree with their property’s valuation, they should contact the Department of Revenue within 30 days of the date on their assessment letter. You can find more information on the review process on the department’s website.
