Montana: Future property-tax estimates vary based on county

By CHARLES S. JOHNSON of the Missoulian State Bureau

7/14/03

HELENA, MONTANA - Property values went up by an average of 26.8 percent for Missoula County homeowners in the new reappraisal, and 62 percent of residential property owners will see their property taxes rise by 2008, despite a new law designed to soften the blow.

Not everyone will face higher taxes. A number of adjustments made by the 2003 Legislature at the recommendation of an advisory committee appointed by Gov. Judy Martz, will hold down property tax increases for many Montanans.

The state Revenue Department estimates 38 percent of Missoula County's 28,718 total homeowners will see their property taxes drop by 2008 when adjustments in the law are phased in.

Twenty-six percent of the county's homeowners will face a tax change of 5 percent or less, the department estimates.

Here's how homeowners in other western Montana counties fared under the new reappraisal:

Flathead County: Residential property values went up by an average of 23.8 percent. The Revenue Department estimates 72 percent of homeowners will see a property tax cut by 2008 when the adjustments are phased in completely, while 28 percent will see property tax increases. Twenty-one percent of the total homeowners will see a tax change of 5 percent or less.

Granite County: Values of residential property went up by an average 20.9 percent. The state estimates 64 percent of homeowners will see their property taxes drop by 2008. Thirty-six percent of homeowners will see property tax increases, with 11 percent of total homeowners seeing property tax changes of 5 percent or less.

Lake County: Residential property values went up by an average of 29 percent in Lake County. The Revenue Department estimates 66 percent of the homeowners will see a property tax cut by 2008, while 34 percent will face higher taxes. Twenty-one percent of the total homeowners will see property tax changes of 5 percent or less.

Lincoln County: Property values went up by an average of 15.3 percent. The state projected 69 percent of homeowners will see property tax cuts by 2008, while 31 percent face higher taxes. Twenty-nine percent of the total homeowners will see property tax change of 5 percent or less.

Mineral County: Residential property values soared by an average of 30.8 percent. The Revenue Department estimates 60 percent of homeowners will see their property taxes rise, while 40 percent will see their taxes drop by 2008. Twenty-four percent of total homeowners will face property tax change of 5 percent or less.

Powell County: Residential property values went up by an average 23.7 percent under the new reappraisal. The Revenue Department projects that 52 percent of homeowners will see an increase in property taxes by 2008, while 48 percent will see tax increases. Sixteen percent of all homeowners will see a property tax change of 5 percent or less.

Ravalli County: Residential property values are up 19 percent in Ravalli County after the latest reappraisal. The state estimates 57 percent of homeowners will see their taxes drop by 2008 when the law's adjustments are fully phased in. Twenty-eight percent of the total homeowners will see property tax changes of 5 percent or less.

Sanders County: The value of residential property went up by 17.8 percent under the recent reappraisal. Sixty-one percent of homeowners will see a drop in property taxes by 2008, while 39 percent will see tax increases. Twenty-nine percent of homeowners will see property tax changes of 5 percent or less.

These figures were released last week as the Revenue Department began mailing out assessment notices to property owners statewide. It is the first cyclical reappraisal since 1997.

Statewide, the Revenue Department estimates that 60 percent of the state's 306,852 homeowners will see a decrease in their property taxes when the adjustments to the values and tax rates are fully phased in over six years by tax year 2008.

Forty percent of the homeowners statewide will see tax increases. The agency estimates that 28 percent of the total homeowners statewide will see a change in taxes of 5 percent or less after the adjustments are fully phased in.

The calculations assume that as property values change, the tax base for local governments and schools also changes. City and county mill levies and the nongeneral-fund mill levies for schools are assumed to adjust downward or upward to offset any increase or decrease in the tax base, the department said.

These calculations don't take into account any new levies that voters may adopt when they vote over the next six years.

Residential property values went up by an average 21.4 percent statewide for the new reappraisal cycle, compared with 44 percent in the last reappraisal in 1997.

These county and statewide statistics cover those residential properties with an improvement such as a home valued at more than $7,500. The analysis doesn't include vacant residential lots or residential lots with an improvement valued at less than $7,500.

Revenue Department officials reminded homeowners last week that just because their property values went up in their assessment notices, that doesn't necessarily mean their property taxes are going up.

The value of a home and the land it's on is just one factor in calculating property taxes. Another key factor is the mill levy for the specific area where people live. These vary widely but include statewide mills to fund schools and part of the university system budget, along with local mills for city and county governments and schools. There also can be levies for special districts.

Other important factors are the changes made by the 2003 Legislature in Senate Bill 461, by Sen. Bob Story, R-Park City, that are intended to take the bite out of higher property values for many taxpayers when calculating property taxes.

Under the new law, the higher values from the new reappraisal, compared with the current values, will be phased in over six years by one-sixth, or 16.66 percent, each year. So an additional 16.66 percent of the new value will be added to the current-year value each year for six years until the new value is fully phased in.

Another adjustment aimed at holding down higher taxes is the homestead exemption. The 2003 law gives all residential properties a 31 percent exemption for tax year 2003 so that only 69 percent of the value of the property is taxed. This exemption increases in each of the five years until peaking at 34 percent in tax year 2008 so that only 66 percent of the value is taxed.

The 2003 law also provides for reducing the property tax rate charged homeowners to hold down higher taxes from higher property values. This rate will drop each year, going from the current 3.46 percent to 3.01 percent in 2008.

Without these adjustments, local governments, public schools and the university system would gain large windfalls in property tax revenue. Similar adjustments took place over the past six years to reduce tax rates and increase the exemption as the new values are phased in. Other adjustments were made in previous reappraisal cycles.

If property values went down in the 2003 reappraisal, the new lower values must be put fully into place immediately, starting with the 2003 property taxes, the first half of which are due Nov. 30.