House Bill 865, introduced in the Montana Legislature on March 25, 2025, aims to amend regulations surrounding tax increment financing (TIF) districts. The bill seeks to clarify the processes for increasing the base value of TIF districts, as well as the procedures for terminating these districts and reporting newly taxable properties.

Key provisions of the bill include stipulations on how the increment value of a TIF district is reported upon its termination. If a district ends before the certification of taxable values, the increment value will be reported as newly taxable property in the same year. Conversely, if it terminates after certification, the increment will be reported in the following tax year. Additionally, the bill outlines how to calculate the market value of newly taxable properties that have undergone construction or remodeling since the last reappraisal cycle.

Notably, the bill exempts school district levies and newly created regional resource authority mill levies from certain tax regulations, which has sparked discussions among lawmakers regarding the implications for local funding and resource allocation. Some legislators have expressed concerns that these exemptions could limit the financial resources available for education and community services.

The economic implications of House Bill 865 are significant, as it could affect local government revenues and the funding available for public projects. Supporters argue that the bill will provide clarity and stability for municipalities relying on TIF districts for economic development, while opponents worry about potential reductions in funding for essential services.

As the legislative session progresses, the bill is expected to undergo further debate and possible amendments. Stakeholders, including local governments and educational institutions, are closely monitoring its developments, as the outcomes could reshape the financial landscape of Montana's communities.