MFPE sues State AG and SOS over property tax initiative

CI-121 would limit residential property tax increases to less than 2 percent per year

By: - January 13, 2022 6:17 pm

The stairs of the capitol in Helena, Montana (Photo by Eric Seidle for the Daily Montanan).

Two Montana business owners and the Montana Federation of Public Employees are asking a Lewis and Clark County District Court judge to block signature gathering on a recently approved ballot initiative that, if passed, would limit residential property tax increases to less than 2 percent per year.

In a lawsuit filed Wednesday, the plaintiffs argue Attorney General Austin Knudsen and Secretary of State Christi Jacobsen did not follow a newly passed law that amended the process of examining ballot initiatives before recently approving signature gathering for Constitutional Initiative 121.

If passed, along with limiting residential property tax increases, the initiative would also roll back valuation and reduce tax breaks for “speculators, investors and house’ flippers.'” The initiative is being led by Matthew Monforton, a Bozeman-based attorney and former state legislator. The initiative must collect just over 60,000 signatures by June 17 to appear on the 2022 ballot.

House Bill 651 amended state law to require the attorney general to conduct a legal review of ballot initiatives to determine if they will cause significant material harm to one or more business interests in Montana. According to the bill’s language, if the attorney general decides there is potential harm, then the attorney general’s statement must appear on the front page of the petition.

The lawsuit alleges Attorney General Knudsen violated the new standards outlined in HB651 by failing to conduct the legally required impact analysis that CI-121 may have on businesses.

“In justifying this refusal, the Attorney General explained that he believed the significant harm evaluation only applied to statutory initiatives and not constitutional amendments,” the lawsuit reads.

Additionally, HB651 stipulates that the secretary of state send a copy of any approved ballot initiatives to the executive director of the legislative services division, who must then provide the information to the appropriate interim committee for review. However, the lawsuit says that process never took place, thus violating HB651.

“Because both the Attorney General and Secretary of State failed to complete their statutory obligation, the Secretary of State has no authority to authorize signature gathering in support of placing the ballot issue on the official ballot,” the lawsuit says.

The plaintiffs include the Montana Federation of Public Employees; Jeff Barber, a Helena Realtor; Ron Ostberg, a farmer from Fairfield; and Dennis McDonald, a rancher from Melville. Together, they are requesting an injunction on collecting signatures for CI-121 and for the Secretary of State to send the initiative to executive director of legislative services for its review by an appropriate interim committee. Attorney for Morrison Sherwood Wilson and Deola and Helena Representative Robert Farris-Olsen is the attorney for the plaintiffs.

Additionally, the suit is seeking a declaration that the AG’s evaluation of the initiative was defective, and he conduct another evaluation of its potential impacts on businesses.

“As a Montana farmer, CI-121 has me very concerned,” said Ron Ostberg, a farmer from Fairfield, in a press release from MFPE announcing the lawsuit. “This proposed change to the Montana Constitution could have a devastating effect on Montana farmers and ranchers since it would shift the state’s tax burden onto family farms like mine. That could crush us.”

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Keith Schubert
Keith Schubert

Keith Schubert is a reporter for the Daily Montanan. Keith was born and raised in Wisconsin and graduated from the University of Minnesota in 2019. He has worked at the St.Paul Pioneer Press, Milwaukee Journal Sentinel and most recently, the Asbury Park Press, covering everything from local craft fairs to crime and courts to municipal government to the Minnesota state legislature. In his free time, he enjoys cheering on Wisconsin sports teams and exploring small businesses. He can be reached by text or call at 406-475-2954 .