Senate hearing on bill to reclassify 1‑acre farm home sites draws divided testimony

HELENA — The Senate Taxation Committee heard testimony on Senate Bill 4 on Monday, a proposal from Sen. Becky Beard to change how one‑acre home sites on qualified agricultural land are valued for property tax purposes.

Sen. Becky Beard, sponsor of SB 4, told the committee the bill would “revis[e] taxation of ag property home sites from class 3 ag property to class 4 residential property,” shifting the valuation of the acre under farm residences toward market value and adding a statewide exemption to reflect lack of marketability on some farmsteads.

The change, supporters said, would reduce large disparities between otherwise similar parcels by treating a residence’s one‑acre site consistently whether the owner farms or does not. “Most of these aren’t surveyed out. They’re not tradable,” said Bridal Beatty, director of the Montana Department of Revenue, arguing that the 1‑acre home site under a residence typically is a home site rather than productive acreage and is treated differently by current law.

Proponents described long study and stakeholder discussion. Bryce Kotz, bureau chief with the Department’s Property Assessment Division, walked the committee through county‑level examples and said the department’s county breakdown shows roughly 29,711 one‑acre home sites on qualified agricultural land statewide and that “of those, only 6,255 would actually see an increase. The rest would actually benefit.” Jared Isom, an economist for the Department of Revenue who prepared the fiscal note, corrected one fiscal assumption and said “about 80% would have no taxable value” under the bill’s exemption.

Opponents — including small farm and orchard owners and several ranchers from higher‑value counties — urged the committee to reconsider or table the measure. Lisa Bennett, representing herself, said she feared small, multigenerational homesteaders could be harmed: “I don’t think that you should have to be a commercial for profit ranching or farming organization in order to get your ag exemption.”

Speakers from Gallatin County described concentrated impacts in fast‑appreciating areas. Steve White, whose family ranch is near Bozeman, said the department’s county spreadsheet showed “1,112 ag property owners in Gallatin County could expect an average increase to their property tax of $1,193.” Kerry White, who said his family uses multiple farmstead exemptions on a multigenerational ranch, warned one example from his property would raise taxes on three farmstead exemptions from $51.81 to $5,971 if the acre moved to market value.

Small orchard owners said they complied with Department of Revenue rules and feared the policy would undo a long‑standing expectation that bona fide orchard operations receive agricultural classification. Frank Mutch, who described establishing an orchard and complying with DOR practice requirements, said the proposed change would force some owners “to sell our place, leave the state.”

Committee members asked detailed questions about the working group that produced the proposal, how the exemption amount was set, and how the changes would affect different counties. Deputy Director Scott Mendenhall and Director Beatty described a multi‑stakeholder land classification working group convened by the department and endorsed by the governor; Beatty said the group considered many options and sought to balance preventing “gaming” of the agricultural classification with protecting bona fide small operators.

No committee vote was taken at the hearing. The bill drew a mix of support from statewide taxpayer and landowner groups and opposition from some growers and ranchers in higher‑value market areas; committee members indicated they had questions about practical impacts even if they saw the policy rationale as improving tax equalization.

Votes at a glance: None — SB 4 was heard and taken under advisement; no motions or final actions were recorded at the hearing.

Background: Supporters said SB 4 would make treatment of a one‑acre home site more consistent across property classes by valuing the acre under a residence as residential (class 4) rather than at agricultural productive value, while carving out a statewide exemption intended to reflect lack of marketability on many farmsteads. Opponents said the bill as drafted would shift substantial tax burden onto owners in rapidly appreciating counties and could harm small, family‑run specialty farms and orchards that meet current Department of Revenue requirements for agricultural classification.

The committee invited follow‑up questions to informational witnesses and planned further consideration in committee work ahead of any legislative action.