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Bill would let school districts apply inflation adjustment to overbase budgets without extra election; committee hears fiscal tradeoffs
Summary
Representative Luke Muszkiewicz introduced House Bill 265 to permit school districts that have previously adopted voted overbase budgets to receive the full inflationary adjustment adopted by the legislature without holding a new election.
Representative Luke Muszkiewicz told the House Education Committee that House Bill 265 would allow school districts to apply the full inflationary adjustment enacted by the legislature to the portion of their budgets above the base (the “overbase”) without conducting a separate voted levy.
“House bill 2 65 is an attempt to resolve this redundant, unnecessary obstacle that conflicts with the legislature's own definition of quality public education,” Muszkiewicz said. He described the current effect: when the legislature provides, for example, a 3% inflationary adjustment through House Bill 15, districts that had adopted the maximum (max) budget receive only 80% of that increase in their routinely adopted base budget and must run a voted levy to capture the remainder.
Lance Melton of the Montana School Boards Association, speaking for a coalition of public‑school advocates, urged passage. Melton highlighted a 2008 court ruling reference and the recent higher inflation environment: “Every little bit of that inflation that is capped counts…this bill if passed will make sure that you do.”
The bill's fiscal note estimated an increase in local property taxes of $5.4 million in FY 2026 and $11.2 million in FY 2027. Muszkiewicz said his rebuttal to the fiscal note accounts for historic levy behavior and suggested net increases could be smaller—about $1.6 million in FY 2026 and $3.7 million in FY 2027—because districts would likely still run some levies absent the change.
Bob Story of the Montana Taxpayers Association testified in opposition. He said the vote requirement was intentional: voters should decide whether to fund spending above the base. He urged caution and pointed to the decennial study of school funding as the appropriate venue for larger formula changes.
Paul Taylor of the Office of Public Instruction described how state and local revenues fund components of school budgets and explained that the bill would convert some previously voted levy revenue into permissive authority to incrementally increase previously voted amounts by the legislature's inflationary rate.
Committee members asked detailed fiscal and implementation questions about how the increase would be triggered, whether the inflation calculation could decrease in years of deflation, and how many districts currently operate at or above max budget. Muszkiewicz and proponents said 346 of Montana's 393 public school districts have adopted overbase budgets and that the bill aims to “mop up” a relatively small share of general fund budgets statewide.
The hearing concluded with no recorded formal action; the committee will take the bill through the usual deliberative process.
