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Senate advances property-tax reform bill to slow growth in taxable value; bill passes committee on second reading 38–12
Summary
Senate Bill 117, a package of property-tax changes to smooth inflation adjustments and reserve new-tax revenue for existing taxpayers, passed second reading in committee 38–12 after sponsors said it would help low-growth rural counties and critics said it may harm fast-growing communities.
Senate Bill 117 passed on second reading in the Montana Senate by a 38–12 vote on March 27 after floor debate addressed how the bill would change property-tax calculations and provide a local reserve for large-taxpayer departures.
Senator Zollnikov, sponsor of SB 117, described the bill as a refinement to Montana’s property-tax code intended to make taxable-value growth more predictable. Zollnikov said the bill would allow jurisdictions to use the average rate of inflation for the prior three years (capped at 4%) when calculating growth rather than the current half-rate method. The sponsor said the change “smooths” increases and helps rural counties with little new development.
SB 117 would also cap the portion of newly taxable value that goes into local budgets for certain property classes (75% for class 4 property in the example given) and create an optional “large taxpayer reserve account” that local governments could fund to backfill budget shortfalls if a large taxpayer left. If a local government creates the reserve and meets deposit requirements, up to 50% of taxable revenue from newly taxable property would be allocated for tax relief; if not, a smaller share (40%) would be available.
Senator Fern praised the bill as addressing foundational property-tax reform and helping smaller, low-growth communities. Senator Pope said his growing communities face difficult fiscal tradeoffs and announced a “soft no” vote because the proposal did not pencil for fast-growth areas like Bozeman and Belgrade.
After closing remarks from the sponsor, the Senate recorded a committee recommendation to pass SB 117; the roll-call recorded 38 ayes and 12 nays.
The measure affects multiple property classes and includes targeted protections for communities that rely on mining and other large taxpayers. Sponsor remarks noted statutory citations in debate regarding abatement treatment for newly taxable values.
