HELENA — The sponsors of a proposed constitutional initiative to cap property taxes in Montana and create a sales-value assessment system have revised it to focus on Montana homeowners, excluding commercial property and second homes.
“We want the tax benefits focused on Montana families, as opposed to Californians who have a summer home on Flathead Lake,” Bozeman attorney Matthew Monforton and initiative co-sponsor told MTN News Thursday.
Monforton and state Auditor Troy Downing, who’s also sponsoring the proposal, submitted a revised version Tuesday.
Legislative staff and the attorney general’s office have about six weeks to review the initiative for legal and other protocols before petitions can be circulated to attempt to get it on the 2022 general-election ballot.
Once wording of the petition is approved, Monforton and supporters have until next spring to get enough signatures to qualify it for the ballot. They need the signatures of at least 60,357 registered voters and at least 10 percent of the voters in at least 40 state House districts.
If passed, the initiative would amend Montana’s constitution to cap residential property taxes at 1 percent of a property’s 2019 assessed value or current market value once it’s sold.
Property taxes could increase because of higher property values only when the property is sold, Monforton said. Otherwise, they’d be limited to an annual increase of 2 percent or the rate of inflation, whichever is lower.
Under the new wording submitted Tuesday, the tax limits in the initiative would apply only to a “primary residence” of Montana residents, and not commercial property. It would not apply to second homes or vacation homes, Monforton said.
The limitations also would apply to Montanans transferring a home to a family member or to Montana residents who move to another city or town and buy a home of equal or lesser value.
Monforton told MTN News last month that an “unprecedented surge of out-of-state money driving up property values” prompted him to sponsor the measure, to protect Montana homeowners from rising property taxes due to higher reassessed values.
Under current law, the state Revenue Department reappraises all residential and commercial real property every two years, adjusting it to market value. The next reappraisal is scheduled for 2023.
If the value of one’s property greatly increases under the current system, property taxes on that property can increase as well – although state law does limit local governments on how much of that windfall they can collect, through mill levies.
The current state constitution doesn’t allow an acquisition-value system, as implemented under the proposal, because it requires that all property-value assessments and valuations be “equalized.”
Installing an acquisition-value system means people who have lived in the same house for many years would not be subjected to dramatically increasing property taxes, just because the market value of their property increase, Monforton said.
The new version also eliminates language that said any new local property-tax levies had to be approved by at least a two-thirds vote.
Monforton said the sponsors made that change because they believed in local control of taxing authority.