Senate committee hears bill to narrow use of special assessments, witnesses cite Helena examples

Sen. Greg Hertz, sponsor of the measure, told the Senate Taxation Committee that the bill aims to clarify when a local charge must be treated as a tax rather than as a special assessment.

The bill would define criteria for assessments, limit which parcels may be assessed for specific improvements, and allow the Department of Revenue final decisions involving property tax exemptions to be appealed to the Montana Tax Appeal Board. "If it walks like a duck, smells like a duck, it is a duck," Hertz said, arguing that some levies labeled "assessments" are in practice taxes and should be subject to voter approval under existing law.

Supporters described examples where assessment practices have produced steep, uneven bills for property owners. Sean Logan, a Helena city commissioner speaking as a private citizen, cited an Attorney General opinion and court precedents and urged statutory clarification so property owners have a clear route to challenge charges they believe are taxes instead of assessments. Attorney Mike Green presented a map of Helena street assessments and said retailers and hotels were paying widely different amounts — "Walmart is paying $2,400 per year; the Colonial Hotel is paying $22,000 a year" — and argued that some assessments were decoupled from a demonstrable special benefit to the assessed parcels. He told the committee: "If it's a fee but it looks awful lot like a tax, it's a tax."

Property owners who testified described long, costly appeals. Brian Sandrock, who said a Helena property assessment rose from about $7,000 in 2006 to $26,342 in 2023, told the committee the city ultimately settled and reduced the assessment to about $8,100. "What was a $26,342 assessment is now just $8,100 — a reduction exceeding $18,000," Sandrock said, adding the settlement included returned legal fees.

Opponents — chiefly municipal governments and local government associations — urged caution. Danny Hess for the city of Bozeman said some districts use parcel size or flat-per-parcel methods to reflect neighborhood-wide benefits that are not adequately captured by taxable value alone. Kelly Lynch of the Montana League of Cities and Towns said existing statutory processes for special and rural improvement districts are extensive and argued the bill could unintentionally disrupt established financing tools while offering little new transparency for citizens who do not attend local budget hearings.

Several county and industry witnesses described existing petition, notice and protest procedures for creating rural improvement districts, including an 85% petition threshold in some statutes, annual hearings, and other procedural safeguards. Opponents also warned that the bill's retroactivity language and strict limits on assessing agricultural parcels could affect rural development projects (for example, developer-created rural improvement districts used to delay fronting costs for subdivisions).

The sponsor said he is willing to work on technical language with municipalities and the League, and several witnesses suggested amendments to align the bill with Montana constitutional takings precedents (Nolan/Dolan). No formal vote occurred during the hearing.

The hearing record includes extensive testimony about the difference between a charge that confers a parcel-specific benefit (an assessment) and a levy for the general public good (a tax). Witnesses urged clearer statutory definitions and better appeal routes for property owners who believe a charge is mischaracterized.

The committee did not take final action during the hearing; proponents and opponents indicated interest in negotiating technical fixes before any committee vote.