Gallatin County Commissioner Zach Brown urges property owners not to panic, but to communicate with Montana Department of Revenue
By Jack Reaney ASSOCIATE EDITOR
If you own Montana property and are vexed by your estimated tax bill for next year, you aren’t alone.
Gallatin County Commissioner Zach Brown and fellow county officials have been fielding concerned calls and emails since the two-year appraisals hit mailboxes last week, even though Gallatin County “is not responsible, nor do we have control over, most of people’s property taxes,” Brown told EBS during a phone call.
“But we send out the tax bills so people think we’re responsible for all of it,” he said.
Property appraisal assessments have been made on a two-year cycle since the state shortened the six-year reappraisal cycle in 2015. Over the past two years, Gallatin County’s real estate boom has led to a “somewhat unprecedented” rise in appraised property values, Brown said. However, when property values rise, the amount of mills a local government can levy must decline proportionally, by law.
Here’s the catch: the Montana Department of Revenue’s recent appraisals include an estimate of 2023 property taxes using higher property values, but also by law, the DOR estimate cannot yet subtract the proportionate number of mills from that estimate.
“The net result is, people are getting these letters and saying, ‘Good god, my taxes are going to go up by 70%,’” Brown said. “No, they’re not.”
Learn how Montana Department of Revenue calculates property tax here.
Brown said the recent tax estimates are nonsense, “incorrect and incomplete,” because DOR is making calculations on incomplete information—bound by state law to do so.
“[It’s an] arbitrary number, not based on actually likely tax bills,” Brown said. “It’s almost like they’re trying to create chaos. People won’t know what their taxes will be until they get their tax bill in November.”
Brown is confident that tax bills will look very different than the current estimate.
Still, property taxes will increase for 2023. Property values have generally increased, and Brown pointed out that Montana is particularly reliant on property taxes due to the lack of state sales tax. Property taxes tend to be higher in similar states like Wyoming and Texas, Brown said.
In addition, inaction by the Montana Legislature has resulted in an additional $81 million per biennium year in property tax collected toward state education funding, Brown explained. In November 2022, the DOR had sent a memo to the legislature warning that education mills are not subject to decrease with the then-estimated 43% increase in state residential property value.
“The legislature and Governor’s office neglected the suggestion from their own employees at DOR to cut the state-wide residential prop tax rate to 0.94% from 1.35%,” Brown wrote in a follow-up email to EBS. “The net result is a $162 million property tax increase from the state on Montana’s homeowners over the next two years.”
Action items and appeals
Brown said it’s a wonky, complicated subject—it’s difficult to communicate in a clear digestible way.
But at the very least, every property owner “should take that assessment notice with a massive grain of salt. If they have questions, they should call the [Montana] Department of Revenue,” Brown said.
Property owners can also appeal the appraised value of their property. Appeals must be made using form AB-26, due 30 days after notice was received by mail.
“If you’re interested in learning about that, you can contact your Department of Revenue office and they can walk you through that,” Brown said. He added that DOR offers property tax relief programs for groups including disabled veterans and those on fixed or limited incomes.
The public can call (406) 444-6900 or submit an online contact form to get in touch with their local DOR office.
In addition, Montana DOR is hosting a series of town hall meetings beginning July 10, including one session at Big Sky’s Ophir School on July 13.
DOR ‘not out to get anyone’
Eric Ossorio, a Big Sky resident and vice chair of the Gallatin County Tax Appeal Board, told EBS he expects those events to be well attended, including the one in Big Sky. He expects close to 5,000 Big Sky property owners—of the roughly 6,500 total—to contest their appraised value, because many have seen their property valuation and estimated taxes double.
“It’s going to be crazy,” Ossorio said. He explained that the local DOR office reviews those AB-26 appeals first, contacting the property owner to discuss their methodology and any mistakes that may have been made. If the property owner disagrees, they can appeal to the Gallatin Canyon Tax Appeal Board—Ossorio and four other board members try to discern whether the DOR made a mistake, and the board issues a ruling.
He emphasized that the DOR people are just employees, really nice people who welcome all taxpayers’ assistance in determining whether their methodology misrepresented a single property.
“They’re not out to get anyone,” Ossorio said. “They’re taxpayers too, a lot of them are in the same situation… They’re not the tax people, this is the assessment arm of the government.”
Ossorio places more blame on the legislature, emphasizing that the state has jurisdiction to change the law that forces DOR to calculate tax estimates using obsolete mills.
“I don’t think it should have ever gotten to this point. Where people are so disbelieving of how the legislature has handled this,” he said.
He added, “If you don’t like the rules, you change the rules—within your authority… The legislature really should figure out how to streamline this process to be as fair as possible, and be less aggravating to the citizen[s].”
Ossorio said he’s been getting calls all week from people who see their taxes estimated to double.
“That’s budget-changing, for a lot of people,” he said.
As Brown emphasized, budgets won’t need to change by the amount shown in the recent and misleading property tax estimate. But as property values rise, the taxes are increasing to some degree.
“People shouldn’t forget to apply for the one-time-only [property tax] rebate that the legislature funded,” Brown said, referring to House Bill 222 which reimburses property owners up to $675.
And for taxpayers who wish to appeal their property valuation, the clock is ticking.
“They want to get on it,” Ossorio said.
