The city and county of Missoula are at odds with Montana’s Republican-majority Legislature on several proposals related to property taxes.

City staff told council members during a meeting Monday evening that the city’s lobbyists opposed three property tax bills that had hearings this week: one that would require voter-approved levies to be expressed as dollars rather than mills (a percentage tax rate), one requiring minimum voter turnout for tax levies to pass, and another that would apply sunset dates to already approved levies.

Property tax reform is a bipartisan priority for legislators as Montana enters another year in a housing affordability crisis. There are some ideas from the governor’s office (for example, shifting the burden of property taxes from primary Montana residents to people who own second homes or short-term rentals), some from Democrats (like Missoula Rep. Jonathan Karlen’s proposal for property tax credits for both owners and renters), and a slew of proposals that target local government spending.

The latter approach is the underlying logic behind the three bills heard in committee this week that Missoula officials and other municipalities around the state are working to stop before they reach the governor’s desk.

One way that local governments can grow their revenues is through voter-approval of tax levies. Currently, those levies can be expressed as dollars or as mills. A mill is a tax rate where one mill is equal to $1 in property tax levied per $1,000 of a property’s assessed value. But House Bill 20, sponsored by Rep. Larry Brewster, R-Billings, would prevent local governments from asking voters to approve tax increases in the form of mills.

“I’m trying to be responsible and do a responsible thing, and that is to level the amount of funding that they get,” Brewster told legislators this week.

But representatives and lobbyists from local governments across Montana said the change could result in chronic underfunding of services like fire. The value — a percentage rate — grows with property values, allowing funding to keep pace with inflation and other rising costs.

“If we bond for a fire station and that gets approved and we want to pass an operational levy to pay for operation and maintenance over time, that’s something that’s pretty hard to put in a set dollar amount in today’s dollars,” Kelly Lynch, the executive director of the Montana League of Cities and Towns, told lawmakers this week. “Even if you have [an adjustment for] full inflation, that’s probably not representative of how you’re going to have to pay for it down the road.”

Jen Hensley, a lobbyist for Missoula County, gave an example of this phenomenon: In 2006, she said, the county put a dollar-amount levy to voters. The $995,000 they approved is now the equivalent of $557,000.

“Our concern is that dollars don’t equal dollars year over year,” she said.

An amendment added to the bill earlier in the process exempts school levies, which are addressed in a different section of statute.

“We ask voters to pay for services that they value through levies, which they approve, and then we’re painted as unbeholden to the will of the voters.”

Another amendment would allow cities and counties to increase their levy amount by three-quarters of the average annual rate of inflation. But Lynch said that still wouldn’t be enough for local governments to maintain services.

“We know that taxpayers need relief and we want to be part of the solution,” she said. “We’re willing to come to the table on having voted levies set in dollars, but we also need to acknowledge that using these funds for what the voters want requires more than just a set dollar amount, particularly in respect to operational levies.”

She said the League of Cities and Towns would be willing to entertain the bill if it was amended to allow cities to ask voters to increase levy amounts by the full rate of inflation, rather than three-quarters.

“Our voters know when and where and for what purposes they will support voted mill levies,” she said, adding that “in the past year almost no voted mill levies were approved in the state.”

Meanwhile, Senate Bill 204, sponsored by Sen. Greg Hertz, R-Polson, would sunset mill levies after 10 years without voter reapproval. A companion bill from Hertz, SB 205, would require a certain level of voter turnout to approve levies regardless of whether or not they receive majority support. If 50 percent or more of qualified electors turn out for the levy, all it needs is majority support to pass. If between 40 percent and 50 percent of the electorate turns out, the levy needs 60 percent support to pass. If less than 40 percent of the electorate turns out, the measure is defeated regardless of the support it receives. As an example, the fire levy Missoulians approved last year wouldn’t pass under the new law even though the measure received 63 percent approval, city staff told the council this week.

“As we all know, things change in our communities over years, and I think it’s a good idea to give voters the opportunity to revisit items in their community,” Hertz told lawmakers in a hearing on the bills this week.

SB 204 would also impact already passed levies. Levies approved more than five years ago would sunset on December 31, 2028 and then every ten years thereafter. Levies approved fewer than five years ago would sunset on December 31, 2030.

“The fact is that this bill and ones like it are a death by 1,000 cuts,” Hensley, from Missoula County, told lawmakers. “Local governments are trying to provide critical services, many of which are required and passed by this body, without funding.”

For example, counties hold incarcerated people before they are transferred to the state’s overcrowded prisons with inadequate reimbursement from the state, she said.

“Health department inspections for food safety where the fee does not cover the cost,” she added. “Mental health holds where people sentenced to [the state mental hospital at Warm Springs] are held in jail with no reimbursement at all from the state.”

“Counties are now painted as out of control and irresponsible with the few funds we have. We ask voters to pay for services that they value through levies, which they approve, and then we’re painted as unbeholden to the will of the voters.”

She noted that voters can already repeal a levy through the petition process.

Both of Hertz’s bills await a committee vote in the Senate. Brewster’s bill has already made it through the House and now awaits further action in the upper chamber.

The ledger #️⃣

26%

Proportion of Missoulians who rate the city’s economy positively, according to a newly released survey from data firm Polco, with which the city contracted last fall. While respondents rated parks, recreation and similar services highly, only 5 percent had a positive view of the city’s cost of living. More results from the survey and information about its methodology can be found here.

The week ahead 🗓️

On Monday, Feb. 10, the Missoula City Council will consider a resolution approving amendments to the city’s budget for the first quarter of the 2025 fiscal year.

Find a list of all upcoming city meetings here and county meetings here.