HELENA – With real estate values rising in much of Montana, a former state legislature is proposing a constitutional initiative to create a “purchase value” property tax system that would prevent large property tax hikes while maintaining ownership of the home or business.
The measure would also limit property tax to 1% of the estimated value of a property in 2019 or the current market value after the sale.
Property taxes could only rise if the property is sold because of the higher property value, on the initiative of lawyer Matthew Monforton from Bozeman.
“There has been an unprecedented surge in foreign money that is driving up property values and, consequently, property taxes for Montana residents,” Monforton told MTN News Monday.
Monforton also said Republican accountant Troy Downing will support efforts to get and pass the measure on the 2022 ballot.
On Monday you submitted a revised initiative proposal to the state officials for review.
Downing has been pursuing the idea of revising the state property tax system for some time, said his spokesman Sam Loveridge.
Once the wording of the petition is approved, Monforton and his supporters have until next spring to collect enough signatures to bring the issue to voters in November 2022. You must have the signatures of at least 60,357 registered voters and at least 10 percent of voters in at least 40 state house districts.
According to current law, the state tax office re-evaluates all residential and commercial properties every two years and adjusts them to their market value. The next re-evaluation is planned for 2023.
If the value of one’s property goes up sharply under the current system, property taxes on that property can go up too – although state law limits local governments on how much of this fortune they can collect through mill royalties.
Monforton said the state’s current constitution does not allow a cost system because it requires that all property appraisals and valuations be “balanced”.
Installing a cost system means people who have lived in the same house for many years will not be subject to dramatically rising property taxes just because their property’s market value goes up, he said.
“This is an issue that transcends party lines,” said Monforton. “Both Democratic and Republican homeowners in Montana are equally and understandably outraged by the kind of real estate tax spikes we are seeing. It’s an idea that will sell itself. “
The system could also help moderate rent increases in high-growth areas as higher property taxes on rental properties are passed on to tenants, he added.
Monforton said the proposal would promote “neighborhood stability” as people who have lived there for years would be rewarded for staying with lower property taxes.
“Foreign investors shouldn’t have the same tax breaks that the Montana residents who built these neighborhoods are entitled to,” he said.