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Department of Revenue seeks millions to implement property tax revisions, address missed new construction
Summary
In a budget hearing, Department of Revenue officials described a legislative request for funds to implement property tax revisions, outlined technology and staffing challenges in identifying new construction, and reported increases in electronic filing and collections activity.
Department of Revenue officials told a legislative committee the department needs additional funding and tools to identify new construction, implement upcoming property tax revisions and maintain customer-facing services.
Paula Gilbert, administrator of the Property Assessment Division, said a legislative audit found the division misses some new construction and recommended several remedies, including change-detection aerial imagery and expanded data sharing with permitting authorities. "Montana is such a large state that on average our appraisers cover 885 square miles," Gilbert told the committee, noting the state's low appraiser-per-acre density compared with more compact jurisdictions.
Gilbert described steps the division has taken to improve outreach and consistency, including reopening county field offices (Livingston, Broadwater, Rosebud) under courthouse agreements, reintroducing statewide training and holding town-hall meetings. She said the division is piloting change-detection tools in Broadwater and Liberty counties and plans a phased rollout to help desk appraisers find new construction more efficiently.
The Property Assessment Division included a contingent decision package tied to House Bill 231, seeking about $3.3 million over the biennium to implement tax revisions as currently drafted. Gilbert said the department is not requesting permanent full-time positions immediately but would analyze workload before converting modified positions to permanent staffing.
Other Department of Revenue divisions presented data the committee can use to judge resourcing: Jill Hamilton, Division Administrator for Information Management and Collections, outlined operational volumes and electronic-filing gains. Hamilton said the department opened and distributed roughly 464,000 pieces of mail and scanned more than 2.4 million pages in calendar year 2024; 90.4% of individual tax returns and roughly 90% of business returns were filed electronically in calendar-year 2024. The Collections Bureau reported recoveries of about $10 million in FY2023 and $14 million in FY2024, noting $6 million of the latter stemmed from offsets tied to the individual/property tax rebate program.
Legislative Audit Division lead Austin Powell summarized the audit methodology used to estimate missed new construction and explained limitations: the audit compared sales and inspection records to model likely undercounted construction and used conservative assumptions. Powell said the analysis produced a statewide estimate of unrecorded residential-value changes that is small relative to total taxable value but can shift tax burdens locally.
Committee members asked about data sources the division could use (electrical-permit records, utility data) and privacy implications of aerial imagery. Gilbert said electrical permitting is helpful but not uniformly required for small jobs; the audit team confirmed some permitting exemptions and noted the department had limited success obtaining private utility data. On privacy and technology, Gilbert emphasized the department is seeking oblique aerial imagery (three-dimensional photography) and not drone surveillance and said imagery would be used to prioritize desk and field work.
Other items in the Department of Revenue presentation: the department reported an increase in electronic filing after passage of Senate Bill 24 (corporate e-filing mandate) and asked for appropriations authority to administer the local-option cannabis tax (House Bill 701) and to formalize internal positions previously filled as modified FTEs.
Why it matters: Missing new construction can shift tax obligations among property owners and affect local budgets. The department told the committee technology and data-sharing improvements would make local valuations more complete; the department seeks funding to implement property-tax law changes and to modernize valuation and processing tools.
What's next: The department's contingent funding request is tied to House Bill 231; if enacted as written, the department plans a phased implementation and said it will return with more precise staffing requests once the bill's final form is known.
