HELENA — Increased property values through reappraisal do not necessarily translate into higher property taxes, state Revenue Director Mike Kadas said.
“There is a logical concern that if my values go up that my taxes are going to go up,” Kadas said. “And that is fundamentally not the case. There are a number of things that can happen that will determine the taxes that counteract the basic notion that if values go up, taxes go up.”
Kadas cited the capping mechanism in state laws affecting property taxes for schools and local governments.
The state school-funding program limits what schools spend and is usually adjusted every session, he said.
As for city and county governments, Kadas said state law says their budgets can increase by half the rate of inflation over three years.
So if property values go up beyond that amount, because of reappraisal, the local government must reduce the tax rate to offset that increase, he said.
“So that’s a huge check on value causing increased taxes,” he said.
Local government and school district voters can raise taxes by approving certain property tax levies, such as to those to issue bonds.
Bob Story, president of the Montana Taxpayers Association and a former state legislator, said he has heard presentations by Revenue Department officials.
“They think that residential is not going to have a particularly large increase this time because of the downturn (in values), other than in Richland County,” Story said.
Alec Hansen, executive director of the Montana League of Cities and Towns, said what the Legislature has done in the past, with phased-in values and tax rates, has worked pretty well in making sure the homeowner “doesn’t get whacked” by reappraisal.
With local governments restricted from increasing their budgets, the amount of money coming into local taxing jurisdictions remains nearly the same, unless people vote for new levies, he said.
“We don’t look at reappraisal as a way to collect more taxes,” Hansen said. “We look at it as kind of affirmation the system is fair and balanced and it works.”
Harold Blattie, executive director of the Montana Association of Counties, said he’s optimistic the new reappraisal process will be smoother than it was the last time.
“I think counties are probably welcoming it,” Blattie said. “I think there’s still some uncertainty that the values in the last reappraisal cycle that were phased in were higher than they are today. I welcome the reappraisal process. Editorially, I wish we could do reappraisals every two years.”