County commissioners express ongoing frustration as they respond to property tax ruling

Lewis and Clark County Property Tax
Posted at 6:33 PM, Dec 28, 2023

HELENA — Last month, the Montana Supreme Court ruled against a county-led effort to challenge the way the state calculates property tax rates. Now, counties are working to get in line with that decision.

In October, Lewis and Clark County was one of dozens of counties across the state where county commissioners voted to lower the school equalization property tax mill rates. In response to the Supreme Court’s ruling, the commission voted Thursday to reinstate the higher rates – but not before they expressed ongoing frustration with how the issue played out.

“I'm upset about it, I think they're out of line, but we will follow the decision of the Supreme Court and support this change,” said Commissioner Tom Rolfe.

The school equalization mills, commonly known as the “95 mills,” are the only portion of property taxes in Montana that’s set by the state. The funding they bring in is intended to ensure equity in education across Montana’s school districts. State law says leaders can never charge more than 95 equalization mills, and the state has consistently levied exactly 95 for more than 20 years.

The actual amount of taxes charged on a property is its taxable value multiplied by the mill rates that all its governing jurisdictions charge. Each mill is $1 per $1,000 of taxable value.

Counties, cities, school districts and other local governments have a cap on how many mills they can charge, based on the rate of inflation. County leaders and the Montana Association of Counties, or MACo, argued the equalization mills should be similarly capped. According to MACo, 49 of Montana’s 56 counties adopted resolutions to unilaterally charge 77.9 equalization mills instead of 95.

However, the Montana Supreme Court ruled that the state does have the authority to set the number of equalization mills, and the counties have to abide by the decision.

Rolfe said during Thursday’s meeting that he felt the court had “rushed this thing to a decision,” and he reiterated county leaders’ assertion that their move would not have affected school funding.

Commissioner Candace Payne said she was unhappy about what she saw as a pattern of state leaders “pointing the finger” at counties for property tax increases, and that the counties had been trying to respond to their constituents’ concerns about taxes with this effort.

“The counties are only – we're the little messengers who carry this information back to the voters that, ‘Hey, your property taxes are going to go up,’” she said. “When we attempt to gain a little control over this, we are ruled to be out of order.”

As a result of the ruling, the property tax bills that went out earlier this year in Lewis and Clark County and other counties that adjusted their equalization mills are too low. Owners will have to pay roughly an additional 17 mills to make up the difference. That amounts to about $70 on a $300,000 home.

Lewis and Clark County chief administrative officer Roger Baltz told MTN Thursday that the county treasurer’s office is still researching the best way to collect the additional tax, to meet the requirements of the ruling and avoid confusing property owners.

Montana lawmakers have until Friday to vote on whether they want to hold a special session on equalization mills and other tax-related issues. MTN will have an update once the results of that vote are in.