As demand and scarcity drive property values up, Montana’s property tax structure may get a second look.
Attorney and former Montana state lawmaker Matthew Monforton is proposing an “acquisition-value” property tax system, the Missoula Current reported. Such a system would keep property taxes from inflating along with market property values by allowing increases only when the property changes hands.
Kendall Cotton, CEO of the Frontier Institute, said something has to be done to address Montana’s property taxes.
“This is something I hear is a number one issue from Montanans that I talk to across the state,” Cotton told The Center Square. “Certainly, placing limits on the growth of taxation – that’s one way to address this growing problem, and it could probably do some good.”
Currently, Montana’s property taxes are assessed every two years with a new appraisal. An influx of out-of-state property investors and urban dwellers seeking refuge from pandemic-ridden cities is driving property values up quickly, leaving some Montanans who have owned their home for ages with inflating property taxes.
Monforton told MTN News that his proposal will help engender “neighborhood stability” by making it advantageous to stay in one’s home longer. In addition, since property tax increases are usually passed on to renters, it would also help stabilize rent in high-growth areas, he said.
Cotton pointed out that in general it is lower-income individuals who suffer most from high property taxes.
“One of the problems with property taxes is that they are one of the most regressive forms of taxes, and so it does burden lower-income people more,” Cotton said.
While capping property taxes could be helpful, he adds, that spending at the local government level is the real issue that needs to be addressed. Otherwise, officials will simply find other ways to extract revenue, he said.
“The issue is local governments in the driving seat for spending local tax dollars – there’s not a lot of tools state legislators have to address property taxes because local governments are spending them all,” Cotton said. “The state doesn’t really spend property taxes – they kind of pass them back on to local governments and schools. So this is really a local government issue and something needs to be done.”
Another facet to the issue is housing regulations – also the purview of local governments, Cotton points out.
“One of the things that really constrains the supply of housing and exacerbates this crisis of affordability and drives up property values, fundamentally it’s a supply issue and housing regulations at the local level are a big contributor to that,” he said. “So local building and zoning ordinances that put limits on development and slow down new housing developments with long permitting processes, those types of things are really contributing to this boom we’re seeing in housing values because supply is not keeping up with demand.”
To get a spot on the ballot in November 2022, Monforton’s proposal needs to garner at least 60,357 signatures from registered voters with no less than 10% of those voters spread across 40 state House districts.
This article was originally posted on ‘Something needs to be done’ about Montana property taxes