HELENA — Democrats in the Montana Legislature expressed concern about a tax shift in the state that is putting significant pressure on residential property taxpayers. They are proposing a plan to address this issue.
“We believe it is crucial to present a proposal that will result in a more equitable tax system and offer relief to working Montanans,” said Sen. Pat Flowers, D-Belgrade, the Senate minority leader.
During a news conference at the State Capitol on Monday, Flowers and Rep. Jonathan Karlen, D-Missoula, announced three pieces of legislation they intend to introduce in the 2025 legislative session:
· The first proposal aims to establish a “homestead exemption” that would exempt the first $50,000 of a home’s value and the first $200,000 of a small business’s value from taxation.
· The second proposal involves reforming residential property tax rates by creating multiple brackets based on a home’s value, with higher tax rates for more expensive properties.
· The third proposal is to create a “Housing Fairness Tax Credit” similar to a concept previously introduced by Karlen. This credit would help offset some of the property taxes for eligible residents if they exceed a specific proportion of the owner’s income.
“Montanans are facing escalating home values beyond their control, leading to working families and seniors being pushed out of their homes and communities,” stated Karlen.
Democrats estimate that the overall plan would reduce residential property taxes by $214 million and small business taxes by an additional $14 million. Flowers mentioned that they plan to compensate for a portion of this reduction by reversing what he referred to as $100 million in “tax giveaways to major corporations.”
Democrats reassured that due to the flexibility local governments have in adjusting their mill levies, the proposed changes should not significantly impact city, county, or school district revenues.
As the minority party in the Legislature, Democrats have criticized Gov. Greg Gianforte and majority Republicans for not taking sufficient action in the previous session to provide long-term property tax relief.
“We anticipated this issue, we knew how to prevent it, and they chose to do nothing,” Flowers added.
Republicans have highlighted the millions of dollars in property tax rebates approved in 2023, which will once again be available to homeowners this year. Gianforte assembled a task force to explore long-term solutions to rising property taxes, with a report containing recommendations expected to be presented to Gianforte next month.
“While certain Democrat politicians are engaging in press conferences and social media posts, Governor Gianforte is actively addressing the challenges faced by hardworking Montanans, including the affordability crisis caused by the Biden administration,” stated Sean Southard, Gianforte’s communications director. “The governor is encouraged by the progress of the bipartisan property tax task force he initiated, particularly the discussions about capping the growth of local spending that drives property tax increases and providing a homestead exemption to Montana residents to ensure out-of-state individuals who own second homes in Montana contribute their fair share for our law enforcement, schools, and infrastructure.”
