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Gazette State Bureau

HELENA – Counties can levy property taxes to make up the difference between what they collected in motor vehicle taxes and fees in 2001 and what new state laws say they will get in 2002, Attorney General Mike McGrath ruled Tuesday.

Counties’ motor vehicle revenue was first reduced when voters approved a flat-fee system for vehicle registrations during the November 2000 elections. The new fees took effect in January 2001 – reducing the amount counties received for the second half of the 2001 fiscal year, which runs from July 1 to June 30.

Then the Legislature approved House Bill 124, the so-called “Big Bill.” HB124 made major changes to the financial relationship between the state and local government, including a provision that motor vehicle taxes and fees, among others, now go directly to the state, and the state returns the money to the counties as part of a quarterly lump-sum payment. Neither the counties nor the state were supposed to lose any money in the deal, but the Legislature told the Department of Revenue to calculate the counties’ 2002 payments as if they had received the flat fees for all of the 2001 fiscal year – effectively reducing the counties’ motor vehicle revenue for 2002 by 12 percent.

Lewis and Clark County Attorney Leo Gallagher noticed the discrepancy and appealed to the attorney general, asking that counties be allowed to make up the difference through property taxes.

McGrath ruled that another provision in HB124, which allows local governments to levy enough property taxes each year to allow them to collect the same amount assessed the year before, makes Gallagher’s request legal.

McGrath’s ruling has the force of the law unless a court overturns it or the Legislature changes the laws involved.

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