HB 231 proposes broad property-tax rewrite: homestead relief, long-term rental credit and small-business carve-outs

Representative Lou Jones opened the hearing on House Bill 231 and described a comprehensive attempt to reshape class 4 property taxation with three central elements: a lower rate for owner-occupied primary residences (an "owner-dwelling" rate), a reduced rate for long-term rental properties intended to encourage workforce housing, and a bifurcated commercial rate to lower taxes on small Main Street businesses while applying a higher rate on the portion of large commercial values above a threshold.

Sponsor summary and intent

Jones said the proposal was developed by the governor27s property-tax task force, Department of Revenue staff and other policy experts and is designed to address an evolving Montana tax base in which residential property makes up an increasing share of taxable value and a rising share of bills are mailed to out-of-state addresses. He described the bill as seeking to "bring those folks to the table" (out-of-state property owners) and to hold farmsteads harmless via an agstead provision.

Supporters27 testimony

The governor's budget office registered as a proponent, with Ryan Evans calling the bill an "elegant solution" that keeps property-tax relief inside the property-tax system without relying on income-tax transfers. Senior and advocacy groups, farm organizations and small-business advocates testified in favor: the Montana Farm Bureau, Big Sky 55 Plus and NFIB supported the bill27s targeted relief and the agstead hold-harmless provisions. Roosevelt County Commissioner Gordon Oelkers, a property-tax task force member, said the bill would reduce primary-home property taxes for the majority of Montanans.

Opponents27 concerns

Opposition focused largely on the commercial bifurcation and the bill27s distributional effects. Bob Story of the Montana Taxpayers Association said the split commercial rate would create winners and losers: many large, multi-million-dollar commercial taxpayers could see substantial bill increases even as small commercial properties and many owner-occupied homes receive cuts. Todd O'Hara of the Montana Chamber noted the tradeoff for businesses: "Given the current tax structure ... the only way that we can provide property tax relief to certain taxpayers is to increase property taxpayers' rates on the other end of the spectrum."

Other opponents warned that some counties could face mill-levy increases and that the bill27s benefits would not be distributed evenly across Montana27s counties. The Montana Budget & Policy Center urged more targeting toward lower- and moderate-valued homes rather than reductions that also benefit very high-value properties. The Montana Petroleum Association emphasized risks to centrally assessed industrial tax bases (refineries and other large facilities) and cautioned against changes that could discourage investment.

Administration and technical witnesses

Department of Revenue leaders Bryce Kautz and Eric Dale and Governor27s Budget Office staff Ralph Franklin served as informational witnesses and answered technical questions about median market values, the department27s mandatory November taxable-value-neutral calculations and administration of owner-dwelling claims.

Sponsor's closing and procedural status

Jones said the bill would deliver meaningful relief to 230,000 primary residences, 130,000 long-term rentals and 32,000 small businesses while holding agsteads harmless. He said the measure is intended to be implemented as part of a package of reforms and asked the committee to consider the bill in that broader context. No committee vote was taken; DOR and the governor27s staff remain available to provide further county-level modeling if requested.

Ending: The committee will review follow-up material from the Department of Revenue and the governor27s office; proponents and opponents identified trade-offs lawmakers must weigh in any final drafting.