Legislature's reappraisal bill not acceptable

We have all read articles from legislators extolling the merits of House Bill 658, where the format and content of the bill is practically identical to the reappraisal mitigation bill of 2003 (Senate Bill 461).

The mantra is that the policy of maintaining state taxable value at 1996 level, except for real growth, i.e., “revenue neutral,” combined with the Extended Property Tax Assistance Program (EPTAP), effectively mitigates the impact of reappraisal for the majority of residential property owners, is the best the legislature can do, and the only constitutional solution available.

In my opinion, defense of HB 658 using this rationale is an attempt to justify ignoring the plight of, and penalizing, taxpayers whose only crime is living in a resort area and having adequate income.

I submit that “mitigation” as used by Montana is nothing more than a cover for the legislature to appear to reduce taxes when all they are doing is shifting the burden of taxes to locales of extraordinary growth in property values; in effect, increasing the tax liability of one group to pay for the decrease in state tax of others.

The fact is, this bill was predetermined by policy, supported, pushed and planned throughout the interim committees, and validated by the governor’s State of the State address (“not one dollar”). It is apparent that our legislature had no intention of recommending a different approach to mitigating reappraisal.

This contention is supported by realizing that the committees were not briefed thoroughly on the shortcomings of SB 461 and the necessity for change, and neither the Department of Revenue nor any of the several reappraisal committees considered any alternatives to correct known inequities, even though several valid, proven methods by other states were identified.

Further, the committees, legislature and public were unintentionally misled regarding the impact to individuals by the Department of Revenue’s showing only average tax-impact data, which excluded the properties with extraordinary increases (outliers) or decreases rather than individual and district information.

Few legislators are aware of just how inequitable HB 658 really is for all property owners who experience a reappraisal tax increase during this recession, so I suspect some did not have enough information to make an informed decision when voting.

Residential owners in Flathead are anxious to learn how reappraisal and HB 658 affects them as individuals. We will know the full taxable value increase when the reappraised values come out in June but, because mills will change to make counties and districts revenue neutral, we will not know the tax impact until the tax bills come out in October.

If your market value increase is 110 percent or more, you will know that you will have a taxable value increase of 36 percent or more and are a member of the minority and eligible to be a “loser,” as the Director of Revenue is prone to say.

(I define a “loser” as an owner with a taxable value increase of greater than 6 percent per year who does not qualify for EPTAP, i.e. does not reside in Montana for seven months of the year or is a resident and has a household income greater than $75,000. These are the owners our legislators do not care for enough to “change the whole system for just a few”.)

Many residential property owners in Flathead County centered around Whitefish/Kalispell, Flathead, Swan and Whitefish Lake properties will be losers knowing that the market value in the county increased by 75 percent and lake frontage value by 200-500 percent.

I am convinced that because of unequal protection and treatment, as well as unconstitutional practice, HB 658 should be repealed, and replaced with one of the alternatives based on Michigan’s successful property tax system. A change to the Montana Constitution will be required because we will change the tax basis from market value to taxable value and “equalization” does not apply to taxable value.)

Also, if we allow HB 658 to stand, the impact of the recession will be exacerbated in that we have no protection from the loss of revenue by property tax reserves, and the only way to maintain revenue is to increase mills.

Also, it makes no sense knowing that practically everyone in Montana has lost wealth and income one way or another, that our legislature is willing to increase taxes of one group just to show a decrease for others.

I intend to hire an attorney to evaluate our claims, and after the assessment notices come out, have a community meeting to find out if we can organize and raise the money necessary to have the court declare HB 658 unconstitutional. I will explain the causes of action and strategy at the community meeting. If you want an advance copy or some help figuring out where you stand, just give me a call.

Dud Mahler is a resident of Whitefish.