15 hours Ago By VICTORIA EAVIS [email protected]
The two remaining property tax relief bills at the Montana Legislature approached the finish line Tuesday, but not before some senators and lobbyists for the state’s largest businesses and utilities voiced their vehement opposition a final time. Lobbyists for outfits like the Montana Chamber of Commerce, Northwestern Energy, the Montana Petroleum Association, Montana-Dakota Utilities and BNSF Railway lamented the property tax increases these entities would see under the package of bills and raised a number of constitutional concerns about the proposals. And as has been typical for the upper chamber this session, a number of senators grew agitated on the chamber floor Tuesday due to their dislike of the legislation, but it was not enough to defeat the bills.
Providing property tax relief is regarded as the main task before lawmakers this session, particularly because Montanans’ tax bills are set to rise again after dramatic spikes in recent appraisal cycles that put many Montana residents in financial binds. According to estimates from the Department of Revenue, the average residential property tax bill is set to rise again by 11%, roughly half the average increase Montana saw in recent years. But because of the rigid way Montana levies property taxes, it is difficult to provide relief for homeowners without costing the state hundreds of millions of dollars or forcing others — such as corporations, farmers or pipelines — to pay more in taxes.
Senators took some of their final votes Tuesday on two major property tax relief bills — and — to create a package that will lower property tax rates for primary homeowners and long-term rentals while eventually raising them on second homes and short-term rentals. The package includes a $400 rebate to be provided this year for primary residences. The changes to the property tax structure are so substantial that there are a few million dollars being funneled to the Department of Revenue to implement them in a timely manner.
But as lawmakers take their final steps in a two-year effort to provide property tax relief to residents, the specter of a lawsuit challenging the bills is looming large because the legislation’s detractors say the package is rife with legal issues. Senate Taxation Committee Chairman Sen. Greg Hertz, a Polson Republican who was a member of the governor’s property tax task force that produced HB 231, said he is having “very serious” conversations about suing over the bills.
Bob Story, executive director of the Montana Taxpayers Association, opposed the bill because the organization represents large businesses that will see their property tax bills rise. He raised a slew of constitutional concerns over HB 542 in a letter to lawmakers, but was not as adamant as Hertz that action will be taken in court. Story said there are “certainly” people looking at a lawsuit as an option, but “somebody’s got to stick their neck out and take the heat.
” Hertz is concerned with the constitutionality of how the bills ultimately came together. Both HB 231 and SB 542 look nearly unrecognizable compared to their original versions, something Hertz says violates the requirement that a bill “shall not be so altered or amended on its passage through the Legislature as to change its original purpose.” Conrad Republican Rep.
Llew Jones, the chief engineer of the property tax package, did not flinch when asked about the prospect of a lawsuit. “Hell, somebody will sue. They always sue,” Jones said last week.
“You can't prevent lawsuits; you can only mitigate their chance of success.” Beyond Hertz’s concerns, there are a number of provisions that people in the Capitol have raised as potential grounds for a suit. Some say the legislation in its current form did not get an adequate public hearing because of how much it has been amended in recent days.
SB 542 was originally three pages long, but all of that language is gone and has been replaced with dozens of pages that contain the bulk of the proposal. The latest version had its only public hearing Tuesday, which code commissioner Todd Everts said appears to be enough to adhere to public hearing rules. Under Montana law, a bill’s contents can not stray outside of its title, and some have posited there are so many provisions in the bills that the contents stray outside their titles.
“If it’s outside the scope of the title? That will be up to the courts to determine,” said Everts, who has been with the Legislature since 1991. And there’s yet another piece that raises legal concerns: The city of Billings and the 351-person town of Sunburst have city charters that cap how much the municipalities can levy in taxes from residents, and because of how property taxes work in the state, the bill package nearing the governor’s desk stands to create budget shortfalls in both municipalities. HB 231 and HB 542 seek to toy with those charters to address that issue, something that has incited legal concerns for weeks, a reality the legislation acknowledges.
The package includes language that says if the charter provisions get hung up in court, the state will backfill the budget shortfalls. If the packages do end up in court, there are still plenty of unknowns about what that might look like. When Hertz was asked about the prospect of blocking property tax relief from reaching residents by bringing a lawsuit, he raised the possibility of a special session to bridge the gap in relief.
Lawmakers are already under the impression they will be reconvening sometime in the next couple months because the federal government has said it hopes to change Medicaid reimbursement rates, a move that would force the lawmakers back to Helena to respond to those changes. At the final public hearings on the bills Tuesday, lobbyists for the large businesses, utilities and pipelines were open that most of their opposition was rooted in the fact that the bills will raise taxes for their clients. Some grappled with the “mandate” to provide homeowners relief while raising taxes for their businesses.
“I understand that the folks that drafted this bill and others made a commitment to the voter in November to reduce property taxes on homeowners. I fully understand it. I'm a homeowner too, I’m a first-time homeowner, actually,” said Sonny Capece, a lobbyist for the Montana Petroleum Association.
“Ultimately it makes Montana unaffordable, uncompetitive and unattractive for business investment.” Over the 2025 legislative session, much of the property tax negotiations have gone on behind the scenes between a select few lawmakers, and because of the factions that have formed within the property tax debate, it’s often clear to those in the building which measures will be successful. Numerous lobbyists who appeared before the committee Tuesday quietly expressed frustration that the “cake is already baked.
” Aimee Grmoljez, a lobbyist representing two utilities, said, “I know this is going to pass,” adding that she is “building a record for the future.” The lawmakers on the committee were unconvinced by their gripes. Jones said the employees at these companies are the homeowners who will receive some tax relief.
House Majority Leader Steve Fitzpatrick, R-Great Falls, pointed out that some of the Chamber of Commerce’s businesses are smaller businesses that stand to see property taxes decrease. There was also support, however, from proponents who believe it will provide meaningful property tax relief for residents. “Senate Bill 542 is an important step in tackling the overall residential property tax structure,” said Rose Bender, the director of research for the Montana Budget and Policy Center, which typically supports progressive policies.
“Is there more to be done in the future? Yes. But is this what is needed today? Yes.” But later on Tuesday, rumored to be the eve of the Legislature’s adjournment for the year, lawmakers in the Senate kept up their session-long streak of debating bills for hours, at times provoking tears and raised voices, and exposing animus over divisions among Republican members.
The senators raised a number of concerns, but primarily targeted the increase in taxes for large businesses and second homeowners. “This [bill] helps people at the expense of those it hurts,” said Senate Majority Leader Tom McGillivray, R-Billings. There was a point of agreement on the floor Tuesday, however.
Those on either side of the bills said that introducing a sales tax — a phrase that Sen. Becky Beard, R-Elliston, whispered when she said it on the floor — may help mitigate the state’s reliance on property tax proceeds, and therefore work to shake up the system and lower property taxes for all classes. Hertz said he had never before seen such an appetite for a sales tax.
Both HB 231 and SB 542 ultimately passed the Senate on Tuesday evening and face final House votes Wednesday before they go to the governor’s desk for his signature. It is widely understood that once the House endorses these proposals and the state budget bill, lawmakers will be able to gavel out the 2025 Legislature. Those in favor of the legislation, like Helena Democratic Sen.
Mary Ann Dunwell, celebrated the near-final votes. “You can go home to your residents and you can say, ‘I listened to you, I heard you; here’s what we did’,” she said..
