Department of Revenue seeks imagery and software to find missed new construction after audit; budget requests include property‑tax implementation funds

HELENA — The Department of Revenue told legislators March 1 it will pursue technology and workflow changes to reduce missed new construction after a Legislative Audit Division review found properties with unrecorded building changes across Montana.

The department’s Property Assessment Division asked for an RFP to buy aerial imagery (including oblique imagery) and change‑detection software, and said the technology would let appraisers identify new or expanded structures without driving hundreds of miles of rural roads.

Why it matters: Montana appraisers cover very large territories — the audit cited about 885 square miles per appraiser on average — and missing new construction can shift local tax burdens and affect municipal budgets. Localities with rapid growth rely on newly assessed value to finance public services; unidentified construction can delay revenue flows and create perceived tax shifts.

What the department proposed

Paula Gilbert, Property Assessment Division administrator, told the committee the division is piloting a web form counties and staff can use to report new construction and is testing oblique aerial imagery plus automated change detection to flag properties with new or altered structures. Gilbert said the goal is to “free up time” for field appraisers so they can inspect flagged properties rather than searching widely across vast territories.

The division also described retention and recruitment pressures in growth areas, existing field office coverage (30 of 56 counties have local offices), and plans to continue statewide training and town halls to improve consistency. Gilbert said the division recently opened an office in Livingston and is seeking space in Boulder to place staff nearer high‑growth areas.

Audit findings and methodology

Austin Powell of the Legislative Audit Division, who led the new‑construction audit, explained the audit’s method and assumptions. Powell said auditors compared properties that had sold with properties that had not been inspected in six or more years, coded observable structural changes and used conservative estimates to project statewide unidentified construction. Powell said the audit’s estimate of unidentified residential construction represented roughly 1% of statewide residential building value but could have important local effects.

Department budget requests

Department staff reviewed decision packages affecting information management, collections, business and income taxes and property assessment. Key requests included a printing/postage increase for collections (DP501), funding to administer local‑option cannabis tax collections (DP701), a cleanup of partial FTE positions in the Business & Income Tax Division (DP702), and the Property Assessment request for funds to support tax‑revision implementation (contingent on pending legislation) and space/rental funding for Livingston, Boulder and Butte offices.

Unclaimed property and collections

Jill Hamilton, IMC Division administrator, described efforts to boost electronic filing and reduce mail: individual filing rates reached about 94% in 2024 and business returns about 90%. She said collections improvements — including instant activation of payment plans and an e‑lien program that now includes 38 counties — helped statewide collections recover $14 million in fiscal 2024, $6 million of which was related to offsets tied to an individual and property tax rebate program.

Next steps and oversight

Legislators asked for follow‑up on several items: how permitting and other public records can be better shared with the Department of Revenue; whether private utility records (for example, electrical hookups) can be used to detect new construction; and what timeline the department expects if an aerial imagery RFP is approved. Several legislators said they would consider whether statutory changes are needed to standardize permit reporting.

Ending note

No appropriations were finalized at the hearing; department leaders said they would work with legislators on the requested packages and timelines, and the department will continue pilots and technology testing to implement audit recommendations.