HELENA — In Montana’s most populous cities and counties — and, in some smaller counties as well — reappraised residential and business property values that determine property taxes often increased by double-digit percentages this year.
But those increases won’t necessarily lead to comparably higher property taxes, unless your increase was above the county-wide average, local officials told MTN News.
“What many counties would do, and certainly this county, most likely will be to reduce the number of mills, so people’s taxes don’t get the huge bump,” said Lewis and Clark County Commissioner Susan Good Giese.
Statewide, residential property values this year increased an average of 12.5 percent, in the Revenue Department’s biennial reappraisal. For businesses, the average increase was nearly 10 percent. The department mailed notices of the reappraised value to property owners several weeks ago.
The state and local governments, including cities, counties and schools, apply mill levies to those values, to calculate a property owner’s taxes for the 2019-20 fiscal year. If the mill levy stays the same and your value went up, your taxes will increase. But if mill levies are reduced, your taxes can stay the same, increase less than your value increase, or even decline.
And in areas where reappraised property values declined — such as a dozen rural counties, primarily in eastern Montana — local governments can increase mill levies to capture the same amount of revenue as the previous year. Or, if the mills in these areas stay the same, your taxes likely will decline.
Still, for most residents of the state, appraised property values increased during the last two-year reappraisal cycle.
The biggest increase for a large county occurred in the state’s fastest-growing area: Bozeman and Gallatin County, where residential values climbed an average of 23 percent and commercial property increased an average of almost 20 percent. Those numbers from the Revenue Department include the value of new construction, so the increase is not entirely on existing homes and businesses.
Neighboring Madison County saw the biggest average increase of any county for residential property, at nearly 29 percent. The largest average increase for commercial property came in another southwestern Montana county: Park County, at 27 percent.
Other counties that saw relatively big increases in average value for residential property were Blaine (20 percent), Park (19.5 percent), Chouteau (19 percent), Broadwater (15 percent) and Judith Basin (13.5 percent).
Average increases for residential property in the most populous counties ranged from 7 percent in Yellowstone County to the 23 percent high in Gallatin County. Ravalli County clocked in at second-highest in this group at 12.3 percent, Missoula was 12.1 percent, Flathead 11 percent, Lewis and Clark at 9.5 percent and Silver Bow and Cascade counties at about 9 percent each.
The value of commercial property in these counties also increased, but generally at a lesser amount — except Missoula County, where the average value of commercial property increased nearly 18 percent.
The four main entities that receive property-tax revenue are school districts, cities, counties and the state. Mills levied by the state, primarily for education, are unchanged. Cities and counties cannot increase their general-fund budget by more than half the rate of inflation (about 1 percent this year) and therefore don’t get a windfall from increased property valuations – unless it’s new construction.
“So that means, if your valuations are going up, then when the local government goes through the tax form, we’re probably going to see a lot of mill-levy reductions throughout the state of Montana,” said Tim Burton, executive director of the Montana League of Cities and Towns.
School district budgets also are limited by state law on how much they can increase, tied to student enrollment and other factors, and can’t just take advantage of higher property values to collect more money.
However, at least two circumstances will cause your taxes to go up: The appraised value of your property increases more than the county- or city-wide average, meaning mill-levy reductions will offset only part of the increase, or increased mills approved by voters for additional services, programs or buildings.
“A lot of that, statewide, will be determined by what the voters themselves voted — if they voted for school levies, or libraries, or any kind of levies where the voters had a voice,” Geise said.
Geise also noted that if property owners believe their reappraised value is too high, they can appeal it to the local Revenue Department office.
“I always tell people when they get their appraisal in the mail, they should ask themselves the following question: `Would I sell my house for that amount of money?’” she said. If the answer is yes, the appraisal is accurate and legal, because the law says the appraised value should reflect the market. If the answer is no, and you think it’s too high, you can file a protest and try to get it reduced.
And if the value is a lot lower than you think your house or business is worth?
“Then you should probably accept that with a slight smile, and move on,” Geise said.
Here is a list of county-by-county average property valuation changes.