WHITEFISH — Standing on the deck of the modest retirement home built by her parents in 1953, Debbie Biolo can see Whitefish Lake, where she learned to swim. She also can see the small house where her sister, Linda McCarthy, lives with their 89-year-old father and, beyond that, the nearly 6,000-square-foot vacation getaway built last year by a Wisconsin family’s trust as an investment property.
The ritzy homes of new neighbors drove up the land value of their 1.5-acre family property to a combined $2.4 million. Annual taxes peaked at $19,000, up from $4,000 about a decade ago. To pay the bills, Biolo and her husband have spent retirement savings faster than planned and contemplated selling and moving away. McCarthy and her father move out of their home each summer to live in a trailer at the KOA campground so they can rent their home to vacationers. Rather than inviting their own grandchildren to swim in the lake, the sisters watch the kids of strangers splash around the shore.
One recent afternoon, McCarthy took a break from yard work, prepping her home for the families that will move in a few days at a time, to express her frustration at the taxes eating up so much of her Social Security and the half payments of her deceased husband’s Navy pension.
“The property tax is just about to force me to sell,'' she said. "We’ve got this new, beautiful home over there. I don’t think I should be taxed on the fact these people have that kind of money. Because that’s not fair.”
But this summer might be the last time McCarthy and her father rent out their house to strangers. When their property tax notice arrives in November, the sisters will worry less about having to give up their family homes because the Montana Legislature approved a new program that will limit the size of their tax bills, potentially reducing them by 70 percent.
For more than 30 years, Biolo and McCarthy, along with a handful of other Flathead-area families, have fought at the state Legislature for some kind of property tax relief that would keep Montanans in homes passed down for generations. They have watched neighbor after neighbor decide to sell and move away, often to a new town, because, they say, of high property tax bills. A previous state program that reduced bills for homeowners who saw large increases is now defunct because of a change from a 6-year to a 2-year reappraisal cycle. Household income limits, usually about $45,000, also mean many middle-class Montanans cannot qualify for two other programs for the elderly and disabled veterans.
In April, a bill carried by Sen. Keith Regier, R-Kalispell, passed the Legislature. Despite concerns from the Department of Revenue that the program might face a court challenge, Gov. Steve Bullock signed Senate Bill 94 last month.
“Montana is not for sale to the highest bidder after all,” Regier said.
Bullock, via email, said he signed the legislation because it "was a bipartisan effort to help homeowners who have lived on the same great piece of Montana land for a long time.''
"Many Montanans contacted me and my office to ask me to sign the legislation, including local elected officials and community leaders,'' he said. "It was a decent fix, which is why I ultimately decided to sign the bill."
Was bill warranted?
Opponents of the bill argue that the assistance only helps a sliver of Montanans in a particular type of situation and not necessarily those who need the most help. Even some who supported the measure say it is too little, too late for many families.
“This bill was designed to address a real problem, but only for (a) very, very, very selected group of people who have that problem. This bill is designed to address a very specific situation that exists at Whitefish Lake,” Sen. Dick Barrett, D-Missoula, said. “When you try and provide a benefit for a particular class or group or people, when other people in similar circumstances don’t quite qualify, it creates a lot of a lot of potential inequities.”
For instance, he wondered why someone living on the lake should receive tax relief but not a family living in town with a similar home and income. He also noted that towns like Missoula and Bozeman also face problems with housing prices and taxes spiking because of rapid growth, but those communities will see little benefit from SB 94 because of the way it ties qualification to a ratio between home and land values rather than overall ability to pay. Barrett had proposed an amendment to the bill that would’ve required the owner to repay the state for the total value of tax relief received upon selling their property, which he thought would bring some fairness to the program.
Although Whitefish families have been the loudest to demand help at the Montana Capitol, the new assistance program could benefit thousands of people statewide. For instance, there might be as many as 1,300 qualifying homes in Missoula County, 1,400 in Flathead, 700 in Gallatin, 400 in Lewis and Clark, and 150 in Ravalli, according to an analysis of state data about residential properties of 5 acres or less. The catch: The land must have been held in the family for at least 30 years. As a result, the number of people helped is likely to be dramatically lower because they are secondary homes or have not been owned that long.
Regier admits the new program created by his bill will benefit only a few hundred or few thousand homeowners, but that doesn’t lessen its need.
“These people didn’t do anything to increase the value of their homes,” he said.
Overall, Montana ranks in the middle of the pack when comparing the effective property tax rate for owner-occupied homes around the country, according to reports by the nonpartisan non-profit Tax Foundation. Coupled with relatively low home values across much of the state — compared to inflated prices seen in some states and urban areas — most Montanans pay property tax bills that are lower than people living similarly in all but a few states.
But tax rates are only part of the affordability challenge. Even property tax bills that are relatively low by national standards can be a burden for families who spend significant portions of their income on long commutes for work, have ongoing health expenses or live on a fixed income.
“It’s tough to make a living in the Bitterroot. ... Lots of people have left,” Sen. Pat Connell, R-Hamilton, said. Many people still living in the valley as taxes have risen and jobs remain scarce “had stubbornness, money or both.”
Connell, the Whitefish families and others say rising property taxes contribute to pushing Montana families out of the homes and towns where they have roots, causing those communities to transform into destinations for recent transplants or resort playgrounds for the rich. To them, it’s not just a battle over bills. It’s a fight for identity and vibrancy of their communities.
After the passage of SB 94, Whitefish Mayor John Muhlfield wrote a letter urging Bullock to sign it into law.
“Today, only 45 percent of the lakefront properties on Whitefish Lake are owned by Montana residents, a dramatic 40 decrease since the 1980s,” he wrote. “When a community such as Whitefish loses families that have comprised the fabric of our town for decades, the result is a deterioration of our sense of place and authenticity. ... The true assets of Montana are its residents, and in towns and cities like Whitefish, maintaining our main street sense of place is of vital importance to our community and economic well being.”
Several other Whitefish residents wrote letters to Bullock that echoed the one written by Muhlfield, saying SB 94 is as much about preserving Montana culture and values as it is about tax bills.
Among them is Marcia Sheffels, a 72-year-old who taught in Montana schools for 47 years and retired recently after serving as superintendent of Flathead County schools. She lives in the home her parents built in 1953 when it was cheaper to buy lakeshore property than a lot downtown. She said the relief provided by SB 94 is no different than lower tax policies designed to keep farming and ranching families on their legacy properties.
“Yet other families’ legacy properties, such as my family’s in the Flathead, are being forced from our homes,” she wrote the governor. “While we are not farmers, my father worked for the newly constructed Anaconda Aluminum Plant, was vested in this community and through hard work was able to establish a family home. ... Our family has given to our community and state for generations, only to now be forced out of our very home — a shocking consequence.”
One of the people who has urged the Legislature for tax relief the longest is 90-year-old “Ranger Doug” Follett, who first traveled to Helena to testify at the Legislature and speak with the governor in 1993.
He moved to Whitefish when it was still a railroad town, taught history in Columbia Falls for decades, worked 55 summers in Glacier National Park and served on the Whitefish Lakeshore Protection Committee. He lives on the property he and his wife bought in 1952 in the house he built himself despite having never before built anything bigger than a birdhouse. Sitting by the fireplace with rocks he hauled from the top of a favorite nearby peak, he talked about why the state has a responsibility to help keep Montana families in their homes.
“The money means nothing to me. It’d be nice to have it, but I don’t have to have it. From this point, you can see the entirety of Whitefish Lake,” he said. “Is America just about profit?”
Barrett, the legislator, agreed that communities have value beyond the kind governments tax. But he said that can’t be the sole basis for deciding property taxes.
“We can’t base tax policy on people’s subjective valuations that way,” he said. “There isn’t any reasonable or coherent way to exempt people from paying property taxes on the value simply because they say, ‘Well, it’s really important to me even though I can’t afford it.’”