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Montana Secretary of State Christi Jacobsen has approved a constitutional initiative that, if passed, would cap residential property taxes, roll back valuations, and also reduce tax breaks for “speculators, investors and house ‘flippers.’”
Former state lawmaker and current U.S. House of Representatives candidate Al Olszewski is the treasurer for the Montana Property Tax Cap Initiative. The initiative, Constitutional Initiative 121, has until June 17 to collect just a little more than 60,000 signatures to place the measure on the ballot for November 2022.
Matthew Monforton, a Bozeman-based attorney and former state legislator, is leading the proposal and said the purpose is “to keep Montanans from being taxed out of their home.” Part of the initiative would roll back tax values to 2019 before COVID-19 and when housing prices started escalating.
To find out more about the initiative, go to www.cappropertytaxes.com
The largest part of the initiative would cap property taxes on residences at 1% and limits annual increases in assessed valuations to 2% or the inflation rate, whichever is lower.
Monforton told the Daily Montanan that two other states have had a similar measure in place for decades, California and Florida. He said the measure will save more than $175 million annually on “excess property taxes.”
“When I was a homeowner in California, even when I had an outrageous mortgage, I appreciated that I knew with certainty what property taxes were going to be, and that’s a certainty that none of us now have,” Monforton said. “We may have been fine a few years ago, but now with the out-of-state money coming in, it’s not the same.”
The measure would ostensibly reduce the “sticker shock” of property tax bills, which have been increasing quickly and rapidly. Monforton also sees good news for renters. He said most landlords have had to aggressively raise rent to keep up with the rising taxes, but capping the tax will likely stop the steep rises.
The property tax would protect residents who choose to stay in their homes and build neighborhoods, the initiative supporters said. For example, a property owner whose house was valued at $300,000 in 2019 would be taxed on that amount as the base. If the owner sold the home several years from now for $600,000, the base value would change for the new homeowner.
Monforton predicts the measure might reduce the number of in-state residents who leave a home quickly, and thereby encourage more neighborhood building.
“It rewards those people,” Monforton said, explaining that keeping their tax base low will provide an incentive to stay, and would likely deter them from leaving because they’d pay a new rate if they decide to move, even if it’s in state.
The measure has the potential to curb the amount of money that flows into state and city coffers, but Monforton argued it doesn’t cut funding to schools or essential services like fire and police.
“It just reduces the rate of growth of tax revenues,” Monforton said. “It forces local government to live within their means and be more efficient with their resources. In other words, (government) has to do that careful economic planning that all families are forced to do.”
However, Bozeman Mayor Cindy Andrus said while she sympathizes with residents who are struggling to keep up with property taxes, she would oppose the measure and imagine other Montana cities and towns would be in the same position.
“(Property taxes) are our only revenue stream for infrastructure and there is no sales tax and no local options, so capping that leaves with little room to support the growth,” she said.
Bozeman, which is frequently used as the example of soaring home prices and a demand for affordable housing, will be OK this year with the infusion of federal CARES and ARPA money, but after that, it would become more difficult, especially if taxes are capped.
“We really do try to be conscious of how much we spend and what burden we place on our taxpayers,” Andrus said.
While the initiative focuses on residential property, it provides the Legislature with authority to provide similar tax relief to all property classes.
“It’s so unfair to tax people on a wealth they can’t touch. If my income doubles and I move to a different tax bracket, well, I have the means to pay that, but if I am on fixed income, the rise in property taxes may force me out because I am not in a position to absorb those tax rates,” Monforton said.
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