Senator Greg Hertz (Senate District 7) told the Senate Tax Committee that Senate Bill 2 would change the treatment of taxable value when a tax increment financing (TIF) district sunsets: the increment that previously flowed into other taxing jurisdictions as newly taxable value would not be treated as ‘‘new property’’ for purposes of budget calculations under current statute (section 15-10-420, cited in testimony). Hertz said the change is intended to return value to taxpayers after a district’s term, advancing property tax relief.

Bob Story of the Montana Taxpayers Association testified in support, outlining the history of 15-10-420 (the post-CI-75 implementation statute) and arguing that when a TIF expires, the increment should function like newly taxable value that reduces mills and provides tax relief for residents who subsidized redevelopment. Story said local governments are not providing new services to newly created increment value and that, in his view, the increment should reduce tax burdens when it reenters the base.

Opponents representing cities, chambers, economic developers, redevelopment agencies, banks and infrastructure coalitions offered detailed testimony against the bill. Jennifer Olson of the Montana League of Cities and Towns said preventing increments from being treated as newly taxable would make TIF “no longer a tool that local governments will be able to use” and that the loss of TIF readiness would hinder investment and job creation in blighted areas. Testimony from Todd O’Hare (Montana Chamber of Commerce), Allison Corbin (Montana Economic Developers Association), Grant Kier (Missoula Economic Partnership), Jack Jenaway (Montana Infrastructure Coalition), Ellen Buchanan (Missoula Redevelopment Agency) and others emphasized project examples where TIF-funded infrastructure enabled redevelopment, jobs and subsequent tax base growth.

Several witnesses warned that the bill’s long-term effect would be to discourage future TIF districts. They argued developers and investors factor the eventual return of increment into their investment calculations; if that return is removed, fewer private-sector projects would be viable in downtown and brownfield sites. Missoula redevelopment director Ellen Buchanan testified that urban renewal and TIF are “the first line of defense against sprawl” and that removing the post-sunset newly taxable treatment would likely redirect investment to greenfield development.

Department of Revenue staff (Bryce Kotz and Dylan Cole) provided technical context: the Property Assessment Division calculates TIF increments, base values and the ‘‘newly taxable’’ calculations each year and certifies amounts to taxing jurisdictions. Committee members asked how much taxpayer relief the sponsor’s change might produce; opponents cited an example in testimony that treating a $5 million increment as not newly taxable would generate roughly $31.36 per year to the average taxpayer for four years at the city level versus about $822,000 available to local government to replace or upgrade equipment (testimony summary provided by Jennifer Olson). Testimony highlighted that the aggregate effect on taxpayers could be larger when county and school mills were included.

Senator Hertz closed by saying the bill is narrow and intended to deliver tax relief when TIF districts end; opponents urged the committee to reject the bill to preserve a proven redevelopment tool. No executive action occurred at the hearing.