Legislative Report

1-13-24

Representative Schillinger Reports,

Happy New Year! We’re getting some good old fashioned January weather!

My last report, was at the end of April as the end of the 68th Montana Legislature drew near a close. After an abrupt and unexpected motion to Sine Die (adjourn), was passed in the Senate on the 88th day of session, we in the House recessed, reorganized, took care of the business we were able to at that point, and voted to adjourn as well at about 10 p.m. that evening. This unexpected ending was not well received by many and left some important work undone after an otherwise pretty productive session.

Perhaps more on that another time. Today I would like to shed a bit more light on the statewide 95 mill levy controversy that has consumed a lot of attention the past several months.

First, the levy came about as the result of lawsuits several years ago alleging public school students weren’t getting equal education statewide as the Montana Constitution requires. The statewide levy idea was hatched as a way to collect proportionately more taxes from the “rich” counties and redistribute it to the “poorer” school districts.

Second, recent statewide appraisals saw huge increases in some cases, especially in residential values in Western Montana. These increases were similar to those we saw in Eastern Montana during the oil boom years. Commercial property also saw some significant increases as well. On the commercial end some blatant over valuations occurred, especially in smaller towns with no comparable sales history to use. Utility type property values saw small changes, which makes sense in that the values really aren’t driven by demand for those types of properties.

Third, each class of properties has a tax rate that is applied to the appraised value. Since the rates weren’t changed by the 2023 legislature, the proportional amount collected from each class changed because values changed at a different rate. This created a shift in the percentage of taxes collected from each class. Greater amounts from residential and commercial, less from utility type. Even though appraisals weren’t complete before the legislature adjourned, it was well anticipated that they were going up substantially. It appears to me that rates should have been adjusted to try and mitigate this shift.

Now, the fight over the statewide levy. Many rightfully argued that leaving the levy at 95 mills would result in a windfall collected by the state, roughly an extra $100,000,000. This was especially insulting to some local governments that have statutory limits put on them of how much they can increase their amount collected, but the state has no limitation. I’m not going to stray off into a political or ideological discussion here on that, but trying to stick to what has happened as a result of the above.

Ultimately, most of the counties in the state decided to only levy 78 mills rather than the 95. This they say, would still allow the state to collect an additional $20,000,000, more than covering the 23-25 budgeted amount.

The Governor sued Missoula County, saying they must collect the full 95 mills. Ultimately, the Montana Supreme Court ruled in the Governor’s favor. Now, the counties, apparently must collect the balance of the 95 mills. As of this writing, I’m not sure that it has been decided when or how the additional unlevied amount will be collected.

The Montana Freedom Caucus, of which I’m the vice chair, issued a call for a special session, that would, in part, clarify the language of the statute making it clear that the executive could collect less than the full 95 mills. We also would have reduced the maximum levy permanently from 95 to 85. Unfortunately, we failed to gain a majority of the legislature for the call.

Sorry for getting long winded, but we barely scratched the surface. I hope this will create some clarity in where we are on this particular issue. Many thanks to county commissioners who have worked long and hard on this issue, trying to do what’s right for their constituents!

For Freedom,

Representative Jerry Schillinger HD37, Jerry.Schillinger@legmt.gov, 406-974-2478.