Senator Beard seeks 3% cap on growth in school-related property tax revenue; school groups warn of funding shortfall

Senator Becky Beard introduced Senate Bill 102 to the Senate Local Government Committee, proposing that the levy calculation for state equalization (the 95 mills) be limited so the Department of Revenue may not set a levy that generates more than the prior year’s property-tax collections plus 3 percent. Beard said the change is intended to protect property taxpayers from abrupt tax increases tied to reappraisals.

Nut graf: The bill focuses on the revenue stream commonly called the 95 mills, a statewide component used in school funding equalization. Supporters described SB 102 as a means to prevent “tax bill shock” when market reappraisals sharply raise taxable value; opponents said the proposal would shrink a key state funding source for K–12 education and shift costs to local districts or the state general fund.

What the sponsor said

Senator Becky Beard (Senate District 38) told the committee that voters are concerned about large increases in property valuations and the resulting bumps in property-tax bills. She described the cap as “a sensible safeguard” that would limit growth to 3 percent annually and said the bill would apply to property-tax years beginning after Dec. 31, 2025.

Proponents

Bob Story of the Montana Taxpayers Association presented historical revenue charts and said recent reappraisals produced steep jumps in the equalization revenue stream. In her opening, Beard used the legislative fiscal division’s numbers to illustrate the recent volatility: she said the state collected $321,000,000 last fiscal year and that, under different assumptions, collections could have grown to $408,000,000 under the full 95‑mill levy—an outcome she described as a 26 percent increase that produced taxpayer concern.

Opponents and fiscal concerns

Lance Melton, representing the Montana School Boards Association and a coalition of school advocates, opposed the bill. Melton warned the committee that limiting growth on the 95 mills would create a gap in school funding that would have to be recovered elsewhere. Using modeling he ran on the school funding formula, Melton said the cap would cause an estimated $43,000,000 shortfall beginning in fiscal year 2028 unless the legislature or local districts find other revenue; he described the bill’s effect as “push[ing] down a daisy and another one pops up somewhere else.”

Melton and other education witnesses said the 95 mills form a central, equalizing revenue stream that reduces disparate local burdens on school districts. He warned that removing or constraining that source would increase reliance on district-level mills in poorer communities and could worsen tax inequities without a compensating state action.

Department of Revenue

Dylan Cole of the Department of Revenue told the committee the department had completed levy calculations but the budget office fiscal note was not available to the committee at the time of the hearing; he said the department’s internal estimates aligned with opponents’ concerns about multi‑year impacts and that the formal fiscal note would be ready prior to executive action.

Other testimony

Amanda Curtis, president of the Montana Federation of Classified Public Employees, spoke as an opponent representing school employees and said the bill raised concerns for public school staff and operations.

What’s next

Sponsor Beard asked the committee for a due pass and said the hearing provided information to weigh trade-offs. Committee members repeatedly asked for the fiscal note and for more granular local‑level impact estimates before taking executive action. The hearing closed with the committee planning executive action once the fiscal note and any amendments are available.

Ending: Committee hearing on SB 102 closed; fiscal note, modeling, and amendment drafting were expected before further action.