Montana does not provoke heavy angst when it comes to the conversation. If one were to judge from watching the streaming smash hit Yellowstone, open conflicts over land issues (and rights) would probably seem mysterious to urban and suburbanized America. The show’s underlying theme is that of a struggle between indigenous peoples and early white occupiers. However, those antagonists seem to be missing a common, overarching and destructive enemy: the out of town (or international) corporate land grabbers, who use political influence, lawyers and violence to, literally, pave paradise.

Sometimes Montana makes the national news in real life, as, for example, with a state constitutional initiative to be put before the people in late 2022. And, shadowing California’s Prop 13, Ballot Question 9 or C1-121 would freeze the property tax and real estate assessments as long as the grasses grow and the rivers flow (sort of).

Why must property taxes come to a screeching halt? What’s so wrong about Montana that they have to change their constitution? Admittedly, Montana has painted itself into a corner with over a dozen property classes (p. 4). But, as something of a harbinger of a possible bright future, the state also subdivides commercial and residential land and buildings into component land and structure values (p. 15). So the state may be onto something.

As always, the best way to divine the truth is the middle way. A glance at the center-right Tax Foundation confirms the expected: Montana is a business-friendly, low tax state. It doesn’t even have a sales tax (surprising because of the reliance on tourist dollars). But C1-121 is sold as owner-occupier-centric. Yet, property taxes as a percentage of value (statewide) is .76%. So let’s glance again, this time at the center-left Institute on Taxation and Economic Policy. Their subsidiary group, The Montana Budget and Policy Center agrees with the Tax Foundation about property taxes: they are pretty low when taken as an aggregate. Yet, we find that owner-occupiers make up a large share of the property tax burden. This is an emerging pattern nationwide: nonresidential property owners preemptively taking the assessors to court. 

Montana also has protections for low-income homeowners, to aid homeowners whose land value has appreciated more than their house. That’s prairie wisdom, if I’ve ever seen it

The state also provides renters and senior citizen credits. The Property Tax Assistance Program (PTAP) is a unique feature of tax administration in the US. PTAP’s credits are given for the structure, but the land upon which the house sits is eligible. Residential properties valued up to $200,000 qualify. Truth be told, this amount is not realistic in the current market; the value cut-off is too low in the overheated Montana land and property market. Indexing for inflation would be a more just and reasonable policy if the object is to keep people in their homes.  

 

What if they gave a property tax revolt and no one came?

 

So why another Prop Thirteen, and why now?

A small group of people are getting rich quick from appreciating land values in Montana, mainly in Western Montana (because “big sky, big mountains,” etc). The fishing is good too. So, more than a few people are buying land in Montana. They flee high tax jurisdictions, out-of-reach home prices, pollution, and the perceived crime rate. In fact, realtors in Montana are not so subtly suggesting your family is safer in Montana than in, say, California. Hence, Montana is currently filling up with people who have too much money on their hands. Generally, these are people who want to keep that money.

What better way to moderate your property tax than to enact a restrictive tax cap? Much of the income they enjoy does not come to them in wages. Whereas wages earners, and those who are barely holding on, can instead pay income, sales, and business taxes. Hey, it turned California into a paradise, didn’t it?

Opposition to CI-121 is mounting, as Montanans see the internal contradictions behind the proposal. Interestingly, conservatives oppose it for reasons which are very different from those of progressives. When the ‘wild-eyed Montanans’ include both the Chamber of Commerce and the State Bankers Association, that’s a hint an interloper may have bitten off more than they can chew.

 

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