THIS ONE TRICK SAVES PROPERTY OWNERS HUNDREDS
Sorry, not sorry for the clickbait title, but tonight’s Council meeting is one that everyone should tune into. On the agenda is the establishment of mill levy rates that will determine your actual city tax burden. On a related note, don’t forget to apply for your property tax rebate, courtesy of the Montana Legislature. Even with the city’s budget increases, and hopefully the passage of the Parks & Recreation Bond, the Montana Legislature’s property tax rebate will offset those increases for many homeowners.
After receiving new property assessments in the mail, Montanans have been concerned about what increased home values will mean for their property taxes. Now we know what that means for Billings taxes.
For the median home in Billings, which jumped from an assessed value (not market value) of $228,100 to $307,600, property taxes will increase $208, a 32% jump from last year. As a quick reminder, much of what taxpayers are paying for is public safety. See the chart below that breaks down how the median home’s property tax is distributed for city services.
| Fund/Service Public Safety Levies (I, II, & III) General Fund Annual Levy Transit Operating Levy Library Operating Levy Baseball G.O. Bond Debt Library G.O. Bond Debt Streets G.O. Bond Debt TOTAL FY 23 [Last Year, FY 22] | Mills Levied 114.00 73.10 8.53 4.27 2.80 2.53 1.34 206.57 | Median Cost $473.40 $303.56 $35.42 $17.73 $11.63 $10.51 $5.56 $857.81 [$649.74] |
There are a couple additional considerations taxpayers should be aware of. First, this property tax increase includes the previous Park District 1 assessment. So, while that added cost is reflected in the property tax increase, property owners won’t be paying the PD1 assessment previously included on property tax bills. Second, the City’s franchise fee settlement cost ($40.65 on a median home to pay for the lawsuit against the City) is built into the General Fund Annual Mill Levy and will go away next tax year. Depending on your assessed home value, you may actually net a profit from the franchise fee settlement of $69.31, which will be reflected on a future utility bill.
Part of the cause of the increase in property taxes is due to the City increasing their budget from last year which was estimated in June to increase the total taxes and assessments on a median home by about $100. Additionally, because of our state’s biannual property tax reassessment process, there was a tax burden shift between different property class types in Montana. Our state has multiple property tax categories including agricultural land, residential land, business equipment, and airlines and railroads and each has it’s own tax rate.
If each property tax category had increased equally, the proportion of tax burden would have remained the same. However, because some property types saw increased assessments while others decreased the proportional share of tax burden has shifted—in this case to residential land, business equipment, and pollution control property. The graphic below shows the shift in tax burden, using a dollar bill to represent the entirety of Billings taxes.
Thankfully, property tax rebates passed by the Legislature are getting disbursed to Montanans. While rebates will vary, the full amount of $675 would more than offset the City’s $208 increase in property taxes on the median home. And it’s available next year as well. So mark your calendar as a reminder to apply again in 2024. Readers of this newsletter have likely made another connection worth highlighting—housing undersupply also contributes to higher tax burden. Thanks to housing changes passed by the Legislature, cities are required to roll back onerous housing regulations and evaluate how they will meet their housing needs in the next 20 years. Encouraging infill, adding density, and increasing housing stock benefits both our businesses, continually looking for talented workforce, and our existing residents as more homeowners help to share the tax burden. For more information on Legislative housing wins, check out the podcast we did with Sen. Daniel Zolnikov and Rep. Katie Zolnikov discussing what has been dubbed the “Montana Miracle.”
Coffee with Candidates
Hear from the candidates facing off in each ward and make sure you’re ready to vote when ballots come out! Bring questions to ask during the time for audience Q&A.